AusTax - The Tax Insider

New website - Taxabull.com

2009-07-09T01:36:00.003+10:00

Hi all!

We have decided to move the blog to a new address www.taxabull.com.

Please go here for new updates. We continue to twitter using @austax but have simply moved the blog.

We will explain later why we have done so.

Cheers,

From the AusTax team

The #1 provider of Australian tax news on twitter.

ATO appeals court tax ruling on deductibility of education expenses vs Youth Allowance income

2009-06-08T12:47:00.018+10:00

Following our previous coverage on Symone Anstis v. Federal Commissioner of Taxation, the Australian Taxation Office has decided to appeal the Tribunal's decision.

In other words, until the ATO is defeated once again in court, it will not allow education expenses to be claimed against "Commonwealth education assistance schemes".

SUMMARY FOR THOSE WHO MISSED THE CASE RULING

SYMONE'S CASE

Symone (the taxpayer) is claiming that her education expenses should be tax deductible because being enrolled in a tertiary education is one of the prerequisites for her entitlement to Youth Allowance.

So, she claimed various expenses such as textbooks, depreciation on the computer, travel, etc.

COMMISSIONER'S CASE

The ATO claimed that this was bogus because she incurred these education expenses to finish her teaching degree and eventually qualify as a teacher.

They are arguing that the expenses are not deductible because it wasn't incurred to derive an income. That is, she was not earning money as a teacher yet at this point in time.

They also rejected the argument that the education expenses was a valid deduction to get Youth Allowance income.

TIMELINE OF EVENTS

17/11/2006 ATO issues an amended tax assessment to Symone

27/11/2006 Symone objects to amendment

05/12/2006 ATO disallows Symone's objection

12/12/2006 Symone goes to Tribunal to dispute ATO decision

18/04/2007 Tribunal rules in favour of ATO

21/07/2008 Symone appeals to the Federal Court

01/04/2009 The Federal Court rules in favour of Symone

29/05/2009 The ATO appeals against the Federal Court decision

SUMMARY

We will have to wait and see whether or not the ATO's appeal will be allowed. If so, then the whole legal circus starts again.

We will update everyone on the progress of this tax case.

In the meantime, the ATO has issued a statement that it will continue to treat education expenses as non-deductible against Youth Allowance (and other government assistance) until a FINAL decision is made.

SPECIAL NOTE FOR LAW STUDENTS OR TAX LAW ENTHUSIASTS (!)

The case judgement is a very useful and straight-forward explanation of basic tax law. That is, the explanation of how revenue recognition and tax deductibility works.

The case judgement can be found here.

From the AusTax team.

The #1 provider of Australian tax news on twitter.

Is your employer taking out enough tax from your pay?

2009-06-07T17:50:00.008+10:00

This is a quick post for those of you who are employees...

Have you ever happily lodged a boring tax return with just your employment income, NO extra income, NO exciting tax deductions and then get hit with a MASSIVE TAX BILL?

WELL... READ ON, THIS MAY JUST BE THE REASON..!

As part of your payroll, tax is withheld by your employer every pay period. The total tax withheld for the year forms the amount of tax that shows up in your PAYG Payment Summary (aka Group Certificate).

Assuming that your only taxable income is from your job, you shouldn't have to pay any additional tax when you lodge your income tax return.

This is because your employer has already taken tax out every week/fortnight/month/etc throughout the year.

HOWEVER..!

How do you know that the CORRECT amount of tax is being withheld from your pay?

This is what you do...

You simply cross-check the tax withheld on your payslip against the ATO PAYG Withholding Tax Tables.

The ATO provides these simple tax tables to employers to allow them to easily deduct the correct tax from their employees. However, mistakes do happen and it is worthwhile double-checking.

This is what you need to know beforehand (HINT: have your payslip handy!):

1. What is your pay cycle? ie Weekly, Fortnightly, Monthly

2. How much are you getting paid per pay cycle?

3. Do you have HECS/HELP or SFSS?

4. Do you have leave loading? (most likely not)

5. Are you claiming a tax-free threshold for this employer?

Once you have the above information, you can use the Tax Tables that your employer also use. Here's the link to the ATO's PAYG Withholding Tax Tables.

Or....

If you are really lazy or just not into numbers (we don't blame you), then click on this link to the ATO's PAYG Withheld Calculator.

You enter all the information, click on Calculate and voila..! The calculator shoots out the Tax Withheld amount which should match up with your payslip.

