All Business tax questions posts

Re: Invoice in another language

KylieS — Thu, 27 Feb 2020 22:12:05 GMT

Hi ,

Great question.

If you are required to provide them as substantiation of an expense they would need to be translated.

KylieS

Invoice in another language

lapple0128 — Thu, 27 Feb 2020 09:59:09 GMT

Hi Everyone
I am a sole trader and not registered for GST. I recently purchased some goods from overseas and the invoices I received were not in English. Just checking if invoices in another language are acceptable to the tax office?
Thanks a lot!

Re: Family Member lead money to help business

ChrisR — Thu, 27 Feb 2020 05:57:41 GMT

Thanks for your question.

From what you have advised it doesn't sound like there will be any tax implications for you or your parents. You can check out the following pages on our website for more information:

Also check out the information from the other thread that you have posted your question in: Loan from parents

Hope this helps.

Thanks,

ChrisR

Re: GST - electronic distribution platform operators

MayW — Thu, 27 Feb 2020 04:45:06 GMT

Thank you for your post.

As your question is not stating a specific product the following is general.

For an entity to charge Goods and Services Tax (GST), they must be registered for GST.

Hope the information about GST and second-hand goods on our website helps.

Thanks
MayW

MYGOVID system error UNK000001

LS1 — Thu, 27 Feb 2020 04:28:44 GMT

Like many others, I am having trouble setting up the MYGOVID app.

I have tried EVERYTHING suggested (numerous times) to get it running.

I have uninstalled and reinstalled the app. I have cleared the cache and data. I have checked the dates and languages. I have double checked that the data I am entering is correct. I an STILL getting the UNK000001 error.

I have a Levono tab7 (Android 7)

Please help!!!

Re: Exempt Scholorships

TaxedoMask — Thu, 27 Feb 2020 03:41:14 GMT

Use the ATOs tool here to check if the receipient needs to treat the amount they receive as taxable income.

The funds does not need to come from a school. A nfp/scholarship fund can provide scholarships too.

Re: Tax Deduction for removal of Horticultural Plants

MayW — Thu, 27 Feb 2020 03:40:12 GMT

Please visit our website for information how you can claim a deduction for the decline in value of horticultural plants.

Hope this helps.

Thanks
MayW

Re: Tax deductions

TaxedoMask — Thu, 27 Feb 2020 03:28:37 GMT

No, private or domestic expenditure is not deductible, no nexus with the derivation of income.

Re: Newzealand dividends paid to Aust Trusts

TaxedoMask — Thu, 27 Feb 2020 03:14:35 GMT

NZ div: treat as Foreign Income.

Withholding tax: treat as Foreign income tax offset.

Normally Gross less WHT = net. not sure how you got the numbers as it doesn't tie up.

Newzealand dividends paid to Aust Trusts

Derek — Thu, 27 Feb 2020 02:48:13 GMT

Hi, I hold shares in Auckland Airport (ASX: AIA), within a family trust. I'm unable to find on the ATO website how to report my NZ dividends, what supplementry forms to use (if any), and what I need to show, not show or claim. An example of the dividend is (in A$)

Security, rate, shares,declared Div, Supplementary div, withhold tax, imputation credit, gross taxable Div, net payment

Full Ord , 0.10, 750, $79.08 , $13.69 , $13.69 , $16.79 , $93.04 , $ 79.08

For each item above where do I show it on the Trust Tax Form, what do I leave out and what can or can't I claim.

Much Appreciated

Tax deductions

Bush66 — Thu, 27 Feb 2020 01:56:45 GMT

Can a psychologist who works from home claim Gym Hire Equipment as a 'self care' deduction?

Re: Loan provided to the company by the shareholder/director/employee of the company

Mark029 — Thu, 27 Feb 2020 01:11:57 GMT

Hi.

Does it make a difference in the process if the one giving out the loan is a business entity (not under the director's or employee's name), who is also a shareholder of another company that was asking for a loan?

What interest benchmark do we follow at this rate, is it the one under Div7A https://www.ato.gov.au/Rates/Division-7A---benchmark-interest-rate/ which is 5.37%.

It might be a newbie question, but is the 5.37% interest a yearly one or a monthly interest?

