News

Foreign equity distributions to corporate entities

November 3rd, 2017

Two recent taxation determinations from the ATO deal with how the foreign equity distribution rules in the Income Tax Assessment Act 1997 apply where the distribution recipient is a corporate partner in a partnership or a corporate beneficiary of a trust. Under the rules, a foreign equity distribution is treated as non-assessable, non-exempt income if [...]

Tax treatment of long-term construction contracts

November 3rd, 2017

In new Draft Taxation Ruling TR 2017/D8, the ATO explains the methods that taxpayers can use to return income derived and recognise expenses incurred in long-term construction projects. A construction project is considered long-term if it straddles two or more income years. Two methods of accounting are available: the basic approach (essentially the accruals method) [...]

Fringe benefits tax: should an Uber be treated as a taxi?

November 3rd, 2017

Earlier in 2017, the Federal Court ruled that UberX drivers must be registered for GST, because they supply “taxi travel”. There has been much discussion of this finding since, and the ATO is now examining whether Uber trips should be eligible for the “taxi travel” FBT exemption. The FBT exemption, introduced in 1995, currently only [...]

Total superannuation balances and pension transfer balance account reports

November 3rd, 2017

The concept of a person’s “total superannuation balance” is now being used to determine whether you are eligible for various super concessions, including the $1.6 million balance limit for non-concessional contributions, Federal Government co-contributions, the spouse contributions tax offset, carrying forward unused concessional contributions and self managed superannuation fund (SMSF) segregation. The ATO has recently [...]

ATO guidance: what is “carrying on a business”?

November 3rd, 2017

The ATO has issued a draft taxation ruling to explain the factors it will consider when deciding whether a company (incorporated under the Corporations Act 2001) is “carrying on a business”. This is one of the tests companies and small businesses must pass to be eligible for the lower corporate tax rate. It’s not possible [...]

New passive income test for lower corporate tax rate

November 3rd, 2017

The Federal Government has recently introduced a Bill into Parliament to ensure that companies with more than 80% passive income will not qualify for the reduced company tax rate. Under the Bill’s changes to the Income Tax Rates Act 1986, calculations of a business’s “passive income” would include: • distributions by corporate tax entities (other [...]

Consultation paper: combating phoenix activities

November 3rd, 2017

The Federal Government has released a consultation paper proposing company and tax law reforms to combat phoenix activities. Phoenix activities involve stripping assets from a company that’s in debt and transferring them to another company to avoid paying the first company’s liabilities – that is, the new company “rises from the ashes” of the old [...]

Superannuation guarantee

October 6th, 2017

Crackdown on employer non-compliance The Government has announced a package of reforms to give the ATO near-real-time visibility over employers’ superannuation guarantee (SG) compliance. The package includes measures to: • require super funds to report contributions at least monthly to the ATO; • roll out Single Touch Payroll (STP); and • give the ATO the [...]

New financial and superannuation complaints authority

October 6th, 2017

Legislation has now been introduced to establish a new external dispute resolution framework and an enhanced internal dispute resolution framework for the Australian financial system. Consumers will have easy access to a single external dispute resolution scheme, the Australian Financial Complaints Authority (AFCA). Certain firms that provide financial and credit services will need to be [...]

No GST on digital currency: Bill

October 6th, 2017

The GST Act (A New Tax System (Goods and Services Tax) Act 1999) is being amended to ensure that digital currency, such as Bitcoin, is disregarded for GST purposes unless the supply is made in exchange for a payment of money or digital currency. To achieve this, a definition of “digital currency” will be inserted [...]