taxInsight - 2015/13 – August

2015/13 – August from taxInsight

Fringe benefits tax rules tightened for not-for-profits

Currently, employees of certain not-for-profits can salary sacrifice entertainment benefits.  If they do so, no FBT is payable by the employer nor does it have to be reported.  Those not-for-profits which are not exempt, but rebateable, would receive a partial FBT rebate. The 2015/16 Budget included a provision for this benefit to be substantially reduced.  From 1 April 2016, there will be a separate, single, grossed-up cap of $5,000 for salary packaged meal entertainment and entertainment facility leasing expenses provided to employees of public benevolent institutions, health promotion charities, public and not-for-profit hospitals and public ambulance services. The charges are […]

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Personal services business and the results test

You will avoid attributed personal services income and be operating a personal services business if you can satisfy the results test.  This is set out in Section 87-18 of the Income Tax Assessment Act 1997. In a recent case (Prasad Business Centres Pty Ltd v FC of T AAT (2015) AATA 411) the Administrative Appeals Tribunal confirmed the Tax Office’s decision not to provide a personal services business determination as requested. The Tribunal held that the results test was not satisfied because: The relevant contract remunerated the principal only for time he spent working on certain projects; Whilst the contract […]

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Small business $20,000 tax write off

There was great joy, not only for small businesses but also for many retailers, from the 2015 Budget announcement of the $20,000 tax write-off.  The economy will also benefit from the increased business activity which is resulting from this much needed measure. Highlights: Any small business with an aggregate annual turnover of less than $2 million is eligible. The write-off applies to any business depreciable asset (new or second hand) acquired after 12 May 2015 until 30 June 2017. This measure replaces the previous instant asset write-off threshold of $1,000. It applies on a per-asset basis. An unlimited number of […]

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Yet another taxpayer win

Deep pockets were needed but in Haritos & Anor. v FC of T (2015) ATC, the Full Federal Court struck down earlier decisions by the Federal Court and the Administrative Appeals Tribunal and brought justice to the taxpayers. It seems that in this case, Tax Office investigators ignored evidence in MYOB accounting records and decided that a significant number of payments made by a cleaning contracting company were dividends to its shareholders. This, despite the accounting records, despite the fact that a cleaning contracting business employs sub-contractors and must pay them, despite the fact that evidence was given as to […]

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Employee Share Schemes (ESS)

These highly valuable benefits fell into disfavour following amendments to the taxing provisions introduced by the previous Government. New rules have been legislated with effect from 1 July 2015.  Employees, who receive options and other ESS interests as remuneration from that date, will be taxed under the new rules subject to some transitional provisions. Employees, who receive options, will generally be taxed when they exercise those options.  Previously, they were taxed on the granting of the options. If an employee chooses to let the option lapse, he or she will be able to claim a refund of any tax already […]

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