News & Tax Insights

From July 2008 the quarantining of foreign tax losses was abolished and these can be claimed against any other income.

The cash basis of taxing income can be used by most individuals. Under this method your income is not taxed until it is actually received (e.g. fees earned and invoiced in June but not received until July, are taxed in the later year). This can be beneficial for tax planning purposes as you don’t have to pay tax on the earned income until it is actually received, but you can still claim expenses incurred even though not paid.

If you have to work in the sun for sustained periods during the day you can claim the cost of sunscreen lotion, sun hats and sunglasses purchased and used at work. The Tax Office considers that people in the following industries are eligible: + Building and construction; + Delivery and courier services; + Farming agriculture and horticulture; + Fishing; + Forestry and logging; + Landscaping and gardening services; + Open-air minerals, oil and gas exploration and extraction; + Outdoor sports; and + Other outdoor services. If your total claim for work related expenses exceeds $300 on all items, they must…

Expecting a high taxable income? You can reduce this by bringing forward expenses likely to be incurred next year. Do you have plant or property in need of repair? Get this done before the end of June and you can claim a deduction this year rather than next.

This is an established and relatively simple mechanism for splitting income between family members. If your spouse carries out some work in the business you should consider forming a partnership. It is very important to document the arrangement to ensure the partners are seemed to be operating a genuine partnership. Be sure to: + Have a written partnership agreement prepared by your solicitor; + Open a bank account in the name of the partnership; + Distribute profit in the manner decided upon; + Ensure that each partner has control and disposal of their share of the partnerships profits; + Obtain…

Non-residents who have permanently departed Australia can withdraw superannuation benefits on departure subject to deduction of withholding tax.

If you are receiving a super pension it will revert to your spouse or dependants on your death (subject to conditions). If you are 60 or over and do not have a spouse or dependants, the pension will stop on your death and a 15% tax will be payable by the beneficiaries. You can avoid this by cashing out your entire pension prior to death.

The Tribunal has confirmed a Tax Office decision to include monies borrowed from a self-managed super fund (and subsequently repaid) as assessable income for a business person who ran into difficulty. Where a benefit is received from a super fund outside of the rules the Tax Act deems that to be assessable income unless the Tax Office believes it is unreasonable to do so. In this case the Tax Office did assess the income. Ms Smith and her husband operated a real estate business and she took out a total of $87,000 across the 2008 and 2009 financial years to…

The Financial Review reports on allegations from a Tax Office whistle-blower that the Small and Medium Enterprise division lacks technical capability, industry specific knowledge and legal expertise and that aggressive tactics are being used by ATO officers in their compliance work. The Inspector General of Taxation is carrying out an investigation into this division and has received a report from the whistle-blower as well as the media. In an internal response to the media criticism which was sent by e-mail by acting Deputy Commissioner Greg Williams it was said …the Tax Office operates on a collective capability model where we…

For individuals and small businesses, prepayments can be claimed in full provided the period covered by the prepayment does not exceed 12 months and concludes before the end of the financial year. You can make a prepayment to create a loss if you wish to offset a capital gain.

The value of work in progress must be accounted for at the end of the year by a manufacturer or builder. However, if you operate a professional or service business you do not have to account for the value of unfinished jobs at the end of the financial year. You only need to account for the work done when a recoverable debt is crystallised.

Democratic Senator Carl Levin has introduced a Bill to the US Senate, which will require that US multi-national corporations would have to report employees, sales, financing, tax and tax payments on a country-by-country basis. The Stop Tax Haven Abuse Act of 2011 was introduced to the US Senate in July.   The new law, if passed, would reveal much about US Multinational Corporation’s offshore tax and accounting practices and permit the Internal Revenue Service (IRS – the US Tax Office) to use this information to evaluate foreign financial accounts and simplify penalty calculations for unreported foreign accounts and suspicious activity.…

In this edition we report the tightening of Chinese money supply (see Could China's tight money crash Australian mines?) and the potential impact on coal and iron ore exports. Is there a real risk to the Australian economy from Chinese contraction? In a report first published in Business Spectator, Karen Maley argues that a rebalancing of the Chinese economy away from exports (and associated significant investment) and towards domestic consumption will also have significant risks for our mineral exports. Maley argues that Chinese exports will inevitably decline with the slowing world economy and further depreciation of the US dollar. She…