Archive for the ‘Tax Cases’ Category

Claiming work trips for business owners

Wednesday, October 9th, 2019

As a business owner, do you sometimes take work trips? When a trip is clearly for business purposes only, the rules for deducting your expenses are fairly straightforward. But what happens when you’ve planned a holiday or to catch up with family or friends while you’re travelling?

Airfares
Assume you travel to London for a two-week trade show and stay a few extra days for sightseeing. If business is the primary purpose of the trip, you can claim the whole cost of the return airfares as a business deduction, because the sightseeing is just incidental. If you have a significantly longer holiday, so the primary purpose of the trip is not just business, you may need to apportion your airfares. And if the primary purpose is clearly private with some incidental work activities, you generally can’t deduct airfares.

Accommodation
Accommodation deductions are limited to the nights that you’re required for the business purpose. In our London example, you couldn’t deduct your accommodation costs for the nights you stayed for sightseeing. This applies even though you could deduct the full airfares.

Record-keeping
Sole traders and partners must keep a diary if they travel for six or more consecutive nights, detailing each business activity, the location, the date and time it began and how long it lasted.
If your business runs through a company or trust structure, it’s not compulsory to keep a diary, but it’s strongly recommended.

TIP: For companies, be careful about your business paying for any private part of your travel, as this could have consequences under the “deemed dividend” rules about benefits for shareholders and their associates.

Salary sacrificing loopholes: are you receiving your full benefits?

Tuesday, October 8th, 2019

Most workers understand that their employer must make compulsory super guarantee (SG) contributions of 9.5% of their salary and wages. However, things can get a little tricky when you choose to salary sacrifice.
Under current laws, employees who sacrifice some of their salary in return for additional super contributions may end up receiving less than they expected because of two legal loopholes. Employers may:
• count the salary sacrifice contributions towards satisfying their obligation to make minimum SG contributions of 9.5%; or
• calculate their 9.5% contributions liability based on the employee’s salary after deducting sacrificed amounts, rather than the pre-sacrifice salary.
Proposed new laws will close the loopholes by requiring employers to pay compulsory SG contributions at 9.5% of the pre-sacrifice amount of salary (that is, the salary actually paid to the employee plus any sacrificed salary). Further, any salary sacrifice contributions will not count towards the compulsory SG contributions. If passed, the new laws will apply to quarters beginning on or after 1 July 2020.

ATO announces “Better as Usual” program to improve your experience

Monday, October 7th, 2019

ATO Commissioner Chris Jordan has announced the launch of “Better as Usual”, a new ATO program aimed at improving people’s experience with the tax system. The program will include four parts:
Whole-of-system experience: looking at the end-to-end experience to address people’s frustration at sometimes feeling like they have to start all over again when dealing with a new ATO area or staff member.
Quality of feedback loops: better understanding and documenting people’s past experiences and actions (eg mistakes versus evasion) to make better ATO decisions in the future.
Complex cases team: a dedicated team to work on the most complex cases, devoting the time and resources necessary to deal with complicated affairs that fall outside the ATO’s normal processes.
Procedural and cultural safeguards: established to reduce (and ultimately eliminate) any cases where ATO mistakes could have a severe impact on taxpayers.

Personal services income rules: unrelated clients test

Monday, September 16th, 2019

The Federal Court has set aside an Administrative Appeal Tribunal decision that income a business analyst derived through a company was subject to the personal services income (PSI) rules.
According to the Court, simply because an individual or personal services entity is able to provide services through an intermediary, such as a recruitment or similar agency, this does not constitute the making of an offer or invitation for the purposes of the relevant legislation. More than that is required for the purposes of the unrelated clients test.

Top mistakes to avoid this tax time: ATO

Tuesday, July 30th, 2019

The ATO has revealed some of the most common mistakes people make at tax time. Top mistakes include lodging before all prefill data is available or failing to report all income and claiming the wrong thing – work-related expenses is one area where people commonly make mistakes. To help taxpayers work out what they can claim, the ATO has developed 30 occupation guides for specific occupations; forgetting to keep receipts; and claiming for something never paid for.

