News & Tax Insights

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.   In support of their call for childcare deductibility, Chief Executive Women say that the cost of women not participating fully in the workforce is $93 billion per year and that a lack of affordable, reliable child care is one of the biggest obstacles. They say that child care in Australia is expensive compared to Singapore, Hong Kong and the US.   That…

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 such as date of birth and address prior to the payment of the distribution.   Hopefully the following 8 paragraphs put the new rules into a logical sequence: + The Trustee should request that the beneficiary provide the following details before either actually paying a distribution or resolving to pay a distribution to that beneficiary:…

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, Ben Gray, 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.   In 2006, a US-based private equity firm by the name of TPG bought the Myer business from the then public listed Coles Myer Ltd (Coles Myer was later taken over by Wesfarmers). TPG improved the Myer business and then arranged to float…

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 the Australian subsidiary of a foreign multinational that holds its intellectual property offshore.   There is no monetary limit to the total R&D expenditure that can be subject to the offset, however, there is a complicated new criterion for core R&D activities. These are defined as:   Experimental activities where the outcome is not known or cannot…

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 the Federal Court which was later confirmed by the Full Bench of the Federal Court.   In the words of Chief Justice French: This application for special leave by the Commissioner of Taxation raises the question whether a trustee of a unit trust could set-off, against capital gains, capital losses incurred some years before under a different trustee with…

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.   During the 2011 financial year, the Tax Office instigated more than 10% of all windups (numbering over 1000). This is double the figure for 2010.   It is using a new business viability software tool to determine whether a softly-softly approach or firm…

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, aged care, health, telecommunications and the building and construction sector.   The decision-making tool can be found at http://www.ato.gov.au/content/00095062.htm.   If you are contracting with an individual (even if they have an ABN) and the contract is not for a particular result to be provided, with the contractor providing their own tools…

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 improve the asset provided it doesn’t change its underlying character.   Since a change to the superannuation rules in 2007, self-managed super funds have been able to borrow money on particular limited recourse arrangements to purchase an asset such as business real property or even a residential rental property. Other super rules preclude the purchase…

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.   Modern technologies such as laptops, internet connections, apps on mobile phones and electronic share trading platforms, mean that the concept of operating in a business-like manner is becoming increasingly fluid.…