Can anyone please assist. This is sorta urgent. I have called ATO for clarification, but I was just transferred line after line.

Thank you.

Re: GST Being Charged in USD

TaxedoMask — Wed, 26 Feb 2020 23:29:17 GMT

Aside from dubious nature of MLMs (see here), high levels of loss for "downstream" participants (see here) and it's similarities to pyramid schemes (see here). The importation of goods (assuming we're talking about physical products) to Australia is generally subject to GST. See here.

I would strongly advise you to consider what you are doing as part of a MLM scheme given the significant number of horror stories.

Re: Significant Global entities & Joint Ventures

NateH — Wed, 26 Feb 2020 23:22:29 GMT

Hi ,

We'll check on this for you and get back to you

Thanks, NateH

Re: New credentials without smartphone

KylieS — Wed, 26 Feb 2020 22:00:06 GMT

Thanks for your feedback.

AUSkey was released over a decade ago to enable business to transact online with Government. The system has not kept pace with modern advances in technology or expectations of the community, and there are a number of issues, including:
• incompatibility with most modern internet browsers
• the requirement for a separate AUSkey for every business a person acts on behalf of
• not available on mobile devices
• difficulty installing and recovering when a password is forgotten.

In addition to user irritants there are significant issues with the misuse of the AUSkey system, including the sharing of credentials and passwords which compromises the integrity of the ATO online environment.

We already conduct proof of identity checks and have a strong history of protecting client data. As we offer more online services to the community with greater access to personal data, a higher degree of certainty of the person interacting with us is required.

AUSkey and Manage ABN Connections (MAC) access to our online services will end on 27 March 2020, replaced with myGovID and RAM. myGovID is a digital identity credential that is unique to an individual, similar to completing a 100 point ID check RAM allows a user to link their myGovID to an ABN.

Your myGovID is unique to you and cannot be shared to ensure the safe keeping of your data and integrity of ATO online systems. Accessing myGovID via a smart device allows use of the identification and security features provided by the smart device – like fingerprint and face verification to provide additional protection of your identity. The myGovID app is only required for the log in step and a user can continue to use their preferred device and browser when accessing online services. This means you can access online services on any device or browser and are not restricted to use on a desktop computer or laptop. It also provides a simpler way to set-up and manage your access and you no longer need to request and setup a new AUSkey when you forget your password.

To setup a myGovID and log in to ATO online services you will be required to verify two of the following four identity documents:
• Australian passport
• Medicare card
• Australian drivers licence
• Australian birth certificate

Additional identity documents, including change of name certificates, marriage certificates and immigration documents will be progressively supported from mid-March 2020.

If you don’t have two of the identification documents required, you may be able to use myGovID with a Basic identity strength to access many ATO online services from mid-March.

Relationship Authorisation Manager (RAM) allows you to set up and manage relationships and authorisations across government online services. You control who can act on behalf of your business online. It gives you greater assurance and visibility over who is transacting on behalf of your business. Linking associated ABNs to your myGovID means you no longer need to setup and maintain multiple AUSkeys for each ABN you are authorised to represent. You only need one myGovID.

If you are operating through a trust we have help available to link your myGovID to your ABN.
Contact our support line and choose option 3 if you have five or less ABN’s to link. We are currently contacting Corporate trustees with more than five ABN’s to create these links for them, as this process will take a little longer.

We hope this helps clarify why we are making the move to myGovID and RAM as well as answer your questions. You can find more detail and links to other resources on our Accessing online services with myGovId and RAM page.

Exempt Scholorships

Lozza18 — Wed, 26 Feb 2020 21:48:53 GMT

Hello,

For a scholarship to be tax exempt to the recipient, I understand the following:

To be eligible for tax exemption, a scholarship, must be open to a wide range of candidates.

Scholarships are exempt from PAYG withholding and personal income tax where payment is:

made to a student receiving full time education, that is, undertaking a full-time course
not received ‘on the condition’ that they become, or continue to be, an employee
principally for educational purposes
does not have any requirement attached that amounts to the student having to render services.

My question is, does the scholarship have to come from a school, college or university or can any entity give a sponsorship that can be exempt to the recipient? What are the criteria for the entity giving the scholarship for it to be exempt to the tax payer?

