News

Taxpayer misses out on small business CGT concession

CGT Holiday House BW

A taxpayer’s claim that a related trust was entitled to the small business 15-year exemption* was rejected because a loan from his trust had to be included in the net value of his CGT assets.

Note (*):  One of the requirements to get this concession is to satisfy the “maximum net asset value test” (MNAVT), whereby the net value of CGT assets of a taxpayer (and their connected entities and affiliates) must not exceed $6 million.

It was agreed between the ATO and the taxpayer that the total net value of the taxpayer’s other assets in 2008 was $5.93 million.

The parties disagreed, however, as to whether an amount of $1.14 million shown as a loan in the 2008 balance sheet of the taxpayer’s trust should be included as an asset – the taxpayer claimed that he was “statute-barred” from recovering the loan by the Limitation of Actions Act 1936 (SA).

If it was an asset, then the net value of the total assets for the purposes of the small business exemption exceeded $6 million, and the taxpayers were not entitled to CGT relief.

Decision

The Federal Court held that any action by the trust against the taxpayer to recover the pre‑1998 loan would be an action to recover “trust property”, and the Limitation of Actions Act does not prescribe any limitation period in respect of claims of that kind.

Therefore, “the contention that the pre‑1998 loan was statute‑barred and did not have to be brought into account in the calculation of the MNAVT must be rejected”. 

Warning to employers to withhold tax from some car allowances

Car Allowances BW

The ATO has reminded taxpayers that, in relation to claiming car expenses, the one-third of actual expenses method and 12% of original value method were abolished from 1 July 2015.

The cents per kilometre method now uses a standard rate of 66 cents per kilometre for all cars, rather than a rate based on a car’s engine size.

Employers should be aware that the ATO set the approved pay as you go (PAYG) withholding rate for cents per kilometre car allowances at 66 cents per kilometre from 1 July 2015.

Employers should withhold tax from any amount above 66 cents for all future payments of a car allowance, as failure to do so may result in the employee having a tax liability when they lodge their tax return.

Employees, who from 1 July 2015 have been paid a car allowance at a rate higher than the new approved amount, should consider whether they need to increase their withholding to avoid any tax liability at the end of the year.

Editor:  If this applies to your business, please contact our office if you need help with the calculations.

March quarter GIC and SIC rates

The ATO has published the 2016 March quarter rates for the General Interest Charge (GIC) and the Shortfall Interest Charge (SIC):

GIC annual rate 9.22%
GIC daily rate 0.02519126%
SIC annual rate 5.22%
SIC daily rate 0.01426229%

Tax help for people affected by recent bushfires

The ATO has advised that, for people affected by the recent Victorian and Western Australian bushfires, refunds will be fast-tracked and they will have additional time to lodge income tax returns and activity statements.

No need to apply

The Tax Commissioner said taxpayers do not need to apply for a deferral or a faster refund.

“If your business or residential address is in one of the identified affected postcodes it will happen automatically. You can visit our website to see the new lodgment dates and check if your region is included.  Further postcodes may be added as needed, so check our website for more information,” Commissioner of Taxation, Mr Jordan, said.

ATO supporting small business to implement SuperStream

Superstream-810x541

As the SuperStream rollout for small businesses continues, the ATO claims that it is helping employers in select industries who need support implementing SuperStream.

Editor: Employers with 20 or more employees were expected to be using SuperStream no later than 31 October 2015. Employers with 19 or fewer employees need to be using SuperStream no later than 30 June 2016.

The ATO has also stated: “With only two quarters left until SuperStream becomes mandatory, now is a good time for employers to adopt SuperStream and familiarise themselves with it before the deadline.

“For some businesses, December and January are quieter periods, so now is a great opportunity to check that your SuperStream option is ready, whether that be your payroll software, your super fund’s online payment system, or a clearing house, such as the ATO’s Small Business Superannuation Clearing House. You can also ask your accountant or bookkeeper for help.”

Now is also the ideal time for employers to make sure they have all the information they need to use SuperStream correctly: “Importantly, you should collect the necessary employee identification data – being your employees’ TFNs and their funds’ unique super identifiers (USIs) – and enter it into your system ahead of the next quarterly due date on 28 January. That way, you have time to check that things are running smoothly before the deadline.

“Your employees can find their fund’s USI on their super statement or by calling their fund. You can also find these details using the Super Fund Lookup website – our online SuperStream checklist has the link.”

The ATO step-by-step checklist to help employers prepare can be found at www.ato.gov.au/SuperStreamChecklist.