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TAX | NEWS | VIEWS & CLUES Welcome to the September 2016 edition of the Spry Roughley Report. Spring! There has been some progress with our leaders attacking the budget issues – but really just a start! Some good news – internationally it seems Reserve Bankers are reconsidering the wisdom of ongoing quantitative easing and printing money. Currency wars are very insidious and no-one wins. The results are asset bubbles; magnification of the wealth divide; and ongoing currency realignments that make it very difficult for businesses to manage those risks. Hopefully we will see a more rational monetary policy environment so that business can focus on the strategic risks associated with disruption to the traditional pillars of competitive advantage – location, access to capital, proprietary technology, distribution channels, and such like. To survive, it seems, businesses will need to "be solidly built on a foundation of continuous innovation and extreme customer focus" – a quote from John Spence. We have just used the book, Awesomely Simple, by John Spence to frame our strategic planning retreat. John has distilled the essential elements for long term business success into six discrete attributes at which we must all excel. He then makes those accessible in a way that can be related to any size business. If you are looking for a great read, only 183 pages, that will get you thinking on how to improve your business, then this is a must read. It is as much a working manual as it is a text book, so I suggest you do as we did and make lots of notations, highlight sections, fill in the effectiveness audit questions, and take note of the action points to help guide your implementation. From a standing start I am an avid fan; so much so that I have 25 copies to give free to any clients interested. Just click here to order your copy. Following up on my note last month concerning the use of the MyGov site and being careful not to include your tax account in your registration, as that then by-passes us as your agent, do not ignore any emails from MyGov! If you have inadvertently included your tax details then the message from MyGov may be to advise you there is a tax notice awaiting attention. Unfortunately, what the message relates to is unclear in the MyGov email. This actually happened to one of our clients and clearly MyGov could do more to improve their customer focus. An interesting clarification from the Tax Office concerning who can claim the small business tax offset, relevant to businesses with turnover under $2 million. It is not available to individuals who receive their share of the small business income indirectly through an interposed trust or partnership. Typically this could apply where a business is operated by a unit trust owned by family trusts, or where a business is operated by a partnership of trusts. If you have this issue it may be appropriate to review your structure if you feel that you can access the small business tax offset – in effect, a reduced tax rate. As a business owner, how can you safeguard your business and its ongoing success in the event of a separation or divorce?
In addition, you'll find a Due Diligence Checklist here to help with various considerations when acquiring a business. As usual, please do not hesitate to call us on (02) 9891 6100 should you wish to discuss how any of the points raised in the report specifically affect you, or click here to send us an email. Warm regards, Martin
Liability limited by a scheme approved under Professional Standards Legislation Share economy participants reminded of tax obligations The ATO has reminded people who earn income in the share economy that they have tax obligations. The type of goods or services you provide, and how much you provide, will determine what you need to do for tax. Popular sharing economy services include:
The ATO notes that you need to get an ABN if you are carrying on an enterprise providing goods and services through the sharing economy, and register for GST if:
No matter how much you earn or your reasons for providing goods or services, it's a good idea to maintain records of your income and expenses, so you can keep track of your activities and deal with tax obligations when they arise.Tax deductions may also be available in certain circumstances. Please contact our office for more information.
Itinerant worker claim denied, so travel deductions refused The taxpayer worked a number of short-term jobs in various country towns across New South Wales. He and his wife had a house, but they would travel to the work locations, taking their car and a motorhome to live in. The individual argued he was entitled to claim deductions for car expenses and travel expenses such as meals and accommodation. The AAT found that he was not an itinerant worker and that the expenses were private in nature and therefore not tax deductible. Among other things, the AAT noted that his duties did not in fact require him to travel between and stay near the different workplace locations in the course of his employment. ATO flags retirement planning schemes of concern
The ATO has previously issued statements about concerning schemes that involve non-arm's length limited borrowing arrangements, dividend stripping and diverting personal services income. The ATO encourages people to report their involvement in such schemes early. In specific circumstances, penalties may be reduced. Please contact our office for more information. Deductibility for gifts to clients and airport lounge membership fees
Changes to $500,000 lifetime super cap confirmed Scott Morrison said in a radio interview that he had previously spoken about the changes and that draft legislation on the measures, to be released soon, will contain a number of changes. He said if someone gets a pay-out "as a result of an accident or something like that, then that is exempted from the $500,000 cap". He also said that if someone had entered into a contract before Budget night to settle on a property asset out of their SMSF and they use after-tax contributions to settle that contract, "that won't be included" in the $500,000 cap. Mr Morrison said there also would be "other measures" in the exposure draft legislation. He effectively ruled out lifting the $500,000 cap amount, saying "the only people that would benefit are people who […] already on average have $2 million in their superannuation scheme, have already put $700,000 in after tax contributions". The ATO can only calculate the amount of your non-concessional contributions available based on the information it has. You may wish to review your own history of contributions. Please contact our office for more information. Home exempt from land tax for "world-traveller" In 2003, the taxpayer was left the property in Shoreham in his mother's will. After moving into the property, he continued his interest of overseas travel, meeting and marrying his now wife, who continues to live in Canada. Broadly, for each of the five tax years in question, the taxpayer spent a couple of months in Australia at the property, with the balance spent mostly in Canada and other overseas destinations. He submitted that he considered the Shoreham property his "home", where he kept "all his personal treasures", among other things. He also noted "significant and communal family ties" in Victoria (including his three children and eight grandchildren in Melbourne) and "financial ties" to Australia. In finding in favour of the taxpayer, VCAT said that in this day and age people are far more mobile than in the past, and it is not unreasonable that someone would have a base at a particular place to which they intend to return and resume occupation. In this regard, the Tribunal was of the view that the land tax exemption applied to the taxpayer's circumstances. Land tax regimes differ from state to state. Please contact our office for assistance or more information. |
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