Thanks

Re: Probe security questions

AJ456 — Wed, 26 Feb 2020 12:22:26 GMT

Accessing any ATO information requires passing an ID check with a sufficient number of points of ID. The questions are not from Probe, the ATO specifies the questions. You'll get asked very similar things when calling the ATO.

Re: Meals & Entertainment

Glenn4802 — Wed, 26 Feb 2020 10:14:59 GMT

FBT is not applicable to a sole trader, assuming they don't have employees.

If an amount is not considered entertainment, an income tax deduction and GST input tax credits can be claimed. For entertainment expenses, you can't claim a deduction or GST credits.

Scenario 1 might be entertainment, depending on the extent of food and drink provided. Some meetings might be entertainment and others not.

For scenario 2, expenses relating to the owner would not be entertainment unless a meal was very extravagant and/or associated with a show. Expenses relating to her partner would be entertainment. For accommodation, only the additional cost relating to the second person would be relevant e.g. if a room cost $100 if one person stays and $110 for two people only $10 would be considered entertainment.

Whether food or drink is entertainment is discussed in TR 97/17. Read the early paragraphs and the table in paragraph 25 to get a good idea of what is considered entertainment. Similar information is included on the general ATO website, but this mainly relates to employers and might be confusing as it contains lots of FBT references.

Small Business Capital Gains Tax Concessions - Passive assets - Business conducted by affiliate or c

Bannisterjbb — Wed, 26 Feb 2020 10:14:36 GMT

Hi,

To satisfy the basic conditions for SBCGT Concessions the asset must be an active asset.

The asset which is to be sold is owned by a company which does not carry on a business.

The asset is used exclusively in a business conducted by a discretionary trust which has a turnover of more than $2 million.

The 2 shareholders in the company control the trust and have received all distributions from the trust equally.

Net asset value of all connected entites and affiliates does not exceed $6 million.

Section 152.10 (1A) provides that if the taxpayer (the company) does not carry on a business the basic conditions are satisfied if an affiliate or connected entity of the company is a CGT small business entity.

Does this mean that because the trust is not a small business entity that the samll business CGT concession cannot be claimed even though the net assets or all connected entites and affiliates do not exceed $6 million?

Re: Meals & Entertainment

Aphrodite — Wed, 26 Feb 2020 08:44:55 GMT

Yes of course - I forgot to say that it is a sole trader.

GST Being Charged in USD

heleneanne65 — Wed, 26 Feb 2020 08:26:23 GMT

Hi guys! I am part of an MLM that is relatively new in this country and everything is charged in USD including the GST, Is this ok? How does an Australian tax get charged to us in USD? Thanks guys!

Re: Meals & Entertainment

Glenn4802 — Wed, 26 Feb 2020 07:48:52 GMT

The answer will vary depending on whether the business is in the name of the individual or if it sits in a company or trust.

Meals & Entertainment

Aphrodite — Wed, 26 Feb 2020 06:24:00 GMT

After reading information on different scenarios as follows, i am still unsure what the transactions should look like. While i feel confident in determining that these are not an FBT situation, I am still unsure as to whether GST can be claimed and allocated as a business expense.

1. Meetings with clients - food & drink paid for, (sometimes including alcohol)

2. Business owner goes on the road for business related activity, accompanied by her partner with food, drink & accommodation involved

Clarification is much appreciated on this.

Re: Business tax

NateH — Wed, 26 Feb 2020 02:35:38 GMT

Hi ,

Just adding an extra resource to the great answers by and - We have some information on our website for when you are starting a business that you may want to look through as well. It takes you through what you need to do to get set up and meet your tax and super obligations.

Thanks, NateH

Re: Is transferring money from business bank account to personal bank account taxable?

TaxedoMask — Wed, 26 Feb 2020 00:27:17 GMT

Drawings from private company to individual is subject to Div 7A rules - see here.

Effectively its treated as a loan (P&I) or a deemed dividend.

People used to "borrow" funds from their private company (at 0% interest since they control it) which allowed them to cap their individual tax rate at the corporate tax rate - hence the need for this rule.

