News & Tax Insights

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…

You can salary sacrifice to maximise your total concessional superannuation contributions up to $30,000 (or $35,000 if aged 50 years or over) for the 2015 tax year and enjoy substantial tax savings.

On 16 May, the New Zealand Finance Minister announced that from 1 October 2015, gains on residential property in New Zealand sold within two years of purchase will be subject to a new “bright line” test, which will be introduced in respect of residential property. There will be a rebuttable presumption that if you sell property within two years of buying it, you did it to make a profit. This means that you are presumed not to hold it on capital account. Instead you hold it in the nature of trading stock and therefore any profit is fully taxable. There…

The Tax Office launched a voluntary disclosure program which was called “Project DO IT” (disclose offshore income today) on 27 March, 2014. Errant taxpayers had until 19 December 2014 to come forward with details of untaxed offshore income and assets. Those who did were subjected to tax going back only four years and had their penalties reduced to 10%. This was announced as a precursor to more aggressive action by the Tax Office whose efforts are being bolstered by improved information sharing arrangements with an increasing number of countries. Many countries who relied on secrecy to attract investments and trade…

The previous Federal Government introduced a new Significant Investor Visa which targeted migrants who could make an investment of at least $5 million in the Australian economy. This was thought to make it easier for investors coming to Australia. Under this program investors would not have to meet a points test and had reduced residency requirements. Investments could be made in State and Territory bonds, ASIC regulated managed funds and direct investments into Australian companies. During the period from inception on 24 December, 2012 and 31 March, 2015 a total of 1,679 applications under this program have been lodged and…

You can get a full deduction for capital expenditure on the following land care operations: eradicating animal pests; eradicating detrimental plant growth; preventing or combating land degradation; erecting fences to prevent animals entering degraded land; erecting fences to separate land classes (if there is an approved land management plan); constructing levee or similar; constructing drainage works; improvements, altercations, etc in relation to levies or drainage works.

The sale of a business or enterprise can be GST free if all the conditions are met. This is referred to as the going concern exemption. The following conditions must be satisfied: the sale must be for consideration; the buyer must be registered or required to be registered for GST; both parties must have earlier agreed in writing that the sale is of going concern; the seller must carry on the business until the date of sale; and the seller must supply the buyer all the things necessary for the continued operation of the enterprise.

Repairs are generally tax deductible when they relate to property which is used for income producing activities. The replacement of an item of property will be deductible as a repair if the item is not a separate functioning item, or there is not a complete renewal.

You can claim deductions for interest paid on monies borrowed to: Repay partners' capital contributions Pay undrawn partnership profits Repay partners, beneficiaries or shareholders' loan accounts (but not if they arise from distribution of unrealised capital gains) Refinance other borrowings currently used to produce assessable income. Acquire income producing assets or property Repay business borrowings Provide working capital and pay business expenses Finance debtors, trading stocks and similar