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taxInsight - 2014/03 – July

2014/03 – July from taxInsight

New Mineral Exploration Tax Incentive

Mineral exploration companies might be able to provide shareholders with an extra tax credit under the Government’s Exploration Development Incentive for greenfields sites, subject to new laws getting through Parliament. The Incentive was part of the Government’s election promises and was costed in this year’s budget.  They have allowed for total exploration tax credits of $100m for industry shareholders over the next three years: $25m against 2014/15 exploration; $35m against 2015/16 exploration; and $40m against 2016/17 exploration. The eligibility requirements for the company are:  Australian resident exploration company;  At least 100 shareholders (Disclosing Entity);  No taxable income;  No mining activities; and  Eligible exploration […]

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Question: Asset Protection

Question: What would be the best structure for a sugarcane farm and its assets to provide adequate asset protection in the event of an occurrence outside insurable cover? The farm is currently owned under a discretionary trust with the main beneficiaries as the trustees. Would it be better to have a corporate trustee? Alternatively, should a company own the assets and rent them back to the trust as the operator? Answer: The current trustees should retire in favor of a corporate trustee. Trustees are personally liable for all the debts of the trust and it is very important therefore for individuals not […]

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Save Tax: Tax Deductible Clothing

You can claim a deduction for the cost of buying, renting replacing and maintaining clothing, uniforms and footwear if these items fall within the categories listed below. The maintenance costs of such clothing are deductible and up to $150 of laundry expenses need not be substantiated. To be deductible the clothing must be: protective in nature, occupation specific, but not conventional, a compulsory uniform, or a non compulsory uniform or wardrobe that has been entered into the Register of Approved Occupational Clothing  

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Question: Interest earned jointly

Question: Where there is a joint savings account, can the amount of interest earned be assigned to one of the holders, or does it have to be evenly split? Answer: Potentially, if you could mount an argument that one party contributed the funds to the savings account you could say that that party was entitled to the interest or the bulk of it. However, this would be a difficult argument to maintain because the Tax Office receives all these details from banks and data matches them to the relevant taxpayers. It is very important to match the information you disclose in tax […]

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Save Tax: Negative Gearing

Negative gearing can be briefly explained as paying more in interest, depreciation and other outgoings than you receive in income from your investment. At first this seems most unwise, but the following example may make the position clearer in the context of our current tax rules. Geared investments (shares, rental property or unit trusts financed by borrowings) provide a tax deduction if the interest and other costs of the investment exceed the income earned. This is called negative gearing. If you purchased a house for $400,000 as an investment and borrow the entire amount at 5% p.a. interest, your annual […]

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Save tax: Rental Property Expenses

The Tax Office is concerned about high level of claims for rental property expenses and is looking at these carefully. Some common errors are: Travelling. You can claim for inspection trips but you must have actually incurred the expense. Motor Vehicle Expenses. You cannot exceed the 5,000km limit under the cents per km method for each vehicle by claiming some kilometers as rental related and others as work related. Private Travel. If you enjoy a holiday whilst inspecting your rental property you must pro rate your claim. Initial Repairs. Travel costs and other expenses relating to initial repairs or improvements cannot be claimed as […]

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