Overseas Hosting Companies charging GST on USD amounts

daniel_rossi — Tue, 25 Feb 2020 14:16:29 GMT

I don't believe this has been thought through properly and needs investigation. I believe Ebay are also doing it. Overseas Cloud hosting companies are forced to charge GST. But months later I discovered they are skimping extra off the top by charging GST off the USD bill not the converted AUD amount. It's paid via Paypal so paypal could convert and add the GST. But they are doing it on their side as the subscription amount.

Not only are the USD bills becoming expensive due to the trashed dollar, I am being charged extra a month on top. When if you convert the amount to AUD then add 10%, the bill should be much less.

They get more when the dollar dives further.

What they are doing is criminal and illegal and need help trying to find answers. I complained but they are going to keep doing it.

Amazon Cloud charge in AUD therefore the GST is correct. It's my VPS hosting place, Vultr.

Is transferring money from business bank account to personal bank account taxable?

Opel135 — Tue, 25 Feb 2020 13:51:25 GMT

Hi,

If I run a business as a company with me as a Director where I do not pay myself an income (I already have a permanent fulltime job), am I allowed to use the income from the company for personal expenses?

Would transferring that money from my business bank account to my personal bank account be deemed as personal income, even if I've paid business tax?

Are deductions allowable for fraud?

PeaceLilly — Tue, 25 Feb 2020 08:01:53 GMT

Hi ATO community,

I am finishing up my company's tax return and just have one question before I submit it.

I sent a somewhat small sum via bank transfer to be credited to an investment trading account to a U.K. limited company. This money was meant to be segregated from their operational expenses. Unfortunately, before the money arrived at them, their website went down and I was unable to contact them and I have been unable to retrieve the money back. The company the money was sent to is still registered and is solvent. I have reported this to Action Fraud U.K. (police) but still haven't received a response.

Would I be able to claim this amount as a deduction under theft or potentially an investment loss?

Thank you for your time and answers.

Re: Discretionary Trading Trust

KylieS — Tue, 25 Feb 2020 05:25:03 GMT

Hi ,

Not it doesn't apply.

When they are employees the trustee is responsible for the payment of income tax and super.

KylieS

mygov and RAM

Russellcorp — Tue, 25 Feb 2020 05:14:40 GMT

I am concerned with the removal of the auskey and the introduction of the use of your personal mygov account for business use. I work for a Liquidator and I do not want my clients linked to my mygov account. How does the RAM work? Is this the best thing for me to do. Does that work similarly to the auskey?

Work Related Injury - Working Director not covered by Workers Comp

TOMACCOUNT — Tue, 25 Feb 2020 03:29:12 GMT

I am looking for some further information about income tax/GST deductions on medical expenses incurred by a company. The situation was related to a single director company that does not have workers compensation insurance. The injury was sustained by the director who is a working director and performs all the work for this company (it is quite a physical role) and this injury occured during his normal work day. At this stage he doesn't take a wage and there are also no other employees within the business.

In WA it is optional to cover a working director for workers compensation so could these injury related expenses be deductible/ GST creditable (if applicable) to the company? Or does this become a personal expense of the director? Can you point me in the right direction to do some further research on this?

Family Member lead money to help business

JessicaSpring — Tue, 25 Feb 2020 02:25:06 GMT

Hello, my parents will borrow their personal saving with no interest to help me out with my business cash flow issue. I will return the money in a month time. may I know if there is any tax implication by doing this?

Re: Register bank details?

ChrisR — Tue, 25 Feb 2020 01:06:48 GMT

Thanks for your post.

You can update your financial institution details with us. Our website explains how you can do that. Your account details will also be updated when you submit a tax return.

If you are in business and you want to update the financial institution details of your business, you can do that via the Business Portal. Have a look at the update your details page for more information.

Hope this helps.

Thanks,

ChrisR

Re: Buyers Identity

ChrisR — Tue, 25 Feb 2020 00:47:46 GMT

Thanks for your question.

Tax invoices for sales of $1,000 or more need to show the buyer's identity or ABN. In turn, the buyer's name is enough to meet this requirement. You don't have to include the buyer's address.

You don't need to include the buyer's identity on tax invoices for taxable sales of less than $1,000.

