Blog
Tax treatment of long-term construction contracts

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?

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

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

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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No GST on digital currency: Bill

No GST on digital currency: Bill

30-Oct-2017

The GST Act (A New Tax System (Goods and Services Tax) Act 1999) is being amended to ensure that digital currency, such as Bitcoin, is disregarded for GST purposes unless the supply is made in exchange for a payment of money or digital currency. To achieve this, a definition of “digital currency” will be inserted into the GST Act. Under the new definition, a digital currency has broadly the same features as state fiat currencies (legal tender). In particular, the value of a digital currency must derive from the market’s assessment of its value. A digital currency’s value cannot be b..

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Tax measures for affordable housing

Tax measures for affordable housing

27-Oct-2017

The Government has released draft tax legislation to implement elements of its housing affordability plan. The proposed measures include an increased capital gains tax discount for people who hold affordable rental housing investments for at least three years. Under the draft legislation, managed investment trusts would be allowed to hold affordable housing investments with the main aim of deriving long-term rental income, but purchasing residential property that is not affordable housing would no longer be permitted for these trusts. TIP: If this legislation is passed, there will be a t..

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New downsizing cap available

New downsizing cap available

20-Oct-2017

If you are aged 65 or over, your home is your main residence for CGT purposes and you have owned it for a minimum of ten years, you could benefit from new draft legislation. You will be able to make additional non-concessional contributions, up to $300,000, from the proceeds of selling your home from 1 July 2018. The downsizer contribution cap of $300,000 will be in addition to existing caps; the capital must come from the proceeds of the sale price and application must be made within 90 days after the home changes ownership. There will also be exemption from the contribution rules for pe..

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GST: simplified accounting for food retailers

GST: simplified accounting for food retailers

17-Oct-2017

The ATO has released a draft determination on the choice available to you, if you are a food retailer, to use a simplified accounting method (SAM) to help you to work out your net amount by estimating your GST-free sales and GST-free acquisitions of trading stock. The Draft SAM is substantially the same as the previous determination it replaces. If you were eligible to use a particular SAM specified in the previous determination, you will continue to be eligible to use that SAM under the draft determination.     Tip: Are you a food retailer? We can help you to use the sim..

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Further guidance for tax losses via a new “similar business” test

Further guidance for tax losses via a new “similar business” test

11-Oct-2017

    The ATO has released a draft guideline on how they will apply the new “similar business test” to supplement the existing “same business test” used for testing whether a company can utilise an earlier year tax loss. The draft guideline says the similar business test will operate in a way that is comparable to the same business test, and that the overall business of a company must satisfy the similar business test to access losses. The focus remains on the identity of a business, as well as continuity of business activities to generate assessable income...

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First Home Super Saver Scheme – draft legislation

First Home Super Saver Scheme – draft legislation

09-Oct-2017

Treasury has released draft legislation to implement the 2017–2018 Federal Budget superannuation measures aimed at improving housing affordability by the establishment of the First Home Super Saver Scheme (FHSSS). The FHSSS will allow voluntary superannuation contributions made from 1 July 2017 to be withdrawn for a first home deposit starting from 1 July 2018. The scheme provides for up to $15,000 per year (and $30,000 in total) to be withdrawn from superannuation.     Tip: To be eligible to use the FHSSS, a person must be 18 years or over, have not used the scheme..

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ATO increases its scrutiny on work-related expenses

ATO increases its scrutiny on work-related expenses

04-Oct-2017

Despite wide publicity on the issue, the ATO has reminded taxpayers that it is increasing its scrutiny on work-related expenses. Last year over 6.3 million people made work-related expense claim for clothing and laundry expenses, totalling almost $1.8 billion. Common mistakes the ATO has seen include people claiming ineligible clothing, claiming for something without having spent the money, and not being able to explain the basis for how the claim was calculated.     Tip: Unsure about what you can claim as work-related expenses? Talk to us to avoid making a mistake...

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Federal Court rules on arrangement to avoid PAYG deductions

Federal Court rules on arrangement to avoid PAYG deductions

25-Sep-2017

The Federal Court has dismissed the taxpayers’ appeals against an Administrative Appeals Tribunal (AAT) decision. The AAT had ruled against one of the taxpayers (a company as trustee of a trust) concerning an alleged sham arrangement, input tax credits denied, GST shortfall penalties, a penalty for not withholding and remitting pay as you go (PAYG) tax amounts, and certain income tax deductions. Two additional taxpayers (a couple) were also unsuccessful before the AAT in a consequential matter – amended assessments had increasing their taxable incomes due to an increase in trust income and..

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Working holidaymakers and  tax returns for 2017

Working holidaymakers and tax returns for 2017

20-Sep-2017

If your business employs working holidaymakers – or you’ve been one yourself this year! – you need to know about the “backpacker tax” changes that came into effect from 1 January 2017. Employers needs to issue two payment summaries to each working holidaymaker for the 2016–2017 financial year: one for income earned up until 31 December 2016; and one for income earned after 1 January 2017 (using payments code H). All employers need to include code H on payment summaries of backpacking workers’ post-1 January income, even if the employer isn’t registered with the..

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Small businesses with tax debts: setting up a payment plan

Small businesses with tax debts: setting up a payment plan

15-Sep-2017

The ATO reminds small businesses that if they have a tax debt of $100,000 or less, they can take advantage of the ATO’s self-help service to set up a payment plan in two easy steps: Use the payment plan estimator to work the options. With their Tax File Number (TFN) or Australian Business Number (ABN) on hand, set up a payment plan by either phoning the ATO’s automated service on 13 72 26 or using the online services for sole traders and individuals on their myGov account. In some circumstances, the ATO says, a business may be eligible for interest-free payment plans for activit..

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Employee travel expense deductions

Employee travel expense deductions

12-Sep-2017

The ATO has also released new guidance on work-related travel deductions. To claim for transport or other employee travel expenses (like accommodation and meals) in your tax return, you must have incurred the expenses as part of gaining or producing your taxable income. Private and domestic travel expenses, including the costs of your ordinary home-to-work travel, aren’t claimable. Transport costs for work-related travel may be deductible, but the ATO will consider factors such as: whether the travel is a necessary part of performing your work (you can’t pretend your family holiday..

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