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taxInsight - 2011/02 – October

2011/02 – October from taxInsight

Our View – providing a tax deduction for childcare, even if it is provided by a nanny, is a great idea

Chief Executive Women, an organisation of 200 female corporate highflyers including Ita Buttrose and Heather Ridout, called for the government Tax Forum … to review the opportunity and cost of tax deductibility of child care for Australia

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Trust TFN withholding tax and TFN reports

The Government and Tax Office have kindly provided yet another layer of bureaucracy for small businesses operating through trusts. Trustees are now obliged to withhold tax from distributions to beneficiaries if those beneficiaries have not provided their tax file number (TFN) and other personal details …

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Protect Assets – take a registered charge over your company

Have you loaned substantial funds to your company or trust (with a corporate trustee)? Make sure that you have a loan agreement in place to record its terms and ensure that you comply with …

Have you loaned substantial funds to your company or trust (with a corporate trustee)? Make sure that you have a loan agreement in place to record the terms of the loan and ensure that you comply with

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Tax Office continues chasing away foreign investment

In a new episode of the Tax Office/Myer float saga, the Federal Court granted orders for the Tax Office to serve a demand for $739 million on an Australian Director after the Tax Office made out a case that he was the local representative of a Dutch and Cayman Islands companies in the TPG group …

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New R&D laws: cash rebates for small businesses

New laws cleared Parliament in August. These provide a 45% refundable tax offset for businesses with group turnover less than $20 million undertaking research and development activities that meet the new eligibility criteria. A nonrefundable 40% offset is available for larger businesses including …

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Clarks’ case: High Court refuses special leave for Tax Office appeal

We have previously reported on this case between Mr and Mrs Clark and the Tax Office. The High Court has refused to hear an appeal by the Tax Office. This case had previously been found in favour of the Clarks by …

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Plan Succession – life insurance on business partner

Take out a life insurance policy on your partner’s life so that you have funds available to acquire his/her interest in the business if they pass away. The proceeds of a life insurance policy are …

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Tax Office crackdown on tax debts

The lenient approach to debt collection taken by the Tax Office during the Global Financial Crisis has been discarded and replaced with a new hard-line. This follows a blowout in outstanding tax debts from 5% of revenue to 11% ($15 billion) last year. The new approach includes the early instigation of garnishee notices and windup proceedings …

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Save Tax – main residence

The dwelling in which you live will be exempt from CGT if you own it. The term dwelling includes a flat, home unit, caravan, houseboat or other mobile home and includes the land on which it is built up to a maximum of 2 ha. If your spouse is living permanently separate and apart from you, you would each be entitled to …

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Employee or contractor

The Tax Office have an employee/contractor decision-making tool on their website and are using it during the field visits to determine whether an arrangement is true contracting or actually an employment circumstance. They say they have detected false contracting arrangements in call centres, transport and logistics, retail, education …

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Draft super ruling: borrowed funds to repair property

Super funds will now be able to use borrowed funds to repair a property purchased with a limited recourse borrowing arrangement. The Tax office has reversed its position on this in a draft ruling. Further, the super fund can use other monies (not borrowed) to …

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Protect Assets – discretionary trust owning company shares

Directors of a trading company are subject to personal risk from statutory penalties from mining, occupational health and safety, environmental, PAYG withholding and superannuation guarantee legislation. Rather than holding the company shares personally, establish the company with the shares held by a discretionary trust (with a corporate trustee) that the Director controls. Although the director has control, she does not have legal nor beneficial ownership of the shares. She has a greater degree of asset protection as the shares become valuable with profitable business operation.

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Badges of business

A Tribunal ruling (previously reported in September 2011 taxInsight) found that the CEO of a services company was indeed conducting a business of share trading on a part-time basis. This decision allowed for claiming deductions because of the drop in value of shares during the global financial crisis and further clarified the factors to consider when assessing whether an activity is a business or mere academic pursuit or hobby …

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Generate Cash Flow – reduce expenses

We know it’s basic but make sure you get three quotes for all purchases. At the very least it will keep your supplier on their toes and will provide further information to make better purchasing decisions reducing total costs.

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