Consultation paper: combating phoenix activities

22-Nov-2017

The Federal Government has released a consultation paper proposing company and tax law reforms to combat phoenix activities. Phoenix activities involve stripping assets from a company that’s in debt and transferring them to another company to avoid paying the first company’s liabilities – that is, the new company “rises from the ashes” of the old one. The government is considering a range of ways to combat this type of activity, including setting up a hotline for phoenix reporting, adding phoenixing to the offences specifically prohibited under the Corporations Act 2001, making..

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ATO guidance: what is “carrying on a business”?

22-Nov-2017

The ATO has issued a draft taxation ruling to explain the factors it will consider when deciding whether a company (incorporated under the Corporations Act 2001) is “carrying on a business”. This is one of the tests companies and small businesses must pass to be eligible for the lower corporate tax rate. It’s not possible to definitively state whether a company carries on a business, but the draft ruling says that ATO will consider a range of indicating factors. Specifically, a company is likely to be carrying on a business if it: is established and maintained to make a profit for..

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Tax treatment of long-term construction contracts

17-Nov-2017

In new Draft Taxation Ruling TR 2017/D8, the ATO explains the methods that taxpayers can use to return income derived and recognise expenses incurred in long-term construction projects. A construction project is considered long-term if it straddles two or more income years. Two methods of accounting are available: the basic approach (essentially the accruals method) and the estimated profits approach. Once a particular method is chosen, the ATO expects the taxpayer to apply it consistently for the entire contract. The same method should also be applied to all of the taxpayer’s similar ..

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Fringe benefits tax: should an Uber be treated as a taxi?

15-Nov-2017

Earlier in 2017, the Federal Court ruled that UberX drivers must be registered for GST, because they supply “taxi travel”. There has been much discussion of this finding since, and the ATO is now examining whether Uber trips should be eligible for the “taxi travel” FBT exemption. The FBT exemption, introduced in 1995, currently only applies to travel in a vehicle that is state or territory licensed to operate as a taxi. However, with the Federal Court’s decision on GST for Uber, and some recent state and territory moves towards licensing changes, the ATO has decided to review its ..

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Superannuation guarantee

06-Nov-2017

Crackdown on employer non-compliance The Government has announced a package of reforms to give the ATO near-real-time visibility over employers’ superannuation guarantee (SG) compliance. The package includes measures to: require super funds to report contributions at least monthly to the ATO; roll out Single Touch Payroll (STP); and give the ATO the ability to seek court-ordered penalties in severe cases of non-payment. Salary sacrifice integrity Legislation has also been introduced to prevent employersfrom using an employee’s salary sacrifice contributions to reduce the emp..

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Compensation for ATO systems outages

02-Nov-2017

After the ATO’s unplanned systems outages, it provided lodgment deferrals, and remitted interest and penalties where the outages affected practitioners and their clients’ lodgments. The ATO has also advised that it assesses claims for compensation in two ways: compensation for legal liability (eg negligence); and compensation under the Compensation for Detriment caused by Defective Administration (CDDA) scheme, which allows the ATO to consider claims and pay compensation for disadvantage or loss because of defective administration. The ATO considers claims in accordance with gu..

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