The latest edition of our quarterly general business newsletter, Business Matters, is now available for download from this website.
In this issue:
- Develop an ethics policy for your business
- Contingency planning
- 50% Investment Allowance
- Division 7A Loans
- Turning failure into success
- Reviewing your PAYG instalments
- The ATO’s latest hit list;
- Timetable of Tax Office deadlines.
Trustees of self managed superannuation funds (SMSFs) are generally prohibited from borrowing money except in specific circumstances (NTAA Editor: such as under the new rules for certain limited recourse loans, where the lender only has a claim against a certain asset of the SMSF).
Because there has been some confusion about this, the Tax Office (ATO) has explained what a ‘borrowing’ is, and how to determine whether an SMSF contravenes this general prohibition.
A borrowing is an arrangement that exhibits two necessary characteristics:
- a temporary transfer of an amount of money from one entity (the lender) to another (the borrower); and
- an obligation or an intention on the part of the borrower to repay that amount to the lender (which may be satisfied by the provision of an asset).
The Federal Court has held that a student taxpayer who received Youth Allowance was entitled to a deduction for the expenses she incurred in pursuing a teaching degree, as she incurred them in the gaining or producing of her assessable income (being the Youth Allowance).
Court rules you can claim tax deductions against Youth Allowance
The Court basically held that, in order for the taxpayer to receive the Youth Allowance, she had to satisfy the requirements set out in the Social Security Act 1991 (i.e., generally to undertake full-time study throughout the relevant period), which required her to spend money (on such things as student administration fees and text books), so those outgoings were incurred in gaining or producing her assessable income.
The ATO has announced that it will be undertaking a number of data matching programs to identify taxpayers who may not be meeting their taxation obligations.
The ATO will request and collect:
- details of approximately 2.5 million individuals or entities that have purchased or acquired a motor vehicle valued at $10,000 or higher, from the Roads and/or Traffic Authorities of each State and Territory;
- information on amounts paid to personal services entities by labour hire firms, placement agencies and computer consultancies; and
- information on amounts paid by mining companies to contractors and sub contractors.
If you have a few questions about data matching or any other taxation matter then please contact us on 9246 9055 and make an appointment.
In a recent speech in Sydney, Neil Oleson, Deputy Commissioner of Taxation, indicated that the Tax Office was targeting SMSFs and their auditors.
Compliance issues
Mr Oleson indicated that to date, the Tax Office has concentrated on putting its efforts into educating and assisting those involved in the system to meet their roles and obligations.
"We now have some 200 compliance staff focussed on self-managed fund issues."
We have gone from completing around 3,600 compliance cases in 2006/07 to around 10,400 cases in 2007/08. In 2008/09 we are well on track to completing over 11,000 cases."