For more information about tax invoices and the information they must include, check out our website. While a buyer's address is listed in the examples, it isn't compulsory.

Hope this helps.

Thanks,

ChrisR

Re: Business tax

macfanboy — Tue, 25 Feb 2020 00:03:38 GMT

Always best to seek a tax professional to complete your first one as you can learn quite a lot from them, don't be afraid to ask lots of questions and mention it is your first when you make the appointment.

They should ask you lots of questions before and during the appointment.

If you feel confident moving forward then you can do it yourself in future years.

Re: Business tax

TaxedoMask — Mon, 24 Feb 2020 23:49:04 GMT

Under the self assessment system, you can either lodge the return yourself or get a tax adviser/accountant to lodge the return and render assistance to you.

There is no "free service" that helps businesses fulfil their tax obligations. With this said, comprehensive materials are available from the ATO's website. eg. for 2019 company returns - see here. For how to lodge your return - see here.

Re: Is Reimbursement of Cancelled Holiday Cost Taxable Income for an ABN?

KylieS — Mon, 24 Feb 2020 22:00:59 GMT

Hi ,

Great information and advice from .

A complex question, if you need more information please contact our early engagement area for assistance.

KylieS

Re: MyGov verification text

KylieS — Mon, 24 Feb 2020 21:53:58 GMT

Hi ,

This would be concerning. Check out the information on the myGov Security page regarding suspicious activity on your account and what you should do.

KylieS

MyGov verification text

DChew — Mon, 24 Feb 2020 19:33:18 GMT

Good morning all. I woke up at 6am and checked my mobile phone. I received an myGov Security verification text (msg ref: SV001) at 4.50am while I was asleep. I did not request for any access code. Does this mean that someone is trying to access my ATO account? Would someone able to advice me on what to do next,,, change the password? Much appreciated, Cheers, D.

Business tax

Addy — Mon, 24 Feb 2020 13:38:19 GMT

Does ATO offer free tax help for people who run a business? I am currently selling skin care and just wanted to know if I can access help to do my own tax returns thank you

Tax Deduction for removal of Horticultural Plants

JE_72 — Mon, 24 Feb 2020 07:20:54 GMT

I have planted grapevines as an agricultural producer. As part of plantng the new vines I have removed some old olive trees to make way for new vine planting

What I need to know is how to claim a deduction for the removal of the old olive trees. Is the removal considered a capital deduction or immediate write off in its own right,or do I add the cost of the removal to the capital cost of the new vines and depreciate as part of the new vines?

GST - electronic distribution platform operators

LG123 — Mon, 24 Feb 2020 05:54:25 GMT

Does online sales facilitator need to charge GST on second hand personal goods sourced by other individual/business (the actual vendor) and then resale through the facilitator's online platform? The sales facilitaor will charge a commission including GST to the vendor, but should the faciliatator also charge GST on the goods itself on the resale and then pass it on to the vendor?

Thanks.

Re: GST and/or FBT on retirement gift to employee

AriH — Mon, 24 Feb 2020 05:53:32 GMT

Because the value of the gift exceeds $300, it is not exempt from FBT. Generally employers can claim an income tax deduction for the cost of providing fringe benefits and claim GST credits for those items provided as fringe benefits. I encourage you to check out the FBT guide for employers. Our website also has examples of ETP's. You will also find helpful links to determine the category that applies to your circumstances.

Hope this helps.

Ari

Re: Treating a Building Improvement Correctly

Justine_Ellis — Mon, 24 Feb 2020 04:40:56 GMT

Thank you

Agree the determination below and that it is not immediately deductible.

I was planning on adding our portion of the cost as a leasehold improvement and depreciating over 5 years which is also the term of the lease. I will go ahead with this.

Thank you for your consideration in this matter.

Re: Treating a Building Improvement Correctly

NateH — Mon, 24 Feb 2020 04:29:00 GMT

Hi and ,

We have heard back from our technical team on this one.

It is likely that such an arrangement can be characterised as a joint construction of improvements to the property that you lease. On this view, both you and the landlord are sharing the costs. As you do not own the improvement you are not entitled to a capital works deduction for the expenditure. It is likely that your share of the costs is not immediately deductible as it secures an enduring benefit of a capital nature. However, your share of the cost may be deductible over five years as a Business related cost where you meet the requirements listed in that information.

