Rambling weekly round up

I just got asked what happened in tax last week that a practitioner should know about. How about:

Instant asset write off for small businesses back to $1,000 from 1 January 2014. And the $5,000 immediate depreciation for cars goes from the same date as well.

– If you want to get a remission of an Administrative Penalty for something like a failure to lodge penalty, these are your best arguments:

“An entity has a genuine, yet mistaken, belief that lodgment was not required as opposed to an indifference to, or a rejection of, their obligation

An entity understood their obligation to lodge but circumstances beyond their control affected their ability to lodge

The amount of penalty imposed by law causes an unjust result

There were credits available to offset the amount of the tax-related liability payable, or

There was extraordinary cooperation during an examination.”

– If you do a lot of depreciation schedules you have a new “effective life” ruling so have a read of the new effective lives effective from 1 July 2014.

Very Small Businesses will not need to make PAYG Instalments in more situations.

– And employers and SMSF Trustees need to start planning for SuperStream.

That would be enough for this week…

Income Tax Legislation

Immediate Asset Write Off

I keep getting asked about the start date of the immediate asset write off reduction from $6.5k to $1k.

People ask this because the first mining tax repeal bill had this measure applying from 1 January 2014 – but the bill was defeated in the Senate…

But now some more clarity. In the MINERALS RESOURCE RENT TAX REPEAL AND OTHER MEASURES BILL 2013 the government confirms that the small business immediate asset write off will be reduced to $1k for assets installed ready for use on 1 January 2014 or later.

This bill should make it through the new Senate.

And by the way, carry back company losses also are retrospectively repealed from 1 July 2013 but the SG rate from 1 July 2014 will be 9.5%.

Funny Stuff Legislation Tax Policy

$9 billion tax exempt entity…

I was going to complain about how sporting entities are tax exempt – at least some are tax exempt.

I was going to compare cinemas to the AFL and wonder why one pays tax and one does not on its profits?

I was going to wonder how having clauses in its governing document saying no “member” will get the profits and on winding up the funds will go to a similar organisation means that at AFL that made a profit of $16 million is not for profit…

But everything is larger in America.

The NFL has been valued at $9 billion and it is tax exempt. Its CEO gets paid $15 million…

Then I came across the strangest thing. Major League Baseball in the US voluntarily gave up its tax exemption. Was it was because they wanted to help the collapsing Government finances? Was it so they could make distributions to their members? Nup. In the US if you are a tax exempt entity you have to declare your executives wages and the baseball executives decided they did not want to disclose what they were paying…

That’s unbiased management.

Tax Policy

Canberra “policy” experts…

Back in 2008 I sat in on numerous meeting of policy “experts”, not tax or housing “experts”, on the set up of first home saver accounts. This was the previous government’s answer to the “housing affordability crisis” – an account you can save for your first home with concessional tax rates on the interest (what interest) and a government co-contribution of 15% up to $750 a year.

I explained that this would just be ignored by most home buyers but it may be of interest of a few high wealth individuals with uni student kids. They get the kids to set one up, give them $5k each year to put into the fund, let the government kick in its $750 each year, and without taking into account any return, at the sand of their four year arts degree (they had to take a year off to travel in the middle of the three year degree) there is $23,000 to buy a loft in the inner suburbs…

The housing experts were just as unimpressed…

But we did not understand how “powerful” these tools will be…

In 2014 the government announces it is closing the scheme – AS THERE HAS BEEN VERY LIMITED UPTAKE… I bet that most of that limited uptake were my high wealth parents helping out their kids.