Blog
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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BUSINESS TAXATION

BUSINESS TAXATION

24-May-2017

Major bank levy from 1 July 2017 The Government will introduce a major bank levy for authorised deposit-taking institutions (ADIs) with licensed entity liabilities of at least $100 billion from 1 July 2017. The threshold will be indexed to grow in line with nominal gross domestic product. The levy will be calculated quarterly as 0.015% of an ADI’s licensed entity liabilities as at each APRA mandated quarterly reporting date (for an annualised rate of 0.06%). Liabilities subject to the levy will include items such as corporate bonds, commercial paper, certificates of deposit, and T..

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PERSONAL TAXATION

PERSONAL TAXATION

19-May-2017

No change to personal tax rates; Budget deficit levy to end The 2017–2018 Federal Budget contained no changes to the personal income tax rates and thresholds. This means that the 2% budget deficit levy on incomes over $180,000 will not be extended beyond its initial three years, and will cease on 30 June 2017. The tax rates for foreign residents for 2017–2018 will be the same as those for 2016–2017, except that the top marginal rate will be 45%, reflecting the removal of the 2% temporary budget deficit levy. The currently legislated low income tax offset (LITO) rates have not chan..

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Does your business import or export goods and services?

11-May-2017

The ATO reminds business owners that if your business imports or exports goods or services in Australia, it is important to be aware of your GST responsibilities so you can get the information on your business activity statement (BAS) right. Exports from Australia are generally GST-free, but special conditions apply in some situations. For example, if it takes longer than 60 days for you to receive payment for your exports, then GST could be charged. When importing, you are generally required to pay GST (10% of the value of the taxable importation). This GST is usually paid to the Depart..

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Higher education HELP changes: faster repayments and threshold changes

10-May-2017

The Minister for Education and Training, Simon Birmingham, has announced a package of reforms to higher education – the Higher Education Reform Package – to take effect generally from 1 January 2018. The details announced will be confirmed in the 2017–2018 Federal Budget. They include: an increased maximum student contribution from 1 January 2018; no up-front fees or deregulation of fees; a new set of repayment thresholds from 1 July 2018, changing repayment timings and quantities for all current and future Higher Education Loan Program (HELP) debtors; a new minimum repayment..

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Tax assistance for people affected by Cyclone Debbie

01-May-2017

The ATO has said it will fast-track refunds for people affected by extreme weather and flooding associated with Tropical Cyclone Debbie and ex-Cyclone Debbie in Queensland and New South Wales, and will allow extra time for those taxpayers and their agents to lodge income tax returns and activity statements. Tax Commissioner Chris Jordan said taxpayers do not need to apply for a deferral or a faster refund. “If your business or residential address is in one of the identified affected postcodes it will happen automatically”, Mr Jordan said. “We understand that for many people their tax ..

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Payment was assessable as “deferred compensation”

26-Dec-2016

The High Court has unanimously dismissed a taxpayer’s appeal and held that payments of US$160 million made to him pursuant to an incentive “profit participation plan” after termination of his employment was income according to ordinary concepts. In particular, the Court found that the payments were “deferred compensation” for the services the taxpayer performed in his employment. At the same time, the Court dismissed the taxpayer’s claim that the amount was assessable as a capital gain on the basis that it did not represent the proceeds for the future right to receive a proportion..

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Companies held to be resident and liable to tax in Australia

01-Dec-2016

In a long-running saga, the High Court has unanimously dismissed the appeals of four corporate taxpayers. The Court confirmed the taxpayers were Australian residents for income tax purposes, and therefore liable to tax in Australia on the profits they made from share trading activities on the Australian Stock Exchange. In making this decision, the Court rejected the taxpayers’ contention that because Justice Perram had in the first case found that the directors of each taxpayer were resident abroad, and because meetings of those directors were held abroad, then Justice Perram and the Full Fe..

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Contrived trust arrangements in ATO sights

01-Dec-2016

The ATO has cautioned taxpayers against arrangements that seek to minimise tax by creating artificial differences between the taxable net income and distributable income of closely held trusts. Deputy Commissioner Michael Cranston said the ATO is investigating arrangements where trustees are engineering a reduction in trust income to allow taxpayers to improperly gain favourable tax breaks, or sometimes to pay no tax at all. Although he noted that many people use trust structures appropriately and within the law, Mr Cranston said the ATO has seen some trustees exploit the differences betwee..

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GST and Countertrade Transactions

01-Dec-2016

The ATO has issued a Practical Compliance Guideline which sets out the Tax Commissioner’s compliance approach, in the context of GST, to entities that enter into countertrade transactions as part of carrying on their enterprise. “Countertrade” refers to the direct exchange of things by one entity for things provided by another entity, and does not include transactions where any of the consideration is monetary. Each entity to a countertrade makes a supply and an acquisition. The Commissioner is aware of various practical problems in the context of these transactions and notes that the..

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GST and Countertrade Transactions

GST and Countertrade Transactions

01-Dec-2016

The ATO has issued a Practical Compliance Guideline which sets out the Tax Commissioner’s compliance approach, in the context of GST, to entities that enter into countertrade transactions as part of carrying on their enterprise. “Countertrade” refers to the direct exchange of things by one entity for things provided by another entity, and does not include transactions where any of the consideration is monetary. Each entity to a countertrade makes a supply and an acquisition. The Commissioner is aware of various practical problems in the context of these transactions and notes that the..

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Budget superannuation changes on the way

01-Nov-2016

The Federal Government has been consulting on draft legislation to give effect to most of its 2016–2017 budget superannuation proposals. Here are some of the key changes. Deducting personal contributions All individuals up to age 75 will be able to deduct personal superannuation contributions, regardless of their employment circumstances. Of course, such deductible contributions would still effectively be limited by the concessional contributions cap of $25,000, proposed from 1 July 2017. Pension $1.6 million transfer balance cap The total amount of accumulated superannuation an individ..

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