NOVEMBER 2009

ATO warns processing of 2009 Returns will be slow

We have been contacted by the Australian Taxation Office to tell us that their computer systems will be unavailable from Friday, 22 January until Wednesday, 27 January 2010 while they implement a new IT system. They have also told us that they will need to suspend some processing in the weeks leading up to the implementation. click here for more details.

Bamford Case
High Court grants leave to appeal

On 3 November 2009, the High Court granted special leave to appeal in Bamford. The Court will consider the meaning of the expressions "income of the trust estate" and "share" of the income of the trust estate in s 97 of the ITAA36.

Regular readers of this newsletter will be aware that we have been keeping a close eye on developments in this case which could affect a large number of ESV clients. In August the ATO issued PS LA 2009/7 outlining its approach to the issues noted above, pending resolution of the decision in Bamford on appeal. In that statement, the ATO said that they will ignore the latest Court decision in respect of the expression “income of the trust estate”.

More Tax Office audits with
New Small Business Benchmarks

The Tax Office has released a number of new "Small business benchmarks" in October.  According to the ATO, these benchmarks provide a snapshot of what, on average, is happening in businesses operating in particular industries by comparing various business costs to sales.

The ATO use benchmarks to identify businesses that may be avoiding their tax obligations. The benchmarks can also be used by you to assess how your business compares to your competitors. click here for more details.

Christmas/year end parties and gifts

If the financial crisis has left enough in the kitty for a party, don’t forget to consider the income tax, FBT and GST implications of providing parties and Christmas gifts to staff and clients.

This is not a simple task but here are some general rules for typical businesses that should make the job a bit easier. (Special rules apply to not-for-profit entities.) click here for more details.

FBT – Donations made under salary sacrifice arrangements

The FBT law has been amended to ensure that, from the 2008/09 FBT year, FBT will not apply where a salary sacrifice arrangement involves a donation to an organisation that is a deductible gift recipient (DGR).

Employees who make donations under such a salary sacrifice arrangement are not entitled to claim an income tax deduction for the donation in their own tax return.

Temporary investment allowance and demonstrator vehicles

Be careful if you are considering buying a demonstrator car to access the temporary investment allowance. We have been made aware of dealers incorrectly advising customers that they are entitled to the investment allowance. While demonstrator vehicles are clearly in the ambit of the investment allowance, the car must be able to fit the description of "new". click here for more details. 

Tax Office considers new anti-tax evasion strategy

The Tax Office is considering options to increase the attractiveness of voluntary disclosure following the success of the Offshore Voluntary Disclosure Initiative (OVDI), according to a media release by the Assistant Treasurer, Senator Nick Sherry.

Senator Sherry said that strategy aimed at stamping out tax evasion is reaping dividends for the Australian community. He pointed out that the OVDI had raised more than $50m in new tax liabilities

The OVDI offers taxpayers, who make voluntary disclosure before they are the subject of an audit, reduced tax shortfall penalties. If their additional taxable income is $20,000 or less for a year, they will not have to pay a shortfall penalty for that year. If the additional income exceeds $20,000, the taxpayer will be entitled to a reduced shortfall penalty of 5% of the additional tax liability.

With many new Exchange of Information agreements either negotiated or in the process of being negotiated, clients should ensure that they have disclosed income from all sources.  If you have undisclosed offshore assets, we recommend that you speak to the tax team at ESV as soon as possible.

Liability limited by a scheme approved under Professional Standards Legislation.

The information in this newsletter is quite general in nature and anyone intending to apply it practically to their own circumstances should seek professional advice to verify it’s individual applicability. 

If you have any queries regarding the information contained in this
update please do not hesitate to contact us.

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