News & Tax Insights

… previously on tax life … Sam had been successful in her bid to win the big order but that was now a couple of months ago and times were a lot leaner now. Uncertainty The End is Near screamed the newspaper headline. There had been a catastrophic run of losses on world share markets and it seemed that the whole world was jittery. The global crisis was now two years old and Sam had bravely ventured into her new business right slap bang in the middle of it. Despite the difficulties with getting bank finance the business had begun…

Question: Our Company has four directors, two of whom do not receive wages or allowances. However, one of these directors travels between company properties to ensure that they are being maintained. He has claimed a kilometre reimbursement for travelling. No ABN or tax invoice has been provided. The requested reimbursement is at the rate of 50 cents per kilometre. How do I treat this payment? Answer: Directors are deemed to be employees and the payment to him will be an allowance to be taxed in accordance with instructions from the Tax Office. PAYG Bulletin No. 1 states that cents per…

Question: I live 100 km from work and rent a second place three days a week which is closer. If my employer pays the rent, will the payment be tax deductible for the employer? Will the payment attract FBT? Answer: If the payment is treated as a living away from home benefit and you provide the employer with a living away from home declaration, the payment should be treated as a deductible expense for the employer and exempt from FBT. Alternatively, because you only require the accommodation for three days per week it could be treated as a travelling expense,…

Question: An employer provides a fringe benefit to an employee but the taxable value is fully reimbursed by the employee. The net fringe benefit is nil after the employee reimbursement. In these circumstances, does the employer have to register as a fringe benefit provider and lodge a FBT return each year? Answer: No. Such arrangements are quite common, particularly for related parties who are employees.

Question: Can you direct me to where I might find more information on the definition of "drawings"? Answer: This is a commonly used term to indicate funds withdrawn from a business by its proprietors. This contrasts with wages and salaries which are monies paid by business in return for services provided by employees (who may include the proprietors).

Question: Can a super fund invest in CFDs? If so, what is the value of the threshold? Answer: Contracts for Difference or CFDs are a sophisticated and fairly high risk product available to investors and traders. The Tax Office has issued two Interpretive Decisions (ID 2007/56 and ID 2007/57) which can be downloaded by visiting the Tax Office website. Essentially, a super fund can invest in CFDs if the CFD provider does not take a charge over super fund assets. You must always be sure never to mortgage or charge any super fund assets (unless undertaking a carefully documented and…

… previously on tax life … Sam was getting into the routine of quarterly reporting to the bank despite that it seemed to be a waste of time. The estate administration for Mick was moving along smoothly albeit somewhat slowly (you just can't rush the lawyers). The big proposal There was a mixture of determination and absolute excitement coursing through Sam's veins! She knew she was in the race with a great chance to win. She had been working on the proposal for a new customer for the last three months and she knew that if she won the contract…

Question: We contracted a person for work. He gave us a tax invoice with ABN, GST etc. He was paid for services. There was no written contract, but we told him verbally that superannuation was included in the hourly rate. Now he wants to be paid super for the period he worked for us. We believe he is not entitled because of our agreement.   The Tax Office rang as he reported us from not paying super. Now we have to pay the super plus late fees, plus 10%. We believe this is not correct. Do you have any answers…

... previously on tax life ... Sam was well in control of her responsibilities as executor of her brother Mick’s estate. The family seemed to all be reasonably okay with the estate process thanks largely to the planning and communication that Mick had put in place before his passing. Covenants Sam’s business was up and running with orders in-hand and, despite the bank’s last minute shenanigans, the necessary finance package had been negotiated and bedded down. Powerless!It was time for the quarterly report and calculation of loan covenants for the bank. Although Sam had negotiated hard on the loan security,…