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Thursday 23 February 2012

Payslips to include date when you promise to pay the super

As from 1 July 2012 it is proposed that every employer must include on every payslip details of how much super relates to that payslip but also on what date they promise to pay the super.

Full details:
Exposure Draft – Payslip Reporting of Superannuation Contributions – 14/02/2012

Tuesday 14 February 2012

Claiming reasonable meal expenses - be careful

  • Each year, the Tax Office revises the amounts they consider reasonable in relation to claims for:
    §         Overtime meal allowances;
    §         Domestic travel allowances;
    §         Travel allowance expenses for employee truck drivers; and
    §         Overseas travel allowance expenses.
  • Expense claims made in relation to such allowances receive concessional substantiation treatment. Where the claim for such expenses is less than the reasonable amount prescribed, substantiation of the claim is generally not required.
  • A recent case has however highlighted the dangers of claiming unsubstantiated meal expenses. In this case:

    §         The taxpayer was a long distance truck driver incurring various expenses;
    §         His tax agent claimed the work-related travel expenses for meal allowances for when he was travelling away from home;
    §         The amounts claimed for meals were by reference to the Tax Office's daily rates; and
    §         The taxpayer received from his employer an allowance under an agreement.
  • The Court rejected the argument that the applicant incurred the amounts in deriving the allowance, as the amounts were more of a 'loading', which was payable in recognition of the inconvenience or hardship involved in long-distance driving.
  • As the payment was neither a 'travel allowance' nor a 'bona fide travel allowance' and no documents could be produced to substantiate the costs, the deductions were disallowed.
  • The court also considered the 25 per cent tax shortfall penalty appropriate, even though it was the tax agent, and not the tax payer, who failed to take reasonable care in claiming the deductions. Nevertheless it was remitted on the basis that the penalty was 'harsh'.

Sunday 12 February 2012

Motor Vehicle Data Matching Expanding

  • The Tax Office has obtained data from various state and territory motor vehicle registering authorities in order to identify motor vehicle retailers who do work off the books in a bid to hide their true incomes and avoid paying tax.
  • The data collected will also be used to address the FBT non-compliance for cars that are available to employees for private use.
  • The Data matching activities further attempt to expose taxpayers who seek to avoid paying luxury car tax.
  • The data obtained during the 2011 income year covers all passenger and four wheel drive vehicles with a value of $10,000 or more.
  • The data will be matched against taxpayers’ records and industry benchmarks. Businesses that report amounts outside these benchmarks will be closely scrutinised.
  • The objective of the Tax Office’s motor vehicle data matching project is to:

    §         Identify businesses participating in the cash economy i.e. those selling more motor vehicles than they are reporting to the Tax Office;
    §         Identify taxpayers whose expenditure is in excess of their reported income; and
    §         Conduct appropriate compliance activities.

  • For more information on data matching, visit the Tax Office website at

Friday 10 February 2012

New overseas deductible gift recipients

  1. A gift or donation of a value of $2 or more is generally an allowable tax deduction as long as it is made to an organisation that is a Deductible Gift Recipient (DGR). A DGR is an entity or fund that can receive tax deductible gifts or donations.
  2. The Assistant Treasurer has recently declared a number of overseas funds to be developing relief funds under the tax law. Some of the funds declared include:

    ·         African Aids Foundation Overseas Aid Fund;
    ·         Friends of New Hope India Relief Fund Gift Account;
    ·         Wellwishers Ethiopia Gift Fund
    ·         Indochina Starfish Foundation Gift Fund; and
    ·         Healthserve Australia Overseas Aid Fund

    From November 9, 2011 donations to these funds are tax deductible.

  3. To be deductible, a gift or donation must also meet several other conditions. Click here for more information.

Wednesday 8 February 2012

Claim GST credits sooner on HP agreements

  • Currently, claiming Goods and Services Tax (GST) credits on the purchase and finance of an asset depends on the method of finance and your reporting basis for GST.
  • GST credits can be claimed on the purchase of an asset through a Chattel Mortgage at the time of the first payment regardless of whether the business reports on a cash or accrual method for GST purposes.
  • A small business cannot claim GST credits on leased assets, as the assets are not owned by the taxpayer. However, the GST included in each lease payment can be claimed at the time of making the payment.
  • GST credits can be claimed on the purchase of an asset through a Hire Purchase (HP) Agreement as follows:
    • Cash Basis Reporting: GST is claimed back over the term of the financing arrangement;
    • Accruals Basis Reporting: GST is claimed back at the time of the first payment.
  • From 1 July 2012, proposed amendments to the legislation will mean small businesses that report on a cash basis for GST purposes and enter into a hire purchase agreement, will be able to claim the full GST credits at the time of the first payment.
  • This concession will only apply to new hire purchase agreements entered into from 1 July 2012. Any hire purchase agreements entered into before this date will be governed by the previous legislation.

Sunday 5 February 2012

New mandatory reporting for the building and construction industry

  • From 1 July 2012, businesses involved in the building and construction industry (BCI) will need to lodge an annual report detailing any amounts paid to contractors and sub-contractors together with each contractor’s Australian Business Number (ABN).
  • The Tax Office is aiming to collect the information to data match transactions to improve tax compliance in the BCI.
  • Based on results of 2009 contractor audits, 34% of the contractors were from the BCI and 51% of the BCI contractors had either not lodged a tax return or had failed to declare their income fully or partially.
  • Payments that have to be reported are those which include a service component. The amount to be reported must then include all monies paid to the contractor including any payments for materials and fittings.
  • For example, Jack is a plumber who has been contracted by a builder to install several toilets in a housing estate. His contract includes payment for his labour as well as parts and fittings used. Jack’s contract would be a reportable supply as it’s a supply of a service in the BCI. The whole of the payments would need to be reported to the Tax Office by the builder.
  • Reporting businesses include all entities, including sole traders, working wholly or principally in the BCI. If the contracting party is not in the BCI, that party will not need to report to the Tax Office.

Wednesday 1 February 2012

Payslip requirements from 1 July 2012

From 1 July 2012, employers will be required to report on payslips and "expected payment on or before" date in addtion to the current entitlement during the pay period. In many cases this will be the superannuation guarantee due date, or a due date under a workplace agreement or award. In some cases, however, where they remit contributions sooner, employers may choose to disclose an earlier date.

This will provide up-to-date information to employees on when they can expect superannuation contributions and will allow them to follow up with their superannuation fund to confirm that payments have been made by the due date. From 1 July 2012, subject to there being no significant payroll system costs, payslip reporting of actual contributions paid rather than just accrued contributions will commence, including the provision of information about which fund the contributions are being paid into.