If it doesn't match AND you answered all the calculator questions correctly, it's time to talk to your employer's HR or Finance team.

It could be a simple case of ticking the wrong box when you first filled in your TFN Declaration form.

Note: The rates changed in July 09. So, when you will get a different tax withheld amount when you run the calculator in July 09.

GOOD LUCK..!

RIGHTING TAX WRONGS, ONE AT A TIME...

From the AusTax team.

The #1 provider of Australian tax news on twitter.

What the Federal Budget means for SMEs? PART 3

2009-05-24T21:44:00.010+10:00

This is the third and final post of a series of articles on the impact of the recent May 2009 Federal Budget on small-medium enterprises (SME) in Australia.

CAPITAL INVESTMENT TAX BREAK (SMALL BUSINESS)

We have been eagerly awaiting for this part of the budget to become tax law. And, this week, this stimulus for small businesses was passed by Parliament.

The ATO will be allowing "small business" to claim an additional tax deduction of 50% on the purchase of any business assets over $1,000.

A "small business" is defined as any business that has a turnover of less than $2 million a year. The usual 30% investment allowance will still apply to businesses with turnovers over $2 million a year.

We will cover the few criterias to be met but let's run thru what the tax break means for small businesses....

OLD WAY without TAX BREAK

A business buys a company car for say, $20,000 and depreciates it over the next 8 years. Using the simple prime cost method, this means $2,500 per year.

In other words, the business gets to claim a tax deduction of $2,500 per year for the next 8 years.

NEW WAY with TAX BREAK

Per the above, the business buys a company car for $20,000 and depreciates it over the next 8 years.

However, in this case, the business gets an upfront tax deduction of $10,000 (50%) in the 1st year AND the depreciation deductions over 8 years.

In other words, the business gets to claim a tax deduction of $12,500 ($10,000 + $2,500) in the 1st year. And, the usual depreciation deduction of $2,500 ever year until Year 8.

Sounds exciting and makes you just want to go forth and spend, doesn't it?

Well, that's the government's plan.

But, let's run through the criterias that you have to satisfy....!

CRITERIA

1. Business turnover is less than $2 million per year

2. Asset has to be a purchased between 13 Dec 2008 and 31 Dec 2009

3. Asset has to be an eligible new tangible depreciating asset

4. Asset has to cost over $1,000

SUMMARY

This is the small business version of the government's "$900 cash tax bonus".

The tax break is designed to encourage small businesses to spend on capital assets to boost the economy and create jobs.

This may well be the best time to buy that tractor, van or other asset for your business.

If you have a corporate structure with a tax rate of 30%, the government is effectively GIVING YOU the other 20% as an incentive.

SPECIAL NOTE for GROWTH BUSINESSES

For those businesses who are currently in a rapid growth phase with turnover close to $2 million per year....

If you can afford it (and need it), buy your business assets NOW whilst you are considered a "small business". That way, you can take advantage of the 50% investment allowance.

If you delay, you may only be entitled to the 30% investment allowance of businesses turning over $2 million per year.

END OF PART 3

OF THE SME BUDGET SERIES

From the AusTax team.

The #1 provider of Australian tax news on twitter.

What the Federal Budget means for SMEs? PART 2

2009-05-20T20:21:00.001+10:00

This is the second of a series of articles on the impact of the recent May 2009 Federal Budget on small-medium enterprises (SME) in Australia.

EMPLOYEE SHARE PLANS

The government introduced a radical change to the tax treatment of employee share & option plans for those earning more than $60,000 per year.

OLD WAY

Previously, employees were given the choice of either being taxed on the value of the shares when they receive the shares / options or at a later date when the shares / options are actually exercised.

An upfront election also allowed the employee to receive $1,000 of the allotted shares / options tax-free.

NEW WAY

As at 12 May 2009, for those earning over $60,000, employee share/option plans will become 100% taxable at the moment which they were granted to the employees. The employee will also lose the $1,000 tax-free component.

Providing employees an equity ownership benefit is a relatively "cheap" way for SMEs to retain highly skilled but expensive employees without burdening their actual cashflow.

However, this budget amendment will raise challenges to SMEs trying to retain highly skilled executive staff. They would have to structure their employee incentive plans accordingly.

UPDATE

The government has come under fire from all directions for their decision to implement this change. We will keep everyone updated on the developments.

