Cart
Contact
Help
Privacy Policy
Articles
Health and Safety
The Blog Page
Drugs and alcohol blog
Links
Anatomy and Physiology
Childcare Resources
Your Child's Development
Counsellor Resources
Child Abuse
Domestic Violence
Risk Management
Cart

the blog page

If you would like to contribute to this Blog Page send your interest to john.b@reallearningsolutions.com.au
Published on
Image description
By John Kelly
Editor-in-Chief, Smart Tax Handbook


Now that the Abbott Government has had time to settle in and consider the changes announced but not legislated by the previous Government, it will be interesting to see what tax changes 2014 holds in store for us.

A press release addressing which of the unlegislated Labor tax initiatives the new Government would proceed with and which they would abandon was issued just before Christmas.

The 4 main initiatives the Government intends to proceed with are:

  1. Capital gains tax (CGT): inclusion of earnout payments, i.e. additional purchase payments for a business that are dependent on the earnings of the business after the change of ownership, as part of the value of a business asset.
  2. Not-for-profits: clarification that not-for-profits must operate principally in Australia to be eligible to access to income-tax exemptions and deductible gift-recipient status.
  3. Instalment warrants: treatment of investors in instalment warrants, which are a method of purchasing an asset that allows for instalment payments, as owners of the relevant underlying assets for income tax purposes. 
  4. Goods and services tax (GST): replacement of GST-free concessions for going concerns and farm land with a reverse charge mechanism, which would move the responsibility for accounting for GST from the seller to the buyer. Note that a side effect of this initiative may be an increased stamp-duty charge if the GST is considered to be part of the consideration for the sale.
The 4 main initiatives the Government intends to abandon are:

  1. Research and development refundable tax offset: allowing this offset to be paid in quarterly instalments.
  2. Bad debts: ensuring consistent treatment in related-party financing arrangements.
  3. Not-for-profits: ensuring that tax concessions for not-for-profits are targeted only at those activities which further the not-for-profit's altruistic purposes. Note, however, that the Government will not be abandoning this issue altogether and will still seek simpler and better ways to target not-for-profit tax concessions.
  4. CGT: providing CGT relief for taxpayers buying replacement assets after a natural disaster.
The Coalition intends to pass any of the previous Government's tax legislation it has decided to move forward with this year, in an effort to provide greater certainty for taxpayers.
Published on
Image description
John Kelly
Editor-in-Chief
Smart Tax Handbook


The ATO has now also released details of further compliance-related activities for 2013-14, and the following all feature on its 'to-do' list:

  1. 125 risk reviews and 26 audits of large and medium businesses suspected of engaging in profit-shifting activities.
  2. 5,000 data-matching cases and 700 risk reviews and audits of trusts, to be conducted over 4 years.
  3. 680 reviews and 118 audits of taxpayers who use tax havens.
  4. 2,500 contacts with and 1,000 reviews and audits of medium-sized taxpayers, focusing on capital gains tax, consolidation, trusts, private company schemes and fraudulent phoenix activity, i.e. when a company goes into liquidation, leaving its debts behind and starting trading again under a new name.
  5. 750 contacts with and 500 reviews and audits of high wealth individuals, i.e. those controlling a net worth of more than $30 million.
  6. 3,000 contacts with and 1,000 reviews and audits of wealthy individuals, i.e. those controlling a net worth of between $5 million and $30 million.
  7. 2,050 reviews checking GST systems and GST payable, focusing on specific industries including mining, financial and insurance services.
  8. 150 reviews of property developers, focusing on developers engaged in phoenix activity.
  9. 35 advance pricing arrangements and mutual agreement procedures, which focus on the transfer-pricing provisions.
  10. 1,500 contacts, 19,000 letters, 3,000 phone calls and 2,800 audits related to fringe benefits tax, general audits and reviews, tailored advice, and follow ups on late tax lodgers and employer obligations.
Will you be on the ATO's list this year?

Published on
How to make sure you include your income and deductions in the right income year
By John Kelly
Editor-in-Chief, Smart Tax Handbook

The ATO is taking an increasingly tough stance on income and expenses which aren't disclosed in the correct year.

Income needs to be included in the year of income in which it is 'derived'. The 4 main ways to tell that you have derived income are:

  • you have invoiced a customer or have a recoverable debt;
  • you have received payment for goods or services;
  • the money or property owing to you has been applied to your benefit, e.g. the money you are owed has been used to offset an amount you owe your customer or it has been paid to someone else on your behalf; and
  • you do not need to do anything else before receiving that income.
Deductions should be claimed when expenses are 'incurred'. You have incurred an expense at the earliest of these 3 things occurring:

  • you have been invoiced for that expense;
  • you have paid for that expense; or  
  • you are absolutely committed to that expense, e.g. you have received goods that you have ordered. 
If you have disclosed income or expenses in your tax return in the wrong year, the ATO is perfectly entitled to exclude that income or expense and include it in the correct year. Sometimes this won't have much of an impact on you, but at other times the results could be disastrous.

For example, if a large deduction was claimed in the year after it was incurred, the ATO could deny that deduction on the basis that it is not a valid deduction for that year. If the time limit for amending tax returns has expired for the previous year, you could end up not getting a deduction for that expense at all. Depending on the amount, it could end up being a very costly mistake.