Tax compliance and developments

Monday, June 24th, 2019

Single touch payroll

From 1 July 2018, employers with 20 or more employees will have to run their payroll and pay their employees through accounting and payroll software that is Single touch payroll (STP) ready. This is a major reporting change, as employers will report payments such as salaries and wages and allowances, PAYG withholding and super information to the ATO directly from their payroll solution at the same time employees are paid.
From 1 July 2019, this system will extend to all employers.
TIP: STP reporting also means changes for employees, who will see year-to-date tax and super information in myGov. Employers no longer have to give employees payment summaries (group certificates) for information reported through STP, because this information will appear on an employee’s employment income statement in myGov at the end of the financial year.

Beware of ATO impersonation scams at tax time

The ATO warns taxpayers to be alert to malicious scammers who are using increasingly sophisticated methods and technology to impersonate the ATO. A new tactic on the rise is “spoofing”, where scammers mimic a legitimate ATO phone number caller ID to call or send SMS messages, or mimic a legitimate email domain to send emails.
SMSs and emails may ask you to click on a link and provide your personal details to get a “refund” from the ATO. Scammers may also say you need to pay a (fake) tax debt. The ATO warns that these scammers may intend to steal not only your money, but also your identity by using your personal information.
TIP: If you’re not sure whether a communication is really from the ATO, don’t respond, don’t click any links and don’t open any attachments. Call the ATO’s scam hotline on 1800 008 540 to check its legitimacy.

Super death benefit for de facto partner upheld

Tuesday, June 11th, 2019

The Federal Court has dismissed an appeal against a decision to pay a superannuation death benefit pension to a fire fighter’s de facto partner instead of a lump sum to his estate in Howard v Batistich [2019] FCA 525.
The trustee of the Crown Employees Superannuation Fund determined that the respondent, Ms Batistich, was a “de facto partner” of the deceased at the date of his death under the Superannuation Act 1916 (NSW) and the Interpretation Act 1987 (NSW). Accordingly, the trustee determined that Ms Batistich was entitled to a fortnightly pension. If there was no spouse (including a de facto), a lump sum death benefit of $350,000 would have been payable to the deceased estate.
The deceased’s parents, as the administrators of his estate, complained to the Superannuation Complaints Tribunal that Ms Batistich did not meet the definition of de facto partner.
In dismissing the appeal, the Court said it was not satisfied that the SCT had misunderstood its task or failed to take into account all the circumstances of the relationship.

Illegal phoenix activity: public examinations in Federal Court matter

Tuesday, October 2nd, 2018

The ATO has announced that public examinations started in a Federal Court matter on 27 August 2018 in relation to a group of entities connected to a pre-insolvency advisor. The examinations will focus on the suspected promotion and facilitation of phoenix activities and tax schemes.
More than 45 service providers, clients and employees of pre-insolvency advisors, as well as alleged “dummy directors” of phoenix companies, will be examined.

GST: supplies of real property connected with Australia

Thursday, September 6th, 2018

GST Ruling GSTR 2018/1, issued on 22 August 2018, sets out the ATO’s view on when supplies of real property are connected with the indirect tax zone (Australia).
It states that a supply of real property is connected with Australia if the real property, or the land to which it relates, is in Australia. The ATO stresses that the test is the physical land’s location, not the location of the interest or right over the land. The supply of a right to accommodation in Australia also constitutes the supply of real property connected with Australia.

Delay in extending reportable payments to courier and cleaning services

Thursday, September 6th, 2018

The legislative logjam in Federal Parliament is affecting the implementation of a wide range of tax measures, and the ATO is having to implement some practical work-arounds.
In the 2017–18 Federal Budget the Government announced that from 1 July 2018, businesses that supply courier or cleaning services will need to report payments they make to contractors for courier or cleaning services. The payments must be reported to the ATO each year using the taxable payments annual report (TPAR). However, legislation to implement this is still before the Senate.
The ATO will not require TPARs to be lodged up until the law change is passed by Parliament. Taxpayers will be expected to keep sufficient business records to enable a TPAR to be prepared and lodged “as soon as is reasonably practicable after the law is enacted”.


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