END OF PART 2

OF THE SME BUDGET SERIES

CLICK HERE FOR PART 3

From the AusTax team.

The #1 provider of Australian tax news on twitter.

What the Federal Budget means for SMEs? PART 1

2009-05-16T08:49:00.016+10:00

This is the first of a series of articles on the impact of the recent May 2009 Federal Budget on small-medium enterprises (SME) in Australia.

DIVISION 7A - PERSONAL USE OF COMPANY-OWNED ASSETS (CARS, BOATS, HOLIDAY HOMES, ETC)

Division 7A applies where the business is operating under a corporate structure.

Div 7A basically says that any monies withdrawn by individual owners should be treated as a "deemed dividend" unless it can be proven that it is a "loan" with an appropriate interest rate and documentation.

The government has indicated that it is thinking of including the personal use of company assets as an infringement of Div 7A as well.

Example

Say, an individual owner uses the company-owned car on the weekends (ie. 2 out of the 7 days of the week).

The new rule says that 2/7 of the "market value" of the car use should be considered a "payment" to the owner as per Div 7A.

So, proper documentation needs to be drafted to show that the "personal use" portion of the car is a "loan" and not a dividend payment. This is regardless of the fact that there has not been any real CASH movements.

There will issues with how the "market value" of the use of the assets will be calculated, etc.

SUMMARY

We will update everyone as soon as the new guidelines are released.

But, in summary, if you use your company assets for personal purposes, it may now fall under Division 7A. This includes vehicles, housing, and other assets.

This will mean that some SMEs may have to speak to their tax/legal advisers to re-evaluate their business structures.

END OF PART 1

OF THE SME BUDGET SERIES

CLICK HERE FOR PART 2

From the AusTax team.

The #1 provider of Australian tax news on twitter.

What The Budget Means For Elderly Australians

2009-05-13T23:50:00.000+10:00

Our elderly are often our weakest members of society - neglected and an afterthought for many of us. For all the contributions they have made to our workforce, our lives and our communities, we need to ensure that they have at least an adequate means of financial and community support.

A large proportion of elderly people are surviving off the age pension and just getting by. At times, the age pension has not moved in line with the increased costs of living. We have seen the costs of rent spiral upwards and our groceries are priced at a premium. For the elderly on pensions, these basic necessities make up a large proportion of their expenditure.

Increase in pension payments

Last night's budget handed down some very important benefits for the elderly. Single pensioners will now receive $32.49 more a week and couples will get an extra $10.14. For single pensioners, the age pension equates to 27.7% of the total male weekly wage.

Pensioners earning $15,000 a year will be $74.14 better off each week, while people earning under $30,000 each year will have an extra $33.39 each week. This will bring them more in line with the increased costs of living so that they can afford more of life's basic necessities.

$32 a week does not mean a lot for working Australians, but for pensioners every dollar counts. These increases in age pension payments are estimated to cost $2.7bn in 2010 and more than $3bn in 2011.

Some have been calling them the winners of the budget - but does giving someone an extra $32 a week who really needs that money to survive a winner? They are simply getting what they should be entitled to - it moves it in line with the standard of living. In any case, this announcement is welcomed by Austax.

Increase in retirement age to 67

For older australians aiming for a pension in 2017, the retirement age has been increased by 2 years. Thus, it will have go up from 65 to 67. This will be increased progressively over a 6 year period, and this new age limit will take place in 2023. The motivation behind this, is that people are working for longer, higher life expectancy and this will help fund the economy.

We're not in favour of this announcement. The retirement age has been at 65 for 100 years, and now its increased for the first time to 67. On the one hand, the government has increased the pension and then they are telling people to work longer for it. Anyone in their mid 40's will have to work an additional 2 years to recieve the pension. We understand that people are working for longer and there is a higher life expectancy, however the government is putting a burden on our older Australians. We do not believe the retirement age should have been increased.

Joe Hockey, the Shadow Treasurer had this to say:

"Raising retirement age by two years to 67 by 2023 was another poor initiative.

"When they promise to do things in 2023 that just shows you they are incapable of making the hard decisions to keep the economy on track," he said.

But Mr Hockey praised the government's decision to spend $14.2 billion over five years to lift the pensions of more than three million Australians and its measures to tackle the medical skills shortage."

Wayne Swan has acknowledged that this will be an unpopular move.

