News & Tax Insights

In January, the Tax Office announced a new data-matching program to target people receiving tax-free pensions from Centrelink and the Department of Veterans' Affairs for the 2011 and 2012 income years. In total, the records of 1.8 million individuals held on Government Computers will be matched against the Tax Office records of names, addresses etc to check whether tax obligations and claims for dependent tax offsets are correct.

Businesses providing contractor services to Councils in Queensland, New South Wales, Victoria and Tasmania during the 2011 and 2012 income years will be subject to data matching undertaken by the Tax Office. The Tax Office expects to electronically match details of 20,500 taxpayers to check whether all tax payment and lodgement obligations have been met. Careful review of BAS, tax return and other ATO details may be appropriate.

The NSW Supreme Court refused an exemption from NSW land tax for the owners of land in NSW that was used for cattle grazing with a herd of up to 40 cattle because the Court concluded that the farming operations did not have sufficient commercial purpose or character. The NSW Land Tax Act provides an exemption from land tax where the land is used for primary production and it is: •         Zoned “rural”, “rural residential” or “non-urban”; •         The Chief Commissioner is satisfied it is rural land; or •         The primary production has “significant and substantial commercial purpose or character”…

There has been a huge blowout in the wages bill for Australian Governments over the past four years.   We have checked the statistics provided by the Australian Bureau of Statistics. They say that the total cash wages for Government employees in the 2010/11 financial year was around $123 billion. In 2007/08, the wages bill was around $100 billion. Government wages increased by 5.6% pa in that four year period.   In the same timeframe, the number of Government employees increased from 1.75 million to 1.9 million an increase of 2.1% per year.   This large growth in the Government…

The Tax Office will exercise its data collection powers to chase up lawyers, visa holders, boat owners, motor vehicle registration holders, credit card holders and other taxpayers. Databases held by other Government departments, banks and insurance companies will be accessed and matched to the Tax Office’s own data holdings.   Data on approximately 1.3 million taxpayers will be taken from Centrelink to check on eligibility for Family Tax Benefit Part B for the 2009, 2010 and 2011 years with comparisons being made to check on incorrect claims for the Dependant Spouse Tax Offset.   Current membership and deregistration from State…

Complicated super contribution rules are about to get… more complicated! Draft legislation was released in December to provide some people a once-off chance to be refunded up to $10,000 of excess concessional (employer or deductible personal) superannuation contributions made after July 2011.   Way back in 2007, the then Liberal Government made significant changes to the superannuation system providing significant additional tax benefits to retirees and creating incentives to get more money into super. To control the amount flowing into super, the Government placed limits on concessional and non-concessional (after tax non-deductible) contributions. The limit was originally $50k for concessional…

Official inflation for the 2011 calendar year was 3.1% with some categories out of the “basket of goods and services” up and others down.   Domestic holiday travel and accommodation prices rose by 7.3%, where international holiday travel and accommodation got 1.9% cheaper.   Other categories that were up include: + Rents 1%; + Telecommunications 1.1%; + Beer (Oh no!) 1.2%; and + Automotive fuel 0.7%.   These were the declines in the CPI categories: + Fruit - 13.4%; + Pharmaceuticals - 5.6%; + Vegetables - 5%; + Audio, visual and computing equipment - 3.4%; and + Motor vehicles -…

Deemed dividends where a company makes payments or loans, or forgives a debt to a shareholder or their associate, may be reduced following a decision of the Full Federal Court and the issue of a replacement Draft Tax Determination about when income tax becomes a present legal obligation.   The infamous Division 7A of the 36 Tax Act can deem a dividend (usually unfranked) to be paid where a company pays money, loans money, forgives a debt or provides the use of an asset to a shareholder or associate. The amount of the deemed dividend is limited to the “distributable…

Employers that misclassify someone as an independent contractor (rather than an employee) face big risks for employee entitlements, withholding tax, superannuation and also unfair dismissals following a Fair Work Australia decision in December.   The Full Bench of the national employment arbitrator found that a purported independent contractor working as a shop assistant in a furniture store was not a contractor, was paid a fixed weekly rate, did not have other clients and was not working through a company.   Unions, the Fair Work Ombudsman and the Tax Office are all cracking down on supposed “sham contracting”. In its decision,…

Private equity investors will miss out in the Government’s newly announced Investment Manager Regime designed to attract substantial funds from offshore for management within Australia.   The announcement in December follows acceptance of most of the recommendations from the Board of Taxation and pressure from the funds management industry.   The funds will have an exemption for Australian tax on “passive assets” invested on a portfolio basis, but this exemption will exclude certain land rich investments and withholding tax on dividends and interest.   The fund will not be able to operate or control a trading business in Australia and…