Tax Policy

Tax changes still outstanding… Not much left

According to my count there are only 23 changes to the tax and super system left for the government to do to have completed all of the outstanding announcements.

And most of these 23 are BORING…

Number one is to get the mining tax, and the associated tax concessions, through at attempt two.

There are four things in the budget (repealing the Seafarers Offset???, Reducing the R&D Tax Incentive by 1.5%, locking in the private health insurance thresholds and allowing people to be refunded excess non-concessional contributions).

And then there is the promised reduction in the company tax rate to 28.5% from 1 July 2015.

The remaining 17 are previous government announcements.

My favourite is fixing earn-out arrangements and the Small Business Concessions – The Treasury has be “working” on this since 2007… and we are still waiting…

The next interesting thing is to replace the GST-free going concern with a reverse charge arrangement.

And after this, if you don’t care about Managed Investment Trusts, International Tax, Taxation of Financial Arrangements, loss recoupment rule, functional currency, the debt equity rules or Offshore Banking Unit rules (that make up 8 technical changes) there are only 7 changes.

These are automatic information from businesses to the ATO, Super fund mergers, four minor changes to CGT, and a change to GST and connected with Australia rules.

With a tax white paper coming up it is unlikely there will be many more tax changes announced in the next couple of years. lets see if the Treasury can clear all these issues soon (come on CGT gurus, you are making up more than 20% of the outstanding issues and one of these in seven years old…).

Outstanding tax changes

Income Tax Legislation

$6,500 Immediate asset write-off stays – until 25 August

The mining tax is not repealed!!! The Senate has voted to keep its amendments which say you can get rid of the mining tax but all the concessions that mining tax was supposed to fund have to stay… No tax in and lots of payments out…

And the next sitting date in 25 August. So the law today says the instant asset write off is $6,500, and the Senate will not reduce the amount to $1,000 from 1 January 2014.

What do I think will happen? I really have no idea at all but my best guess is the government will have to consider keeping the tax and the concessions that go along with it. So it is possible that we might, just might, have a $6,500 threshold.

But how do I prepare a tax return? Personally I would still go with $6,500 and warn a client that you may have to amend… But you won’t have an absolute answer until as late as September!

This Senate is an absolute disgrace!!!

Funny Stuff Income Tax

All animals are equal, just some are more equal than others..

The Commissioner of Taxation has just written to some of its staff. The letter states that the staff may get a shock when they get their payment summaries.

You see, like almost every employer in Australia, the Commissioner pays allowances while employees are travelling.

We all know that the amount we pay is the Commissioner’s reasonable allowance amounts. We do this as if we stay under these amounts there is no PAYG Withholding and the amount does not appear on payment summaries.

But it appears the Commissioner paid his staff travel allowances above his own reasonable limits. Worse still he did not withhold…

So employees now have to find what they spent their allowance on so they can claim a deduction… Because the Commissioner cannot comply with his own reasonable travel allowance limits…

UPDATE: And tomorrow the Commissioner will update his determination on reasonable travel allowances in TD 2014/19… Beautiful timing!

Income Tax Legislation

Immediate Asset Write-Off Mark 2

I take it all back!!!

Clive Palmer has just announced the instant asset write off of $6,500 stays or he wont support the repeal of the Mining Tax…

Without his three Senators the proposed reduction to the instant asset write-off for small businesses will not happen and so this write-off will stay at $6,500… And there will be an immediate write of of $5,000 for cars, and carry back losses will still apply, and the schoolkids bonus stays, and the low income superannuation contribution stays (this is effectively the refund of the 15% contribution tax for those with marginal tax rates less than 15%).

I might like some of these policies (love the low income super contribution and the high instant asset write-off) but when you are spending 10% more than you are making every year, decreasing your revenues by billions of dollars is not wise… But very popular.

Not wise but very popular… That might be a good description of much that goes for tax policy debate…

Funny Stuff

Weird Taxes #345

In the 1st century AD, there was a specific tax on… urine. The urine from public urinals was sold to laundries. And each buyer had to pay a tax based on the volume purchased… A urine GST.

Funny Stuff Tax Policy

What the Federal Government spends your taxes on…

So if you earn a bit over $80k in a year you end up paying about $20k in tax – this includes the medicare levy as it should as hypothecated revenue (being revenue collected for specific expenditure) cannot occur under our Constitution so lets just call the medicare levy additional income tax…

But what does the Federal government do with this $20k? Well now we have an answer. And so will everyone else who gets an income tax assessment.

If only we got the same document in relation to the GST we pay, the rates we pay to local councils, the stamp duties we pay to states…

But now you know that for every $1 you pay it tax, a pensioner gets 15c, a parent gets 10c, a disabled person gets 7c, an unemployed person gets 3c, 17c goes to health (states fund more), 8c goes to education (state fund more), defence gets 8c, a “general” public servant, probably in the highest income city in Australia… canberra… gets 7c, and interest on debt gets 3c. Everything else is little bits and pieces.

Do you like this budgeting…