What the budget means for you

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

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

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

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!

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..

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?

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.