News & Tax Insights

You may be able to claim deductions for capital expenditure incurred in the creation or purchase of an Australian patent, registered design or copyright. You can claim an annual amortisation calculated by reference to the effective life of the property. Intellectual property acquired through licensing has an effective life equal to the term of the licence.

Companies must gross up franked dividends received and then can reduce tax payable by the amount of the franking credit. This could result in the wasting of carry forward tax losses. To avoid this, companies can choose the amount of prior year losses they wish to deduct in a later year of income. Companies also have the flexibility to deduct carried forward losses. Additionally, a current year loss that would otherwise be used up against franked dividend income can be carried forward and deducted in a later year. Any excess franking credits can be converted to an equivalent amount of…

If you own a worthless CGT asset, get rid of it and crystallise a capital loss! You may not have to sell or get rid of worthless shares to claim a capital loss. There is a provision for unrealised losses on shares that are worthless to be treated as realised capital losses. This happens if the liquidator or administrator makes an announcement that there is no prospect of a return to shareholders. The shares are then treated as if they were sold and re-acquired at nil cost.

Concerned that an ABN quoted to you is not genuine? You can check this through the internet at www.abr.gov.au Always ensure that an ABN is quoted otherwise you must deduct withholding tax at the rate of 49%. You need not deduct withholding tax if the payment is wholly of a private or domestic nature or the payment does not exceed $75 (excluding GST). If the payment exceeds $75 make sure you get a written, signed statement that the supply is private or domestic in nature or relates to a hobby. You need not insist on an ABN if the payee…

Preparation for a tax audit is all important. Tax auditors will insist on seeing adequate records of your entitlements to tax deductions and proof of any claims that money received was not taxable income. The disallowance of a tax deduction may simply be a matter of not being able to produce accurate records proving the circumstances in which the expenditure was incurred. Always ensure that you maintain adequate records and keep in mind the substation requirements.

You may be able to obtain rollover relief where there is a scrip-for-scrip takeover between companies and trusts (whether widely held or private entities). The CGT liability would be deferred at the time of the takeover until ultimate disposal of the replacement interest.

When interest on a housing loan is not deductible, it is unfair to have to pay tax on any interest received on savings. Banks have introduced mortgage offset accounts to stop this injustice. The  bank does not have interest on the offset account, but the amount which might have been earned is effectively deducted from the interest charges on your home loan. The bank looks daily at the balance of your offset account when calculating the interest charged on your home loan. The Tax Office allows this procedure because no interest is received by or credited to the account of…

You can help protect your family against unexpected claims and creditors if you establish a discretionary trust. Under certain circumstances, the assets contained in the trust may be protected from seizure by a trustee in bankruptcy. Take care that the balance sheet of the trust doesn't show family members with creditor risk as substantial creditors from the trust as in this event a trustee may be able to demand payment.

Authors, inventors, performing artists, production associates and sports persons receiving higher than normal income in a particular year can average down their tax rate under Division 405 of the 97 Tax Act. This may also apply to computer programmers writing a special one-off product, not simply improving or upgrading an existing product.

Employers who provide fringe benefits with an annual taxable value of $7,965 or less in the 2014/15 income year enjoy some exemptions from the keeping of detailed FBT records. This is adjusted yearly in accordance with CPI if the establish a so called base year.