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The Howard Government has announced that it will allow further tax deductions for GST related expenditure for businesses with a turnover of $10 million or less.
Deductions will be allowed for the cost of plant and equipment bought in preparation for GST, provided a binding purchase agreement is in place by 30 June 2000, and plant and equipment is installed ready for use by 30 June 2001 (previously 30 June 2000).
| Meaning of Carrying on an Enterprise for ABN Purposes |
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The Tax Office has released a ruling concerning the concept of carrying on an enterprise in relation to the need for an ABN. The ruling provides:
- It is the trustee of a trust or super fund that is entitled to an ABN (rather than the trust);
- An entity may be entitled to more than one ABN where it acts in its own capacity and in the capacity as trustee of one or more trusts; and
- Otherwise, entities with more than one enterprise are typically only entitled to one ABN.
For entities other than those automatically entitled to an ABN (companies, government entities and certain non-profit organisations) the ruling analyses the meaning of carrying on an enterprise in some detail.
In a separate announcement, the Government has stated that leasing a residential property does not require the landlord to obtain and quote an ABN, even when there is minor business use of the premises.
Please contact us for further information.
| Medicare Levy Surcharge Changes |
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The Federal Government has announced that it will legislate to prevent high income earnerswho take out private health insurance policies from 25 May 2000, with excesses of over $500 (singles) and $1000 (families/couples), from claiming an exemption from the Medicare levy surcharge. In other words, it prevents high income earners from paying low premiums (high excesses) to obtain health insurance to avoid the Medicare levy surcharge.
Currently, a 1% surcharge applies to high income earners in addition to the ordinary Medicare levy for taxpayers without private health cover. High income earners are defined as those with taxable incomes in excess of $50,000 for singles and $100,000 for families/couples (with an adjusted threshold for dependent children).
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The Tax Office has releases a PAYG checklist (on its Tax Reform web site) listing a number of administrative issues to address during the transition from PAYE to PAYG withholding both before and after 1 July 2000.
Please contact us for further details.
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The Treasurer has confirmed that the Government intends to support the Option 2 tax model proposed by the Ralph Committee and that the intended start date is 1 July 2001.
Briefly, Option 2 refers to a new method of calculation taxable income based on cash flows and the movement in values of assets and liabilities.
| Charities Entitled to Claim Refund for Excess Franking Credits |
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The Government has announced that from 1 July 2000, registered charities and gift deductible organisations will be entitled to claim a refund of imputation credits attached to dividend distributions from companies, either directly or through trusts.
Charities will need to ensure they have appropriate data capture systems in place to support refund claims.
We anticipate that similar rules might also apply to distributions of trust income which are taxed under entity tax rules after 1 July 2001.
| Claim for Self Education Expenses |
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A taxpayer has won a court case concerning self education expenses even thought there was no guarantee of increases income as a result of the expense.
The tax payer enrolled in a human services course which the Commissioner argued had no nexus to her current income producing activities.
The court held that even though the successful completion of the course would not guarantee the taxpayer advancement in her employment, her employer had accepted that further study would be of benefit in her current employment and would be considered in relation to future promotions.
| Indexed Superannuation Amounts 2000/01 |
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The Tax Office has released the following indexed superannuation thresholds for the 2000/01 income year.
- Tax free amount of a bona fide redundancy payment or approved early retirement scheme payment:
- Fixed component: $5,062.
- Annual component: $2,531.
- Age based deduction limits:
- Under 35 years: $11,388.
- 35 to 49 years: $31,631.
- 50 years and over: $78,445.
- RBL Limits
- Lump sum RBL: $506,092.
- Pension RBL: $1,012,181.
- Post-June 1983 ETP component threshold: $100,696.
| FBT rates and Thresholds |
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The Tax Office has issued the following rates and thresholds for the current (March 2001) FBT year:
- Benchmark interest rate: 7.3%.
- Cents per km rates (private vehicle use) for a motor vehicle other than a car:
- engine capacity 0-2500cc: 33 cents;
- engine capacity over 2500cc: 40 cents;
- motor cycles: 10 cents
- Living away from home allowance – reasonable food component:
- 1 adult: $146;
- 2 adults: $235;
- 3 adults: $264
- 4 adults: $351
- 2 adults and 1 or 2 children: $264
- 2 adults and 3 children: $307
- 3 adults and 1 child: $307
- 3 adults and 2 children: $351
(Adults are persons aged 12 or over. For larger families, add $87 per additional adult or $43 per additional child).
Important: This is not advice. Clients should not act solely on the basis of the material contained in this Bulletin. Item herein are general comments only and do no constitute or convey advice per se. Also changes in legislation may occur quickly. We therefor recommend that our formal advice be sought before acting in any of these areas. The Bulletin is issued as a helpful guide to clients and for their private information. Therefore is should be regarded as confidential and not be made available to any person without our prior approval. |
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