Article Super

FPA Congress Paper

I can’t be bothered carrying hundreds of copies of my paper for tomorrow’s presentation at the annual FPA Congress up to Brisbane…

So attached is the paper for delegates (and anyone else with an internet connection) to download.

Enjoy (But you have to be at the session to listen to my not very funny jokes…)

FPA November tax presentation


Tax training rules

I know the idea of thinking about the best way to explain the tax system is not the first thought of the day for most people… But to start today…

This is what I think should occur in every tax training event or tax training document. Here are my six tax training rules.

1. The session or document must be “evolutionary”, being that they need to start from first principles and not assume substantial previous knowledge. With a technical discipline like taxation, once you have missed a learning step it is often not possible to engage later in the training.

2. The session or document must explain the “why”, being that it is easier to understand a certain provision of taxation legislation, if you first understand why the policy makers wanted such a provision to exist.

3. The session or the document must be “relevant and practical”, being that it cannot merely be a discussion of the provision of the legislation, but must discuss how a taxpaying entity would apply and comply with the provision, and how a revenue authority would collect any revenue that flows from the provision and ensure compliance with the provision.

4. The session or document must be “empowering”, being that those trained are confident to apply the provisions after they have left the session or read the document as they feel they have a detailed understanding of its purpose, its operation and its outcomes.
5. The session or document must be “open and respectful”. As taxation legislation and administration is very difficult to understand, the session must allow for participants to feel comfortable to ask open questions and responses must be respectful.

6. The session or document must be “fun”. Taxation training can be thought of as “boring” and if this is the case participants will engage less and be less confident as a result. Therefore, a tax technical session must be fun for the participants.

In addition to these six “taxation training” principles, it is important to apply general adult learning principles as proposed by Malcolm Knowles in 1970. These include:

1. Autonomous and self directed learning.

2. Learning that allows for an accumulated foundation of experience and knowledge.
3. Learning that is goal oriented.
4. Learning that is relevant.
5. Learning that is practical.
6. Learning where participants are shown respect.
Many of these factors are in my six tax training rules.

Now I have to live up to my rules.

Article Income Tax

Solar panels and tax – How many people have this wrong???

0010IP_Blue_Journal_Aug (Mansell)

By the way, after writing this article I found that I had been placed on the world’s largest “climate denial” database. Now I new thought a tax article could make me politically incorrect?

Article Income Tax

Lease Fit Out Costs and Division 40…

The two questions here are:

1. For various items included in a fit out, can a taxpayer claim a deduction under Division 40?

2. If they can claim a deduction under Division 40 what is the effective life?

3. If they cannot claim a deduction under Division 40 can they claim a deduction under Division 43?

Interestingly, the Commissioner has issued a series of private rulings in this area. In Private Ruling 79966 the lease agreements for the lease of various stores in shopping centres were for a period of between two and seven years. At the end of each lease period, the lessor and the entity enter into negotiations regarding the re-lease of the store. One of the requirements of the renegotiations is to refit the store. The Commissioner states that a deduction was available under Division 40 for the following items: Floors including carpets and vinyl that can be removed without damage, Signage and wall panelling, Cabinets that can be removed without damage, Security, Computer systems, Graphics, Plasmas and Phone systems. As these items are clearly removable from the premises at the expiry of the lease the Commissioner concludes the items are plant to which Division 40 applies. However, the Commissioner concludes that other items such as roller shutters, internal doors, shade cloth, sails and ceiling batt insulation are in general an integral part of a building and so would not be plant under the ordinary meaning. Therefore, unless they can be classified as plant under the extended definition (for example a motor for the roller shutter would be considered as machinery and therefore plant), it is unlikely that a deduction for a decline in value for these items would be allowed under Division 40.

Other items of a lease fit out that the Commissioner has accepted are able to be depreciated under Division 40 include (see Private Ruling 1011433712630): Air conditioning assets (excluding ducting, pipes and vents), Carpets in commercial office buildings, Curtains and drapes, Fire control and alarm assets, Floor coverings (including vinyl that can be removed without damage), Workstations, Lighting control system (microprocessor based), Lighting system (fluorescent), Generators and Window blinds used in commercial buildings.

In relation to the question of effective life the Commissioner states that the effective life of these depreciating assets held is the term of the lease or the time between refits whichever is applicable. Subsection 40-105(2) states “If, in working out the period, you conclude that the asset would be likely be scrapped, sold for no more than scrap value or abandoned before the end of that period, its effective life ends at the earlier time”. In this case, the depreciable assets in the main need to be replaced or scrapped at the time of a new fit out or ultimately at the end of the lease period. Therefore the taxpayer can self assess the effective life as being either the term of the lease or the time between fit outs, whichever is applicable.