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Latest News

Latest News

Foreign resident or Australian overseas? Banks and governments automatically sharing your information around the world

Parliament has just passed legislation that requires local banks, on an annual basis, to provide detailed information to the Tax Office who will then automatically share that information with the relevant foreign tax authority where an Australian bank account is held by a foreigner or a company, trust or other entity that is controlled by a foreigner.  The purpose of the new legislation is a global crackdown on people holding funds offshore and not declaring income to their home country tax authority. It is a multi-way, reciprocal arrangement with many national governments planning on gathering and cross-sharing information under the […]

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Initial Repairs

Question: I have just bought a house that I intend to rent out to a tenant.  Before I do that, there are repairs needed including carpentry repairs to the deck at the back of the house, painting, replacement of the carpet and replacement of the dishwasher.  Can I get a deduction for these repairs? Answer:  Unfortunately, no you can’t get an immediate deduction for those items. However, you can claim depreciation for the new carpet and new dishwasher and you can claim the capital works allowance for carpentry repairs to the deck and also the painting. Explanation:  As you have just bought the property, […]

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Renting former home out, repairs costs

Question:  Last year, we moved out of our home to relocate and signed an agency agreement and got the real estate agent to find tenants and set up a rental arrangement for the house.  There are some repairs that really should be done to the house including carpentry repairs to the deck at the back of the house, replacement of the dishwasher, replacement of the carpet and painting of the exterior of the house.  Can I get a deduction for the money spent on those items? Answer:  For the money spent on carpentry repairs to the back deck and painting, you can get an immediate […]

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Bank information shared with USA Internal Revenue Service

Under the US Foreign Account Tax Compliance Act (known as FATCA) Australian banks have provided details of over 30,000 customer accounts worth over $5 billion to the US Internal Revenue Service (IRS – the US equivalent of our Tax Office). These are accounts of US citizens and tax residents with Australian bank accounts.  There is a wave of transparency measures being implemented world-wide.  By 2017 close to 100 countries will be sharing non-resident data under the OECD Common Reporting Standard. The Australian Tax Office will receive data from the IRS about Australians with financial accounts in the US and will […]

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Australian Securities and Investments Commission – is it up to the task?

Log on to ASIC’s website – www.asic.gov.au and you can obtain information about how to make a complaint or report misconduct.  This is divided into different categories, many of which must be dealt with by other organisations.  But those matters which are within its responsibilities include troubles with investments, companies which have gone into liquidation or administration, shares, insider trading and operation of companies.  It also carries regulatory responsibility for company auditors and financial planners.  It has a very broad set of responsibilities. Will your complaint or problem be dealt with expeditiously?  Probably not.  The word around the traps is that ASIC doesn’t have the manpower to […]

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Sale of land for $2m or more? Buyer beware (and seller)!

Foreign resident capital gains withholding payments will apply where a foreign owner sells land or land interests with a market value of $2m or more requiring the purchaser to withhold and pay 10% of the purchase price to the Tax Office.  At the time of writing, the legislation is before the Senate and expected to become law.  The new law will apply to contracts signed from July 2016. This is another step in the Government becoming tougher on capital gains for non-residents.  It follows the removal of the 50% CGT discount for non-residents from the budget night in May 2012. […]

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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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Primary production land tax exemption refused: NSW

The NSW Court of Appeal has refused a claim for the primary production land tax exemption made by a couple for their property that was used for thoroughbred horse breeding.   The couple claimed that only 5% of the land was used to rent out a residence on the property and accordingly, the overwhelming majority percentage of the land was used for primary production.   However, in an earlier decision, the NSW Administrative Decisions Tribunal decided that only a small number of horses were ever present on the land and that primary production activity was minimal and accordingly, the residential […]

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Australian banks suffer big expense helping collect US taxes

More than half of the financial institutions surveyed by Thomson Reuters will exceed their budgets for complying with new reporting requirements on US individuals and entities.  Banks must report details to the Tax Office and it will then on-send that information to the US Internal Revenue Service.  More than a quarter of those financial institutions expect to spend between USD 100,000 and USD 1 million to comply with the new rules. The United States legislature passed new legislation in 2010 called the Foreign Account Tax Compliance Act (FATCA).  The intention is to use the dominant strength of the US banking […]

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Benchmark interest rate in 2014-15 Division 7A loans

The benchmark interest rate for Division 7A loans has reduced from 6.2% to 5.95% for the 2014-15 financial year. Where a company makes a loan to a shareholder or their associate and the loan is not paid back before the lodgement date of the tax return for the year that the loan was made, the loan will be deemed to be a unfranked dividend unless it is put on a commercial footing with terms compliant with Division 7A of the 36 Tax Act including repayments and interest charges at this benchmark rate. The deemed unfranked dividend penalty can also apply […]

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Tribunal refuses train guard travel claims

The Administrative Appeals Tribunal (the Tribunal) refused an appeal by a NSW train guard for a deduction of $3,700 against his 2010 tax for car expenses on the cents per kilometre basis.  The guard made the claim because he carried mandatory work items to and from work including: Full folders of railway instructions; A watch showing the correct time; Multi-coloured torch; Notebook; Working timetable; Diagram book; A red and a green flag; Identification card; Hand-held radio; Key kit; Train status book; Departmental issue mobile phone; A pager; A whistle; A safety vest; and A pad of “delay slips”. The claim […]

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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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