Higher Income Pensioners

Pensioners on higher incomes will be disadvantaged as the Government will cut the pension by 50 cents for every dollar over the income threshold of $138 per week for singles and $240 per week for a couple. It is essentially a redistribution of income, from higher income pensioners to lower income pensioners.

Carer payments to increase

One of the announcements were were quite happy to see is that Carers get a bonus. There is a new $600 a year Carer Supplement, plus extra $600 a year allowance for each person in their care. We believe this a positive annoucement as often these people are our "unsung heroes" and sacrifice much of their time and other opportunities to take care of our elderly, the sick and other members of society. This is estimated to have a total cost of $1.8 billion over five years.

From the AusTax team.

The #1 provider of Australian tax news on twitter.

What The Budget Means For Young People

2009-05-13T23:02:00.005+10:00

While most young people probably didn’t tune into the Budget announcement by Treasurer Wayne Swan they sure were talking about it online given #ausbudget09 and #budget09 were trending topics on Twitter last night. Perhaps it’s the current concern over the state of the economy that has got everyone involved but deservingly so, because they will cop the recovery of the $57.6bn deficit!

Youth Allowance and Abstudy

But not all was doom and gloom because if you are a student looking to Youth Allowance and Abstudy as income support, the parental income test for these dependants will be increased from $32,800 to $42,559 from 1 July. This means more students should qualify for the support (than they normally wouldn’t have) and thus be able to receive an extra buck to drink at that university bar.

First Home Buyers

For those who are first home buyers and have been trawling through every property inspection most weekends (along with hundreds of other keen property beans) than the 30 June deadline for the boosted first home owner grant will be extended for another six months. That means inflationary home prices will continue, the number of people you are competing with for that house/apartment will carry on and your real estate agent’s number should still be on your speed-dial. But it does mean that up til 30 September, the grant will be the full $14,000 for existing homes and $21,000 for developed (new) homes. However, it will reduce to $10,500 for existing homes and $14,000 for developed homes from 1 October til 31 December. So the flurry of fun in the real estate market will remain.

Health Insurance

From 1 July 2010, a new tiered measure will affect how much government rebate you can claim, thus affecting the amount of your health insurance premiums per month. The existing 30% rebate will remain for young people with earning less than $75,000 per annum, but for salaries more than $75,000 per year the rebate will be reduced to 25%, and for salaries of $90,000 and above, the rebate will be reduced to 10%. Start assessing what bang for your buck you can squeeze out of your health insurers!

Infrastructure & transport spending to create jobs

Given the extra government spending on rail, road and infrastructure networks those studying engineering and currently working in the industry should mean additional job opportunities and project involvement. This extends to those in the country regions such as the Hunter Valley.

A Greener Nation

And while the carbon emissions trading scheme have been delayed, at least we can see the Government’s commitment to building a greener nation by the $4.5bn allocated to low emission coal technologies and solar initiatives. That means a lot more a cleaner future for all of us, we should hope!

From the AusTax team.

The #1 provider of Australian tax news on twitter.

Australian Federal Budget 2009 - POLITICS 2.0

2009-05-13T22:02:00.007+10:00

We are seeing the increased use of social media tools like Twitter and Youtube videos by government and their officials.

The recent 2009 Australian Federal Budget was no exception....!

WAYNE SWAN - TREASURER

Below is a "Behind the Scenes" video by Wayne Swan leading up to the budget night. He candidly spoke about the stress and long hours leading up to the day including a few words by his mother-in-law.

It was posted on Kevin Rudd's website, www.kevinpm.com.

JOE HOCKEY - SHADOW TREASURER

Joe Hockey also recently launched an attack on the Labor Government's 2009 budget via his website, www.joehockey.com.au.

He also released a Youtube video titled, "The Real Rudd Budget" which we have provided to you below....

PETER COSTELLO - EX-TREASURER

Peter Costello is the latest high-profile politician to jump on the bandwagon by launching his website, www.petercostello.com.au.

Although he has yet to release a personally made Youtube video (he is still a noob), he has posted a CNBC interview about the budget on his website which we have provided below...

Conclusion

There seems to be an ongoing trend by politicians to embrace social media. Politicians are now establishing websites expousing their personal brand to voters.

This will only grow as the next generation of tech-savvy politicians move into the halls of power.

POLITICS 2.0 IS HERE...!

From the AusTax team.

The #1 provider of Australian tax news on twitter.

