Funny Stuff GST Tax Policy

Queensland. Beautiful one day, tax insanity the next…

The Queensland government raises about $44 billion a year in taxes, fees…

About 20% of this amount comes from the GST that is collected by the Federal Government and passed on to the states and territories.

This makes the GST almost as large as all the other taxes combined that the Queensland government charges (all those taxes together come to about 24% of all the revenue).

And the GST is almost as large as all other grants the Federal Government makes to Queensland (about 28% of all Queensland government revenue).

So the GST is by far the most important single revenue item for the Queensland government…

And the Queensland opposition leader can’t even quote the rate is 10%.

She knows exactly how she wants to spend the revenue but has no interest on how the revenue is collected…

But before I laugh at Queensland politicians I need to remember that my local Canberra representative thought that the government paid for the superannuation increases for workers…

Where do they find these people?

UPDATE: And we now have a Premier who can’t quote the GST rate…

Income Tax

Data matching gets all big brother

The Commissioner has announced another data matching program, but this is one is a bit different.

The Australian Taxation Office will acquire details of entities from State and Territory motor vehicle registries for the 2013-2014, 2014-2015 and 2015-2016 financial years. And with these 2 million records (they are only looking at cars greater than $10,000 market value) they will do the following.

“… Use the motor vehicle purchaser’s data as an indicator of risk, along with other data holdings, to identify taxpayers that have purchased vehicles with values that are not commensurate with the income they have reported”

So if you have been hiding your income from the Tax Office, don’t use it to buy a flashy car… Or anything else that the Commissioner can data match like property, investments or bank accounts.

And for the creative lawyers the Commissioner will be looking for where related parties or owned entities buy the flashy car as well…

FBT Income Tax Super Tax Policy

Tax Impediments Facing Small Business…

The Board of Tax report on Tax Impediments Facing Small Business has been made public. This report, and the Government’s response make some interesting reading.

What do you think about:

  1. “Based on an analysis of business population data, the Board recommends that the small business entity turnover threshold be increased to at least $3 million and investigate the feasibility of an increase to $5 million.” The Government says they will think about it…
  2. “The Board recommends an increase to the ‘minor and infrequent’ threshold from $300 to, at least, $500. This is arguably a reasonable level that keeps the threshold current.” The Government says they will think about it…
  3. “The Board also recommends that there be an investigation of the possibility of aligning the FBT year to the income tax year.” The Government says they will think about it…
  4. “The Board recommends that the superannuation guarantee charge be calculated on the basis of OTE rather than salary and wages to align it with the way that superannuation contributions are calculated. While OTE is a more complex definition it would mean no change to employers’ current calculations. The Government supports this recommendation and has agreed to implement this proposal from 1 July 2016 as part of the package of reforms to be implemented to reduce small business superannuation compliance costs.
  5. The Board recommends that the calculation of the SG Charge components be redesigned by legislation. And the Government will do this as well.
  6. Decision tools from the ATO on PSI, employee vs contractor and whether you will be carrying on an enterprise.

So there are a few good measures but the report does the standard cop out of saying more reviews are need into the Small Business CGT Concessions and the way entities are taxed differently (especially trusts). Still waiting for the Board of Tax review on unpaid present entitlements to companies and Division 7A

Cases FBT

You win some, you lose some… and I am a bad loser…

I have patted myself on the back before for an AAT decision on FBT at my local airport. I may have congratulated myself a bit early as in Commissioner of Taxation v Qantas Airways Limited [2014] FCAFC 168 the Full Federal Court overturned there being no car parking FBT for employers who provide car parking for employees at Canberra Airport.

Now, like any upstart tax advisor I have to prove I am right and the collective wisdom of the Federal Court is wrong (as they have been shown in a few high profile appeals to the High Court – aka MBI Properties)… I quote from their learned justices…

In this case, whilst it is true that the operator of the parking stations imposed the restriction that the car parks were available only to airline passengers and meeters and greeters of airline passengers, the car parks nonetheless are public car parks in the sense that in the ordinary course of the business the car spaces are available to any member of the public on the contractual terms stipulated. The contractual terms do not mean that the car park spaces are not available to members of the public but, rather, that conditions are imposed on the use of the car park by members of the public.

So restricting the use of a car park to a certain part of the public at any time, rather than the whole public all the time, is not limiting its use as at any time any member of the public could be in the part of the public that can use it. Yes I know that is confusing (because it is a stupid argument) but in Australia, anyone can be Prime Minister (other than those with criminal records but lets ignore this…). According to this decision, the Prime Minister’s car park at Parliament House is “available to the public”. To smart by half…

Income Tax

The biggest share data match ever…

The Commissioner has announced the largest data-matching program regarding details of share transactions from share registries for the period 20 September 1985 to 30 June 2016. That is right, from 20 September 1985! Over 95 million records and 1.2 million individuals …

He is looking for:

  • Identify tax returns that may not include accurate information relating to the disposal of shares and securities;
  • Identify taxpayers that have outstanding returns or not correctly registered for their taxation obligations;
  • Develop intelligence and indicators to detect emerging trends and issues; and
  • Enhance voluntary compliance through initiatives such as pre-populating information into taxation returns.

So it looks like he is trying to pre-populate more share data. This could be very helpful when preparing tax returns.

Income Tax Legislation Planning Idea Planning Stuff Tax Policy

Start up Employee share scheme just got fun….

We have blogged about this before but we now have some draft legislation that will make 1 July 2015 lots of fun for advice to start up companies.

While this draft legislation makes other changes as well**, this will also make remunerating certain employers lots of fun. These Start up companies will be able to do two things:

1. In relation to shares, a discount on shares of 15% or less is exempt from income tax. Also, the shares then subject to the capital gains tax system with a cost base reset at market value.

2. In relation to rights, a discount on “out of the money rights” is not subject to upfront taxation and the right, and resulting share once acquired, is then subject to capital gains tax with a cost base equal to the employee’s cost of acquiring the right.

So what is a Start up company? No company in the group has existed for 10 years, the entities are not listed, the aggregate turnover is less than $50 million and is Australian resident. Yep… that means most of the companies in Australia.

So get ready to advise on this…

**In “normal” ESS deferred schemes not covered by the startup concessions, where income tax is deferred, the taxing point is the earliest of:

For shares

  • when there is no real risk of forfeiture of the shares and any restrictions on the sale are lifted;
  • when the employee ceases employment; or
  • 15 years after the shares were acquired.For rights
  • when there is no risk of forfeiture of the rights and any restrictions on the sale are lifted;
  • when the employee exercises the rights;
  • when the employee ceases employment; or
  • 15 years after the rights were acquired.