Thanks, NateH

Re: NDIS for plan managers

AriH — Mon, 24 Feb 2020 03:06:03 GMT

In this situation you do not need to account for GST. It is only relevant to NDIS and the service provider that is charging GST.

GST would only apply to you if you are registered and charging clients for this service you are providing for them. Take a look at how GST works.

Hope this helps.

Ari

Re: How does GST work on STRIPE fees and STRIPE Taxes

TaxedoMask — Mon, 24 Feb 2020 02:12:03 GMT

You are based in AU. They provide the service to you. They charge you GST as required. This is separate to the GST that you charge your customers.

Re: Australia Director

TaxedoMask — Mon, 24 Feb 2020 02:05:26 GMT

No. The ATO does not simply waive a requirement that's written into the Corporations Act (it's not a tax issue per se). Consider getting a temp Aussie director.

Re: Is Reimbursement of Cancelled Holiday Cost Taxable Income for an ABN?

TaxedoMask — Mon, 24 Feb 2020 01:52:34 GMT

Hahaha if the professionals can't figure it out, your chances of certainty from here would be... slim. Should get assurances from Company A in the event of adverse outcomes from the ATO that they would compensate.

- the monies received from Ltd A will be treated as assessable income, and

Agreed (s20-20).

- the costs associated with cancelling the holiday will not be deductible as the money was not spent for the purpose of generating business income.

I would say that it is deductible. There is a question of whether it'll fall under s8-1 or s40-880.

My fear is that the latter is more likely so there could be a timing issue. I say this as the receipt of this amount should not be characterised as revenue/assessable by the employee. After all the nature of the underlying amount being compensated is both capital and private in nature. A deduction was not obtained by the employee going on this holiday - so there's no mischief here.

Since the income is "capital", it would be difficult to argue that the nature of the payment from C to D is on revenue account. Rather, it is a compensation payment that is capital in nature. Since this does not form part of the cost base of an asset - I am of the view that its a s40-880.

Now when you pay C, I cannot see the nature of the payment changing. so may have the same issue. There may be an out somewhere but it hasn't come to mind.

- therefore, in order not to be out of pocket, we would need to recover $9434 + GST for a $5000 holiday ($5000/0.53)

It's not subject to FBT (on the basis that it is a compensation payment and not an expense payment fringe benefit) so I would still say its $5,000 and no need to gross up. After all you are paying the person to not go to his holiday and to render services to you / Company A instead.

The link provided from Company A is unhelpful at best.

Re: GST on per diem

KylieS — Mon, 24 Feb 2020 00:36:32 GMT

Hi ,

Thanks for your patience.

We have been in touch with our GST experts and they have advised that they need to get some more information from you to be able to give you an accurate answer.

Can you please send your question to GSTMail@ato.gov.au

KylieS

Re: Starting a new business

KylieS — Sun, 23 Feb 2020 21:24:07 GMT

Hi ,

Great info from .

Check out this information on our website regarding starting your own business.

KylieS

NDIS for plan managers

melindasullivan — Sun, 23 Feb 2020 21:08:30 GMT

I am a Plan Manager for NDIS which means I manage the budgets of clients. When the client receives a service I claim the money (invoice) from NDIS and then forward it to the provider. Most sevices do not have GST applied but in the event that they do, do Ineed to account for GST or do I not need to because I am simply claiming the funds thay are entitled too and then passing them on.

I am not paying for services and then being reimbursed, just to be clear.

I use a seperate bank account specifically for client funds to go in and out of.

Re: Starting a new business

macfanboy — Sun, 23 Feb 2020 01:12:40 GMT

Once you apply for an ABN and have been granted one you will need to lodge tax returns every year you hold that ABN regardless of income.

If you are intending to turnover more than $75,000 per financial year you need to register for GST and file BAS statements ever 3 months paying the GST that you have collected and claiming the GST on the expenses that you incurred.

