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The Tribunal has confirmed 75% shortfall penalties on a company and its sole director for not lodging returns in the 2005 income year. The Tax Office can impose a monetary penalty based on a percentage of the underlying tax obligation for lack of care. In this case, the director had personal tax of $13,497 due and a penalty of $10,535. The company had $86,760 of tax and a penalty of $65,070. The director argued that returns could not be lodged due to a breakdown in the relationship with their former accountant and also because he suffered a…
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The Tribunal has affirmed the Tax Office decision to deny claims for fuel tax credits by a sawmilling business due to lack of records and dubious evidence from one of the taxpayers. Apparently, there was a contra arrangement for the supply of diesel fuel for the sawmill. However, there were insufficient reliable records that the fuel was regularly supplied in return for cut timber. The Tax Office imposed 75% penalties on top of refusing the claim for the fuel tax credits. All businesses that claim fuel tax credits (in their quarterly BAS) should take note of the…
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Question: How does the Government calculate the amount I should contribute in Child Support? Answer: There is a complicated formula and table which is published each year under the Child Support (Assessment) Act requirements. That table determines the Government’s view of the cost of raising children and it is based on the annualised Male Total Average Weekly Earnings (MTAWE) as measured by the Australian Bureau of Statistics. For the 2011 year, the annualised MTAWE was $64,865. For both parents, one third of MTAWE is allocated for their self support. The balance of their Adjusted Taxable Income (including fringe…
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Question: Employees of a local hotel are all casual. They work various hours during the week. Some are rostered to work on Saturdays and Sundays. Under their award, there is a penalty for Saturday and Sunday work of 150% which is the same as overtime. Should this penalty be dealt with as overtime (i.e. no super guarantee) or should it be deemed as a penalty and super paid on the amount? Answer: The superannuation guarantee levy of 9% [forecast to increase to 12% over coming years] is payable on ordinary time earnings which is for ordinary hours of…
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Question: We are a motor vehicle dealership. If we were to fly a prospective buyer to the Sydney Motor Show for the day with one of our sales consultants, is GST applicable on the airfares, meals, taxis, etc? Or is it treated as non-deductible/non-GST expense? (i.e. an entertainment type expense). Answer: Deductibility for entertaining expenses is severely limited. Entertainment includes amusement, sport or similar leisure time pursuits and would include recreation and amusement in vehicles, vessels or aircraft, also entertainment in the form of food and drink. Common examples are business lunches, cocktail parties, and tickets to sporting or…
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Question: I have some questions relating to the provision of laptops to employees under a salary sacrifice arrangement. My questions are: 1. Since laptops are FBT exempt, is the employer able to claim the GST on the purchase? 2. How would the purchase transaction be recorded? Should it be reflected as part of the salary deduction? 3. Would the cost of the laptop be reported on the employee’s year end payment summary? Answer: 1. The employer can claim the input tax credit provided he holds a tax invoice. The expense is fully deductible to the employer and…
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Question: The infrequent and minor benefits provided to employees are exempt from FBT. Are they tax deductible? Answer: If the benefit is by way of entertainment, the answer is no because entertainment expenses are non-deductible unless they are subject to FBT. Minor benefits for employees which are not in the nature of entertainment are deductible.
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A MODERN DAY SOAP (TAX) OPERA ... previously on tax life ... The business had been on foot for over a year now and things were coming together with a long term financial plan. Sam’s 18 year old daughter Rachel had dropped her bombshell about wanting to take her boyfriend down to Melbourne with her when she went to University. Careful family negotiations were abating that problem. Reducing business risk The cleaners had been through Sam’s office giving it an annual spring clean. There was a slight eucalyptus smell and the environment felt cleansed. Sam was in a clinical frame…
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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…
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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:…
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Have you loaned substantial funds to your company or trust (with a corporate trustee)? Make sure that you have a loan agreement in place to record the terms of the loan and ensure that you comply with the debt/equity rules. Subject to your bank’s conditions, consider putting in place a registered charge over the fixed and floating assets of your company thereby placing you ahead of unsecured creditors in a wind-up situation.
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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…
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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…
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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…
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