What the budget means for you

2009-05-13T09:29:00.005+10:00

We have decided to provide commentary on the budget using a series of posts as to how they affect different segments of society. There is a lot of commentary out there from the major news outlets and there is a raft of changes.

We have simplied our analysis into "What the budget means for...."

1. The Eldery: We have defined this as 50 years of age and over, as the budget impacts the pension and the age pension from 2017

2. Young people: We have defined this as 25 and under and first home buyers

3. Business: We have a particular focus on SME's (small and medium enterprise business).

There will also be some additional posts from our contributors focusing on Superannuation and the economic impact.

From the AusTax team.

The #1 provider of Australian tax news on twitter.

Australian Federal Budget 2009 - SOCIAL MARKETING

2009-05-13T07:28:00.005+10:00

This would be of interest to our social media friends....

GOVERNMENT USES SOCIAL MEDIA..!

The Federal Government will fund a social marketing campaign to extend and complement the Australian Better Health Initiative campaign.

It should be interesting to see what the government comes up with.

The Fed will also pay $6 million per year to the States from 2010 as facilitation payments to reinforce local activities.

From the AusTax team.

The #1 provider of Australian tax news on twitter.

Australian Federal Budget 2009 - CASH IN vs CASH OUT

2009-05-12T22:20:00.006+10:00

Here's a graphical recap of the governments cashflow for 2009/2010....

MONEY IN (REVENUE)

$291 billion

MONEY OUT (EXPENSES)

$338.2 billion

NET CASHFLOW

$ (47.2) billion DEFICIT

From the AusTax team.

The #1 provider of Australian tax news on twitter.

Australian Federal Budget 2009 - INFRASTRUCTURE SPEND

2009-05-12T22:00:00.000+10:00

Here's a graphical recap of the infrastructure spending that the government is planning.

SOCIAL INFRASTRUCTURE

CLEAN ENERGY INITIATIVE

CRITICAL INFRASTRUCTURE

From the AusTax team.

The #1 provider of Australian tax news on twitter.

A budget forged in the fire!

2009-05-12T21:56:00.003+10:00

Wayne Swan delivered the federal budget tonight outlining how the government will spend $58 BN (though he never mentioned the deficit number did he?). A budget that was "forged in the fire". He made some interesting points regarding infrastrucutre spending, and drew a lot of laughter when he suggested increasing the retirement age by 2 years.

There was a lot of chatter on twitter, so much that the hashtags for #ausbudget09 and #budget09 became trending topics after the speech was delivered. @austax microblogged the whole time while watching the speech on ABC, delivering live updates from our various correspondents.

We're currently in lockdown in the moment, like other major news outlets, accounting firms and financial institutitions digesting all the information. We are discussing the changes and writing up some analysis - some will be ready for tonight, and there'll be more tomorrow as well.

Watch this space!

Cheers,

The Austax team

The #1 provider of Australian tax news on twitter.

Update on Madoff fraud victim tax relief..

2009-04-28T23:45:00.003+10:00

We reported posted an article on the 17th of April about the IRS allowing the victims of the fraud losses to gain certain tax benefits.

Here's the link for those who missed it...

http://austaxation.blogspot.com/2009/04/irs-says-we-can-to-madoff-stanford.html

An update on the situation in the USA...

Despite the US IRS Federal tax ruling, it seems that the state government agencies are refusing to allow the same rules to apply to state income taxes.

Specifically, the California Franchise Tax Board is refusing to co-operate.

The group of victims affected by this refusal amounts to around 10% of the US$65 billion fraud. They are currently lobbying the state governments for tax relief.

RECAP FROM AUSTRALIAN PERSPECTIVE

We have to keep in mind that the USA runs on a complicated multiple-tiered tax system. In some places, there are federal, state and municipal (what we call "local council") income taxes.

In Australia, we have only a federal level income tax system. This includes the Goods & Services Tax (GST) which was introduced in 2000 to replace the various State and Territory taxes, duties and levies.

From the AusTax team.

The #1 provider of Australian tax news on twitter.

IRS says "YES, WE CAN...!!" to Madoff & Stanford fraud loss claims - ATO?

2009-04-17T22:32:00.024+10:00

The past few months saw news spread like wildfire across the globe about the insanely massive fraudulent Ponzi schemes that were uncovered..!!

Here's two of the biggest ones...!

Bernard Madoff ran a Ponzi Pyramid scheme which stole US$50 billion from investors around the world.