Starting a new business

Bumpy — Sun, 23 Feb 2020 00:37:48 GMT

I’m thinking of kicking off a new business soon. My question is, if I register for an ABN and register the business, but NOT operating or trading right away, what needs to be done as far as tax???? Do I still need to lodge business statements etc???

Re: New credentials without smartphone - comments may be censored

jamie200 — Sat, 22 Feb 2020 02:01:17 GMT

I do hope comments are not being censored, as this is my second attempt to post this. If so, I will be taking it up with ATO management.

Unfortunately the standard of IT projects at the ATO has dropped dramatically over the years. First was ECI, then ATO Certificates, then Auskey, now MyGovID, it just seems that the business analysis gets worse with each product.

A good case study is MyGovID (so badly named, and nothing to do with MyGov!). First, an individual should not have to use their personal phone for registering as a business representative, this crosses the line between personal and business use of assets and is also a security risk. Instead the ATO should have issued tokens based on authorised users, similar to Auskey, where a master user can issue susidiary tokens. Using an employees "smartphone" is a recipe for disaster, security-wise and is a honeypot for hackers. In addition, many people simply don't want ATO software running on their smartphones, especially something resembling an Australia-Card.

Secondly, how does a tax agent or business owner function when they prefer to use their desktop or laptop computer for business work? Why do they need to refer to their smartphone at all? This is a really stupid restriction and obviously not thought out, someone at the ATO and digital office got it in their head that they HAD to make MyGovID on smart devices only. What happens if the smartphone is stolen or lost? Many people don't want fingerprinting and facial recognition accessible by the ATO or any government app on their phones for that matter, while the ATO already capture voice during helpdesk calls.

The relationship authorisation manager (RAM) is another badly designed system, one that should never have seen the light of day, but someone thought it would be a good idea to link individuals to businesses, rather than treat ABN's in their own right. Auskey/ATO certificates seem to have got this right, MyGovID got it very wrong.

Thirdly, the ATO released MyGovID before even having a solution for how to authenticate corporate trustees of a trust, something that Auskey did with ease. MyGov can not authenticate a trustee that is not an individual. Again, the business analysis team failed miserably in the design of MyGov and MyGovID and released an insufficient product.

Lastly, people without Australian drivers licenses or Australian passports can not sign up for MyGovID, this includes anyone with only a medicare card and nothing else for verification. The reliance on Drivers License and Passports as a means of authenticating people is not sufficient. What about permanent residents who have ABN's and don't have aussie documents? What about overseas investors? These peoples can not currently register for MyGovID. Another failing of a badly designed system, which is to replace Auskey. PR's could previously get an Auskey.

It is beyond belief that the MyGovID team acknowledge the above failings, but have rushed for this deadline to implement a backdoor Australia-Card, that many people can not register for MyGovID that previously had an Auskey. Honestly, something rotten is happening in the ATO and this just proves it. How do I know? Well, lets say that most of the corporate knowledge in that place has disappeared and replaced by cheap imported labour.

Re: Is Reimbursement of Cancelled Holiday Cost Taxable Income for an ABN?

cedric42 — Fri, 21 Feb 2020 21:40:14 GMT

Many thanks for your response TaxedoMask. The information contained in your link is excellent.

For context, I am the owner of Pty Ltd B. The advice from our accountant is that :

- the monies received from Ltd A will be treated as assessable income, and

- the costs associated with cancelling the holiday will not be deductible as the money was not spent for the purpose of generating business income.

- therefore, in order not to be out of pocket, we would need to recover $9434 + GST for a $5000 holiday ($5000/0.53)

Pty Ltd C has received similar advice.

Ltd A, however, has advised that Pty Ltd B and Pty Ltd C should not include the reimbursement as assessable income with this reference:

https://www.ato.gov.au/Business/Income-and-deductions-for-business/Assessable-income/What-income-to-exclude/

On this basis, they have advised that we only need to recover $5000. However, I can't see how the reimbursement fits into any of these categories in the ATO link provided.

I was hoping there might be a specific ruling for our scenario or failing that, a response from the ATO that I can forward to Ltd A.

I expect there is a different accounting treatment in the scenario where Ltd A reimburses a cancelled vacation for one of its own employees and that this may be the source of the confusion.

