News & Tax Insights

In a tough decision, the Tribunal has refused a $20k deduction for losses in share trading activities for a casual childcare educator in the 2011 tax year (Devi v FCT [2016 AATA 67]). In that year, the taxpayer earned $40k in childcare wages working between 25 and 30 hours per week and commenced trading shares using $60k of savings and a $40k margin loan. 71 purchases of bank, mining and smaller company shares were made to a value of $380k.  37 sales to a value of $315k were made.  Most transactions took place in the first half of the year.…

The Full Bench of the Federal Court declined an appeal by multiple foreign companies against an assessment based on them being Australian tax residents. The foreign companies included: Hua Wang Bank Berhad (offshore bank incorporated in Samoa); Bywater Investments Limited (incorporated in the Bahamas); Chemical Trustee Limited (incorporated in the UK); and Derrin Brothers Property Limited (incorporated in the UK). Documents provided in evidence indicated that all of the companies were ultimately owned and controlled by an accountant based in Sydney.  Each company made profits buying and selling ASX listed shares.  If they were non-resident and the shares were held…

Foreign resident capital gains withholding payments will apply where a foreign owner sells land or land interests with a market value of $2m or more requiring the purchaser to withhold and pay 10% of the purchase price to the Tax Office.  At the time of writing, the legislation is before the Senate and expected to become law.  The new law will apply to contracts signed from July 2016. This is another step in the Government becoming tougher on capital gains for non-residents.  It follows the removal of the 50% CGT discount for non-residents from the budget night in May 2012.…

Currently, employees of certain not-for-profits can salary sacrifice entertainment benefits.  If they do so, no FBT is payable by the employer nor does it have to be reported.  Those not-for-profits which are not exempt, but rebateable, would receive a partial FBT rebate. The 2015/16 Budget included a provision for this benefit to be substantially reduced.  From 1 April 2016, there will be a separate, single, grossed-up cap of $5,000 for salary packaged meal entertainment and entertainment facility leasing expenses provided to employees of public benevolent institutions, health promotion charities, public and not-for-profit hospitals and public ambulance services. The charges are…

You will avoid attributed personal services income and be operating a personal services business if you can satisfy the results test.  This is set out in Section 87-18 of the Income Tax Assessment Act 1997. In a recent case (Prasad Business Centres Pty Ltd v FC of T AAT (2015) AATA 411) the Administrative Appeals Tribunal confirmed the Tax Office’s decision not to provide a personal services business determination as requested. The Tribunal held that the results test was not satisfied because: The relevant contract remunerated the principal only for time he spent working on certain projects; Whilst the contract…

There was great joy, not only for small businesses but also for many retailers, from the 2015 Budget announcement of the $20,000 tax write-off.  The economy will also benefit from the increased business activity which is resulting from this much needed measure. Highlights: Any small business with an aggregate annual turnover of less than $2 million is eligible. The write-off applies to any business depreciable asset (new or second hand) acquired after 12 May 2015 until 30 June 2017. This measure replaces the previous instant asset write-off threshold of $1,000. It applies on a per-asset basis. An unlimited number of…

Deep pockets were needed but in Haritos & Anor. v FC of T (2015) ATC, the Full Federal Court struck down earlier decisions by the Federal Court and the Administrative Appeals Tribunal and brought justice to the taxpayers. It seems that in this case, Tax Office investigators ignored evidence in MYOB accounting records and decided that a significant number of payments made by a cleaning contracting company were dividends to its shareholders. This, despite the accounting records, despite the fact that a cleaning contracting business employs sub-contractors and must pay them, despite the fact that evidence was given as to…

In recent times, there have been a number of enquiries into what the OECD calls Base Erosion and Profit Shifting (BEPS).  Internationally, there is concern about multi-national companies using techniques such as arranging funding in low tax countries and charging high interest to their subsidiaries in high tax countries (called Base Erosion) or, through pricing mechanisms, arranging profits to be shifted from high tax countries to low tax countries (Profit Shifting). The OECD is examining this with a view to encouraging member countries to introduce legislation aimed at limiting the resulting adverse revenue effects but despite some years of effort,…

The overseas, controlling owners of an Australian company may want to apply to change the 30 June balance date for the Australian company to line up with the home country balance date.  For example, the Australian subsidiary of a UK parent company could apply to change the balance date to 31 March to assist with UK reporting requirements. There is a Tax Office form called Application for Substituted Accounting Period (SAP) NAT5087. Also, the Tax Office has published a practice statement for its staff to follow in assessing an application: PSLA 2007/21 Substitute Accounting Periods (SAPs). The application should be…

The Tax Office says that farmers will be able to write-off the cost of a new hay shed over three years, provided it is used primarily and principally for the storing of fodder. The new write-off would also apply to an alteration, addition, extension, structural improvement or capital repair, again, provided that it was used primarily for storing fodder. It can also be incidentally used for other purposes, like the storage of a tractor provided the main use is the storage of fodder. The expenditure can be deducted in equal amounts over three years beginning from the year which the…

The Asia-Pacific Economic Cooperation consists of 29 Asian and Pacific countries who have established cooperative arrangements to promote trade and business.  These include Australia, Brunei, Chile, China, Hong Kong, Indonesia, Japan, Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, Singapore, Taipei, Thailand, Vietnam and Russia.  Canada and United States are also members. If you are the head of a business entity or the owner or director of a registered business or a nominated employee of that business, you may be eligible to apply for an APEC Business Travel Card.  If you are a senior government official, you might also…

Will payment of a tax liability create serious hardship? If you are an individual or trustee of a deceased estate you can apply for release from income tax, FBT, Medicare Levy, General Interest Charge and some other interest penalties. Visit www.ato.gov.au and type release from tax in the search box to obtain the necessary application form. You must have lodged all outstanding tax returns and activity statements with the Tax Office. Serious hardship must be of a significant kind in terms of normal community standards. If the Tax Office refuses your application you can appeal to the Small Taxation Claims Tribunal…