Allen Stanford also allegedly ran a Ponzi scheme which stole US$8 billion from investors.

Now, that is all very sensational, but back to our world of TAX....

IRS

The IRS (US tax enforcement agency) recently released Revenue Ruling 2009-9 (PDF) which allows investors in these Ponzi schemes to claim their lost funds as a tax deduction..!

The Ruling is extremely generous and allows investors to claim ALL of the monies invested as well as the income declared by the funds less any actual cash withdrawals.

In other words, the defrauded investor can claim the net cash balance owed to them as a tax deduction.

A quick point by point summary by Loeb & Loeb LLP.

ATO

Well, this got us thinking......

"If the same thing happened in Australia, would the ATO as nice?"

Well, the quick answer is probably "NO" at this stage...!

The tax legislation does allow a tax deduction for businesses suffering a loss from theft as per s.25-45.

But, this is more for theft during the "normal operations of the business". For example, money being stolen from the safe or in transit to the bank.

See the following supporting ATO IDs...

1. ATO ID 2001/318

2. ATO ID 2001/59

However, the existing case law and ATO rulings seem to indicate that a loss from financial fraud does NOT fall under s.25-45.

Below are examples of cases where some unfortunate souls' attempt to claim the loss were knocked back by the ATO.

Refer to the following: -

1. ATO ID 2003/1029 - Deduction: Loss from misappropriation of money by an investment broker

2. Lean v. FC of T (2008) or great summary by Robert Richards of CPA Australia

So.....!

Loss from THEFT / BURGLARY:

Loss from FINANCIAL FRAUD:

FINAL WORDS

In all honesty, we wouldn't be surprised if the ATO does release a POSITIVE ruling in favour of deductibility of financial fraud losses.

The financial crisis has influenced our law-making bodies and the government in general to sway to the populist view of doing whatever it takes to "stimulate our economy".

Now, whether or not this is right or wrong is a discussion for another time and place...

But....

The integrity and strength of our legal system relies on its independence from political and economic conditions.

It should be about the interpretation of the law without bias or prejudice.

Without Fear, Without Favour

NEC TIMES, NEC FAVENS

From the AusTax team.

The #1 provider of Australian tax news on twitter.

Are directors liable for a company's TAX DEBT?

2009-04-12T13:23:00.007+10:00

Corporate structures are created on the assumption of limited liability status. This means that the company is considered a separate legal entity.

So, most of the time, the liabilities of the company is limited to itself and does not extend to shareholders and directors.

Of course, if the directors have engaged in insolvent trading, then they would be liable for the debts of the company. We have had many cases of this in recent times such as HIH.

But, we are talking TAX and specifically TAX DEBT. The tax debt of a company would normally not extend to the directors.

However, if a payment arrangement has been made with the ATO for the tax debt AND the company breaches the arrangement....

Then, the directors can be personally liable for the tax debt under s.222AOE "Directors Penalty Notice".

FINAL WORDS

The corporate structure has been traditionally held as a great tool for business. However, the privileges of directors have been increasingly eroded thru the years.

At the same time, the liabilities and responsibilities of directorships have increased steadily.

So, research the company before you assume the directorship...! It may just have a few hidden traps for the unwary..!

From the AusTax team.

The #1 provider of Australian tax news on twitter.

ATO ALERT: Data-matching program targeting car sales

2009-04-10T13:06:00.004+10:00

Grim news for those caught under this new data-matching program started by the ATO.

The ATO will be reviewing all car sales over $10,000 that was made in the 2007 / 2008 financial year. Apparently, 1.7 million sales records fall under this category. The information has been provided to the ATO via the motor registries around Australia.

The previous crackdown in 2008 was for "luxury" car sales over $57,000. In that case, a whooping 70% of investigations yielded a tax liability for the ATO. A very good return on investment, indeed..!

So, no surprise that its now chasing after the "middle-class".

WHO DOES IT AFFECT?

1. Employers who have provided their employees with car benefits.

Any benefit provided to your employees outside of wages & salaries is subject to the Fringe Benefits Tax (FBT) rules.

The ATO will be catching out any employers who have not been declaring FBT on car benefits to employees.

2. Persons who appear to be living beyond their financial means.

If you declare a taxable income of only $10,000 but buys a car worth $30,000, then that's suss...!

The ATO will be investigating you to see whether or not you have been paid in cash and not declaring it.

