Estate planning is a complex area which requires careful consideration of tax implications. Many issues that affect the distribution of assets to beneficiaries will need to be considered before an individual passes on to ensure undesirable tax consequences are avoided for both the individual and potential beneficiaries. These include the timing on the transfer of the assets including property and investments, potential gifts, transfer duties, and the use of testamentary trusts. Typically in terms of capital gains tax (CGT), the transfer of assets upon the death of an individual does not immedi ..read more

Now that the revised stage 3 tax cuts have passed all stages of Parliament and received Royal Assent, the new rates are law and will apply from 1 July 2024. While the revised rates won’t apply for the current financial year, it is prudent to understand the changes to be able to plan for the future more effectively. Depending on an individual’s annual income, the changes will affect them differently. This article will look at how these revised rates will affect individuals earning $67,600 (median income extrapolated from the latest ABS data), $98,176 (average income extrapolated from the latest ..read more

The ATO has released a ruling which consolidates and updates its previous rulings (now withdrawn) on its view of the deductibility of self-education expenses under s 8-1 of the ITAA 1997. The ruling does not address the repeal of s 82A of the ITAA 1997 which limited the amount of expenses otherwise deductible, or outgoings necessarily incurred by a business. With this release, now is the perfect time for a recap on the current rules for deductibility of self-education. Under this newly released ruling, self-education expenses include courses at an education institution (whether leading to a fo ..read more

Following on from two prominent High Court decisions in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1 and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2, the ATO has issued a Ruling clarifying the issue of whether certain individuals are employees or independent contractors. In brief, the High Court’s decisions deal with the distinction between employees and independent contractors in the context of a labour hire company and two truck drivers operating through partnerships to provide delivery services to their former employer. In ..read more

Personal Services Income (PSI) generally only applies to individuals that receive more than 50% of their ordinary or statutory income from a contract as a reward for personal effort or skills. An example that most people would be familiar with is a sole trader builder/tradesman using their skills to earn income either directly, or through an interposed entity (ie a PSE). However, PSIs apply to any industries, trades or professions where individuals use their personal effort or skills. This includes so called “white collar” professionals in IT, finance, and medicine in addition to the construc ..read more

The talk about the stage 3 tax cuts has reached fever pitch recently. The changes were originally legislated by the previous government in 2019 with support of the then Labor opposition. During the election campaign and since coming o government, the Prime Minister had reassured voters on multiple occasions that the stage 3 tax cuts would remain. However, with the recent inflationary stressors, the government has been under increasing pressure to scrap the already legislated tax cuts in favour of cost-of-living relief for low to middle income earners, which would require the introduction of a ..read more

In the holiday season, some people head to their holiday home to celebrate with family or friends or to let their loved ones make use of the property. Owners of holiday homes that claim tax deductions for property costs should be careful to ensure that their holiday property is genuinely available for rent, otherwise deductions for expenses may be denied. Factors that may indicate a property is not  genuinely available for rent include: the way that it is advertised which may limit exposure to potential tenants (ie if it is only advertised by word of mouth, at a particular workplace, on ..read more

ATO data matching – directors and officeholders 7 The ATO has announced a data-matching program which will acquire officeholder data from ASIC, the Office of the Registrar of Indigenous Corporations (ORIC) and the ACNC for the 2023-24 to the 2024-25 income years. The aims of the program are manifold, including both compliance and education objectives, however, the main objective is to assist the Australian Business Registry Service (ABRS) in increasing the uptake of the director ID regime and helping to identify unlawful activities, including phoenixing of companies. In brief, the director ..read more

ATO crackdown on TPAR lodgments 7 The ATO has reminded relevant taxpayers to lodge their Taxable Payments Annual Report (TPAR) by the annual deadline or as soon as possible. It notes that the deadline for each year is firm and those that fail to lodge their TPAR may be subject to penalties, the scale of which depends on the size of the entity and the period of time since the due date for lodgment. As a reminder, the TPAR applies to businesses in the building and construction industry as well as businesses that provide cleaning, courier and road freight, information technology and security ..read more