LATEST NEWS

Concreting Benchmarks

For concreters working directly with households, the ATO has issued expected income levels based on materials used and after consultation with industry bodies in Qld, NSW and Vic. Full details at:

http://www.ato.gov.au/businesses/content.asp?doc=/content/00117594.htm

Main Problem with Self Managed Superannuation Funds

It appears to be “loaning” of money to fund members and their relatives. There is a real danger of the fund being made non complying resulting in adverse tax consequences.

Market Valuation for Tax Purposes

The ATO has issued a guide to outline accepted market valuation processes for taxation purposes. The guide can be accessed at

http://www.ato.gov.au/taxprofessionals/content.asp?doc=/Content/00161737.htm&page=1&H1

Cash Economy Letters

During the last few months the ATO has sent some 44,000 letters to cash economy businesses to remind them of their obligation to record all income and expenses correctly in their tax returns. Benchmarking industries, third party data matching with insurance companies, shopping centre managements, luxury car and boat records are some of the sources used to target the cash economy.

First Home Savers Accounts

From 1 October 2008 financial institutions including most banks and some superannuation funds will be able to offer First Home Savers Accounts (FHSA) for persons aged between 18 and 65 with a tax file number and who have never owned a main residence home in Australia or have never previously had a FHSA.

Earnings on the income in the FHSA are taxed at 15% and salary sacrifice contributions are not allowed. Refer to ATO fact sheets NAT 72404, NAT 72453 and NAT 72450 for further information on government bonuses and other requirements of the scheme.

Car depreciation limit for 2008/09

The ATO has advised that the car depreciation limit for the 2008/09 financial year is $57,180 (up from $57,123 in 2007/08).

The ATO 2008-09 Compliance Program:

  • income tax;
  • tax havens;
  • illegal tax schemes;
  • high wealth individuals; and
  • the cash economy.

Their priorities for individual taxpayers include:

  • a focus on capital gains from the sale of property, shares and other assets;
  • expanding their review of the activities of senior executives and directors; and
  • monitoring work-related expense claims, particularly out-of-pattern claims for self-education, car and travel expenses.
  • undertake over 5000 cash economy reviews
  • work with industries to develop benchmarks

Refer to ATO media release no 2008/42

Earlier News

Low Income Tax Offset

From 1 July 2008 the maximum low income tax offset is increased from $750 to $1,200, available in full to annual taxable income is $30,000 or less and tapers off until annual taxable income reaches $60,000.

Employers can use half of the available offset, up to $600, in calculating the tax instalments deducted.

Education Tax Offset

Eligible families (generally parents entitled to Family Tax Benefit Part A) will be able to claim a 50% tax offset every year in their tax return for main education expenses up to

  • $750 for each child undertaking primary studies (i.e., maximum refund of $375 per child, per year); and
  • $1,500 for each child undertaking secondary studies (i.e., maximum refund of $750 per child, per year).
Eligible expenses include:
  • notebooks, home computers and associated costs;
  • printers;
  • home internet connections;
  • educational software;
  • trade tools for use at school;
  • school text books; and
  • stationery.

As with all tax claims it is recommended that good records with receipts be kept.

Minor benefits exemption may apply to benefit provided every year

The provision of a 'minor benefit' (which must be less than $300) to an employee or their associate can be exempt from fringe benefits tax (FBT) if it meets the relevant criteria. One of those criteria requires a consideration of the infrequency and irregularity of the provision of associated, identical or similar benefits.

The ATO recently confirmed that the provision of a Christmas party to employees and their associates every year would still be considered 'infrequent and irregular', and may, therefore, be exempt from FBT.

It has now confirmed that the same rationale can apply to the provision of other benefits.

An employer may not need to pay any FBT when it provides each of its employees with a reimbursement of $295 p.a. towards, say, a local gym membership. However, this would not be the case if the gym membership was included in an employee's salary package under a salary sacrifice arrangement.

ATO has Cash Economy Compliance Action

Recently the ATO sent over 9,000 letters to people who had applied for an owner/builder’s licence in NSW and Victoria, advising them about tax obligations of persons they were likely to employ and also sent 3,000 letters to shopping centre retailers, advising them that the shopping centre owners had provided the ATO with information about their business turnover and rental payments.

Other actions include data matching from outside sources such as motor vehicle registrations, boat registrations, property purchases and sales, to check lifestyle against declared taxable income.

Industry Benchmarks

The ATO has been developing ‘benchmarks’ or ‘industry norms’ of the relationship between costs and income for various industries, to give people an idea of what range of income can be expected based on the work they do and other costs they incur, and so business operators can compare their performance with the rest of their industry.

Apart from the taxi industry benchmarks brought out a few years ago, the ATO has now produced benchmarks for the following industries:

  • floor sanding and polishing;
  • roof tiling; and
  • painting.

Other benchmarks will be forthcoming for other building trades.

Email: adam@pikusa.com.au

Phone: +61 8 8390 3885

Postal Address: PO Box 309 Summertown SA 5141

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