3. Persons who buy and sells cars regularly for profit.

There is a strong distinction between "car enthusiasts" & "car dealers". Its the ol' hobby vs. business argument. It's commonsense at the end of the day.

If you are turning over 50 cars a year, you may be classified as a business..!! The ATO will be looking at classifying those profits as undeclared capital gains on sale.

If you fall under any of the above, it might be a good idea to see a tax accountant to suss out potential liabilities, etc.

From the AusTax team.

The #1 provider of Australian tax news on twitter.

How we bring you the latest tax news on twitter

2009-03-31T00:21:00.004+11:00

The AusTax team uses a mixture of judgement, research and statistics to work out what are the hot topics for our core audience. We scan the daily news items and pick out certain items to tweet based on our understanding of the market and our years of experience. We also engage in conversations with relevant people in industry and in the profession to gauge what are the big issues.

To ensure we bring you the most up to date information, we also use some automation in providing you the news. We are still experimenting with the right mix and frequency. If you have any breaking news, would like to request a certain topic or feedback, please email us at: info.austax at gmail dot com.

Please note that we are not affiliated with any accounting firm, and we continue to be an independent source of information scouring the newswire.

From the AusTax team.

The #1 provider of Australian tax news on twitter.

Legal Media Group releases best tax advisers list and best transfer pricing advisers

2009-03-29T14:52:00.013+11:00

The Legal Media Group annually releases its Experts Guides list of best lawyers globally and in the US. The list also includes tax advisers and transfer pricing advisers. This list was announced a few days ago and features the who's who of the industry (mainly those working at larger and mid-tier firms).

Please see this blurb from their methodology:

Legal Media Group's Expert Guides series has been an invaluable and indispensable source of guidance for in-house counsel in large corporations worldwide, since its inception in 1994. These practice area guides are designed primarily for individuals who require access to pre-eminent practitioners in specific areas of law for the purpose of instruction on an international

basis.

Best of the best list

The lists are actually quite large, so we've decided to not include the whole thing. We can't seem to find a list of Australian tax advisers on that list or transfering pricing specialists. We can only find a directory list. For general list of the Australian tax advisers go here.

We are curious, do people in industry look at these best of the best lists? And how much weight do you give them?

Australian Transfer Pricing directory list

From the Aus Tax team - your tax insider.

TGIF - Thankyou ATO for releasing a useless GST ruling about Strippers

2009-03-26T21:17:00.007+11:00

We've heard on the news wire that due to the continuing economic crisis, more and more American women are turning to occupations in the adult industry. According to SMH via Associated Press:

"The tough job market is prompting a growing number of women across the country to dance in strip clubs, appear in adult movies or pose for adult magazines like Hustler.

Employers across the adult entertainment industry say they're seeing an influx of applications from women who, like Brown, are attracted by the promise of flexible schedules and fast cash. Many have college degrees and held white-collar jobs until the economy soured."

Yes, the current times are tough. Banks are crashing, Jim Cramer can't recommend any stocks, and Kevin Rudd is giving away $900 to boost the economy. Desperate times calls for desperate measures. Gone are the days of dropping "$3,000" on a lap dance.

Which brings us to this related tax issue. One of our contacts reminded us of this tax ruling. A few years ago, 2004 to be exact, a GST ruling came out about the "supply of adult entertainment services: dancer collects payments and distributes entity's percentage". Summarised below:

Issue

Is the entity, a supplier of adult entertainment services, making a taxable supply to a customer under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when a dancer, engaged by the entity, performs a lap dance or striptease for one or more customers and the dancer collects the payment for the performance?

Decision

Yes, the entity is making a taxable supply to a customer under section 9-5 of the GST Act when a dancer, engaged by the entity, performs a lap dance or striptease for one or more customers and collects the payment for the performance.

This "transaction" has a GST component and is considered a taxable supply. We suppose it is a service performed by a professional, conducted in a business like manner. There is consideration and both parties walk away satisfied.

Now try getting a reciept for that and telling your accountant.

As the rapper Akon would say:

Tax that, all on the floor

Tax that, give me some more

Tax that, 'til you get sore

Tax that, oh ooh

TGIF

From the AusTax team - Your Tax Insider.

H&R Block Superbowl Grim Reaper Ad

2009-03-25T23:36:00.002+11:00

We thought these ads were pretty funny and should share it with you. H&R Block is known for their great social media ads. The one above was shown during the Superbowl while the one below is just hilarious! For the H&R Block Youtube channel, go here.

