News & Tax Insights

Does your business employ family members? If so, ensure that their wage entitlements are paid up to date before the end of the financial year. The Tax Office does not look kindly on journal entries for unpaid wage entitlements.

If you receive an overtime meal allowance in connection with an award or industry agreement you can claim up to $28.20 per meal without substantiation. The expense must have been actually incurred to buy food or drink in connection with overtime worked.

If you are an eligible small business taxpayer, instead of purchasing plant, you can lease the item and negotiate an advance lease payment for the first 12 months to obtain a substantial tax deduction this year. Make sure that you  do not allow the trade-in value to be deducted from the price of a new vehicle. You should have the dealer pay a cheque for this. You can also negotiate with a finance company for a sale and lease back of plant and equipment.

Does your trust deed allow attribution of income? If so, you might be able to distribute different types of trust income (e.g. primary production income, capital gains, franked dividends, business profits) to different beneficiaries in the most tax efficient method. Does your trust have a corporate beneficiary? You can make distributions to a company to be taxed at the company tax rate of 30% instead of the highest individual rate of 49%. Your accountant will talk to you about the management of Division 7A.

Are you operating a business alone or in partnership with your spouse? Talk to your accountant about establishing a family trust, becoming employees of the trust, having substantial superannuation contributions made by the trust for your both and using a corporate beneficiary to receive any surplus distributions. Your accountant will talk to you about the management of Division 7A.

You are automatically eligible for small business concessions if you are operating as an individual, partnership, company or trust that: is carrying on a business; has an aggregated turnover of less than $2 million. Your aggregated turnover is the turnover of your business plus the turnover of any businesses you are connected with or have an influence over.

You can claim a deduction for capital expenditure incurred in constructing income producing buildings and structural improvements such as roads, driveways, carparks, bridges, retaining walls, fences, etc. Extensions and alterations also qualify. The claim is a percentage of the cost of construction, including building costs, architect's and engineer's fees. The flat rate is 2.5% p.a. although there may be some circumstances where you can claim at 4% p.a. depending on the type of building and date of construction. If you are having construction work done, make sure you get a detailed invoice from your builder itemising the cost. If you have purchased…

The Federal Treasurer, Mr Joe Hockey, has issued a Tax Discussion Paper which is titled Re: Think.  Mr Hockey said that the Paper begins a dialogue on how to create tax system that supports high economic growth and living standards, improves international competitiveness and adjusts for a changing economy and new opportunities.  He noted that the current tax system, having been designed before the 1950s, is not suited to the 2050s. The Discussion Paper is a 203 page document and is available on www.bettertax.gov.au The Government is encouraging consultation and is planning to issue a Green Paper to be published…

If you have obsolete stock you may elect to value those items at lower figures if that is warranted because of obsolescence or any other special circumstances relating to each item. The value selected must be reasonable. If your trading stock is unsaleable it is best to dispose of it prior to the end of the financial year. The lower value of stock at year end will reduce your taxable income.

If you have a property which does not earn income (eg vacant land or unoccupied building), you cannot claim the expenses as tax deductions unless you are genuinely trying to rent it out. If the property can be made to be income producing - by renting it or agisting stock on it, or renting it out as a parking lot - then it may be possible to claim your interest, rates, land tax, etc. If you intend building a rental property on the land in the reasonably near future you can claim the interest.

If you purchase items while travelling overseas you may be able to claim a refund of the VAT (Value Added Tax) or GST you paid on purchase. Claims can usually be made when departing the country. This scheme is also in place in Australia and, as such, your overseas visitors may be entitled to a refund of the GST for certain goods when exiting the country. These goods must have a combined value of at least $300 and purchased within 60 days of departure.

Since its introduction in July 2000, GST has been applied to imported goods over $1,000 in value but not necessarily on imported services. The Treasurer has indicated that he will introduce legislation to apply GST to intangible supplies provided by offshore companies into Australia.  These supplies could include media services and all other services which are charged by offshore companies but which benefit Australians. Mr Hockey said that these integrity measures were related to an OECD consensus – that GST should be charged at the source, so a company providing intangible services into Australia, such as media services, should charge…

Commencing from 1 April 2015, HM Revenue & Customs (the UK Tax Office, referred to as HMRC) will levy a Diverted Profits Tax (DPT).  This is intended to counteract diversion of profits from the UK.  It will be levied on companies that seek to avoid setting up a permanent establishment in the UK or that use arrangements or entities which lack economic substance. Hence: If: a non-UK company arranges for a company to carry on an activity in the UK for the supply of goods, services or other property, and doesn’t create a permanent establishment in the UK, and this…

On 3 March 2015, the Treasurer announced that Australia and Switzerland had agreed to increase cooperation in order to tackle tax evasion. The Tax Office will automatically receive details of financial accounts such as investment income and balances that Australians hold in Switzerland, and use it to check against the income declared in their Australian Tax Returns.  The Swiss Federal Tax Administration will receive details of Swiss residents that hold financial accounts in Australia. This information will be on the basis of the OECDs Common Reporting Standard (CRS) and will be implemented from 2017 with the first exchange information in…