News & Tax Insights

On 16 May, the New Zealand Finance Minister announced that from 1 October 2015, gains on residential property in New Zealand sold within two years of purchase will be subject to a new “bright line” test, which will be introduced in respect of residential property. There will be a rebuttable presumption that if you sell property within two years of buying it, you did it to make a profit. This means that you are presumed not to hold it on capital account. Instead you hold it in the nature of trading stock and therefore any profit is fully taxable. There…

The Tax Office launched a voluntary disclosure program which was called “Project DO IT” (disclose offshore income today) on 27 March, 2014. Errant taxpayers had until 19 December 2014 to come forward with details of untaxed offshore income and assets. Those who did were subjected to tax going back only four years and had their penalties reduced to 10%. This was announced as a precursor to more aggressive action by the Tax Office whose efforts are being bolstered by improved information sharing arrangements with an increasing number of countries. Many countries who relied on secrecy to attract investments and trade…

The previous Federal Government introduced a new Significant Investor Visa which targeted migrants who could make an investment of at least $5 million in the Australian economy. This was thought to make it easier for investors coming to Australia. Under this program investors would not have to meet a points test and had reduced residency requirements. Investments could be made in State and Territory bonds, ASIC regulated managed funds and direct investments into Australian companies. During the period from inception on 24 December, 2012 and 31 March, 2015 a total of 1,679 applications under this program have been lodged and…

You can get a full deduction for capital expenditure on the following land care operations: eradicating animal pests; eradicating detrimental plant growth; preventing or combating land degradation; erecting fences to prevent animals entering degraded land; erecting fences to separate land classes (if there is an approved land management plan); constructing levee or similar; constructing drainage works; improvements, altercations, etc in relation to levies or drainage works.

The sale of a business or enterprise can be GST free if all the conditions are met. This is referred to as the going concern exemption. The following conditions must be satisfied: the sale must be for consideration; the buyer must be registered or required to be registered for GST; both parties must have earlier agreed in writing that the sale is of going concern; the seller must carry on the business until the date of sale; and the seller must supply the buyer all the things necessary for the continued operation of the enterprise.

Repairs are generally tax deductible when they relate to property which is used for income producing activities. The replacement of an item of property will be deductible as a repair if the item is not a separate functioning item, or there is not a complete renewal.

You can claim deductions for interest paid on monies borrowed to: Repay partners' capital contributions Pay undrawn partnership profits Repay partners, beneficiaries or shareholders' loan accounts (but not if they arise from distribution of unrealised capital gains) Refinance other borrowings currently used to produce assessable income. Acquire income producing assets or property Repay business borrowings Provide working capital and pay business expenses Finance debtors, trading stocks and similar

Does your business employ family members? If so, ensure that their wage entitlements are paid up to date before the end of the financial year. The Tax Office does not look kindly on journal entries for unpaid wage entitlements.

If you receive an overtime meal allowance in connection with an award or industry agreement you can claim up to $28.20 per meal without substantiation. The expense must have been actually incurred to buy food or drink in connection with overtime worked.

If you are an eligible small business taxpayer, instead of purchasing plant, you can lease the item and negotiate an advance lease payment for the first 12 months to obtain a substantial tax deduction this year. Make sure that you  do not allow the trade-in value to be deducted from the price of a new vehicle. You should have the dealer pay a cheque for this. You can also negotiate with a finance company for a sale and lease back of plant and equipment.