From the Tax Insider

ATO to target private equity and ASX 100

2009-03-25T22:20:00.001+11:00

One of our sources has told us that it appears that the ATO may be trying to increase its revenue by increasing the number of risk reviews on larger taxpayers. There's been news in the past few months that they will target private equity transactions and ASX 100 companies.

Which makes sense given the PWC job advertisement from a few days ago. Hence, PWC is beefing up its tax controversy expertise. Other big 4 firms are also taking note re tax reviews.

From the Tax Insider

Tax Controversy Positions

2009-03-25T19:14:00.000+11:00

Seek wouldn't let us link to the job ad anymore but we thought we would bring you a copy of the PWC tax controversy position before they took it down. We have it on good authority that:

"PWC had made 2 rounds of redundancies, affecting tax area in one of them and getting rid of lower levels, yet now they are hiring managers and senior managers from their seek ads. A bit of a tax controversy given couldn’t they have used existing staff to do the work"

Hey Seek / PWC, we're doing you a favour! We are generating more interest for that position. Maybe someone will take on this poisoned chalice. For the second ad see below.

From the AusTax team - your tax insider.

Look no further for controversy than at PWC tax

2009-03-25T00:44:00.000+11:00

Our Tax HR correspondent reported this hot tip over the news wire.

PWC are now hiring 2 tax controversy staff at management and senior consultant level. Don't get us wrong, tax controversy is a great area to be in. It's just that PWC let go over 100 staff recently from their Australian offices. Its tough times given the global economic crisis. Even some of our friends were laid off.

So how is PWC hiring two new staff?

The ad claims the following:

"As we continue to grow our Sydney Practice"
"Rapidly growing practice"
"Ambitious and fast growing team"

We would hardly think that these areas are growing or expanding if you have just laid off a significant proportion of your workforce. A bit hypocritical we think.

By way of background, tax controversy is a specialist and growing area. One of our colleagues works in this area and has told us in the past that this position deals with tax litigation, tax audit and negotiation with the ATO.

In later posts, we will confirm with our sources regarding the exact number of staff that PWC and throughout the Big 4 industry has laid off.

From The AusTax team.

Welcome to AusTax

2009-03-24T09:13:00.000+11:00

Hi there,

Thank you for enquiring about the AusTax twitter account. We are Austaxation and we aim to be the #1 source of Australian tax information on twitter.

We are a team of tax experts that have worked in the Australian tax industry. Our aim is to cover the following:

latest tax news stories
tax law updates
tax events
tax jobs
tax rumours

Our mission is to provide tax information to individuals, businesses and to tax professionals. We also occassionally cover overseas tax stories and economic news if we believe they are relevant to our core audience.

Our team of tax professionals have years of experience and provide a qualitative eye over tax articles and tax legislation to bring you the best articles. We also have extensive contacts in the tax industry in accounting firms, law firms and within government.

For news and business enquiries please contact info.austax dot gmail.com.

Thank you,

AusTax twitter team.

AusTax - The Tax Insider

New website - Taxabull.com

ATO appeals court tax ruling on deductibility of education expenses vs Youth Allowance income

Is your employer taking out enough tax from your pay?

What the Federal Budget means for SMEs? PART 3

What the Federal Budget means for SMEs? PART 2

What the Federal Budget means for SMEs? PART 1

What The Budget Means For Elderly Australians

What The Budget Means For Young People

Australian Federal Budget 2009 - POLITICS 2.0

What the budget means for you

Australian Federal Budget 2009 - SOCIAL MARKETING

Australian Federal Budget 2009 - CASH IN vs CASH OUT

Australian Federal Budget 2009 - INFRASTRUCTURE SPEND

A budget forged in the fire!

Update on Madoff fraud victim tax relief..

IRS says "YES, WE CAN...!!" to Madoff & Stanford fraud loss claims - ATO?

Are directors liable for a company's TAX DEBT?

ATO ALERT: Data-matching program targeting car sales

How we bring you the latest tax news on twitter

Trending tax topics - What's hot at the moment

Legal Media Group releases best tax advisers list and best transfer pricing advisers

TGIF - Thankyou ATO for releasing a useless GST ruling about Strippers

H&R Block Superbowl Grim Reaper Ad

ATO to target private equity and ASX 100

Tax Controversy Positions

Look no further for controversy than at PWC tax

Welcome to AusTax