Australia Director

ProfitSee — Fri, 21 Feb 2020 18:22:53 GMT

We are a small software company and conducting internaltional business. Our Australia director left us unexpectly when we decide to liquidate our AU subsidiairy. Our Australia accountants told us we needed to find an Australia resident to templorarliy take on public officer role to able to lodge our final income return. However, we are winding up our AU business and have no employees in Australia that can represent us. So we wonder if the ATO can consider waiving the public officer requirement and allow 2 US directors to sign the final pre-liquidation tax return instead?

Thank you in advance for your answer,

Discretionary Trading Trust

Hedayat — Fri, 21 Feb 2020 09:59:19 GMT

My question is about beneficiaries of a trading trust who also work for the trust. In general, trust distributions don't attract super guarantee contribution requirements and the tax liability is upon the beneficiaries when they receive the distribution at the end of the year. Does the above scenario apply to a trading trust with beneficiaries working for the trust? and with drawings paid throughout the year to beneficiaries would be offset against the share of profit at the end of the financial year?

Re: New credentials without smartphone

johns100 — Fri, 21 Feb 2020 06:13:42 GMT

Unfortunately the standard of IT projects at the ATO has dropped dramatically over the years. First it was ECI, then ATO Certificates, then Auskey, now MyGovID, it just seems that the business analysis gets worse with each product.

A good case study is MyGovID (so badly named, and nothing to do with MyGov!). First, an individual should not have to use their personal phone for registering as a business representative, this crosses the line between personal and business use of assets and is also a security risk. Instead the ATO should have issued tokens based on authorised users, similar to Auskey, where a master user can issue susidiary tokens. Using a employees "smartphone" is a recipe for disaster, security-wise and is a honeypot for hackers. In addition, many people simply don't want ATO software running on their smartphones, especially something resembling an Australia-Card.

Secondly, how does a tax agent or business owner function when they prefer to use their desktop or laptop computer for business work? Why do they need to refer to their smartphone at all? This is a really stupid restriction and obviously not thought through, someone at the ATO and digital office got it in their head that they had to make MyGovID on smart devices. What happens if the smartphone is stolen or lost? Many people don't want fingerprinting and facial recognition accessible by the ATO or any government app on their phones, while the ATO already stealthily capture voice during phone calls.

The relantionship authorisation manager is another badly designed system, one that should never have seen the light of day, but someone thought it would be a good idea to link individuals to businesses, rather than treat ABN's in their own right. Auskey/ATO certificates seem to have got this right, MyGovID got it very wrong.

Thirdly, the ATO released MyGovID before even having a solution for how to authenticate corporate trustees, something that Auskey did with ease. MyGov can not authenticate a trustee that is not an individual. Again, the business analysis team failed miserably in the design of MyGov and MyGovID.

Re: Is Reimbursement of Cancelled Holiday Cost Taxable Income for an ABN?

TaxedoMask — Fri, 21 Feb 2020 04:25:50 GMT

Asking your accountant or tax adviser is probably your best bet.

Imho were looking at deductions and income all the way up the chain and a compensation payment where the recoupment does not fall inside s20.20 for the individual.

Good reading available here.

Re: Directors Loan

TaxedoMask — Fri, 21 Feb 2020 03:29:56 GMT

Since he is shareholder and director, its a 7A loan (takes precedence over FBT). Since repaid within a month - should not be an issue.

Directors Loan

Joe2019 — Fri, 21 Feb 2020 02:08:26 GMT

My friend puts private expenses (house rent etc) through his private company's books and then repays the company in the following month. At any given time, the account will have a debit balance. Is this considered a director's loan? [I am helping my friend with his taxes this year. In the previous year, the person helping him did not report the debit balance as a director's loan, and to the best of my friend's knowledge, he has not signed a formal loan agreement with the company]. Thank you

Re: Significant Global entities & Joint Ventures

GregoryC — Thu, 20 Feb 2020 23:24:28 GMT

Hi, is this still applicable if the arrangement is a Joint Operation?

Register bank details?

Drumma81 — Thu, 20 Feb 2020 05:40:07 GMT

Buyers Identity

Rishi1706 — Thu, 20 Feb 2020 04:02:10 GMT

Buyers Identity - On a valid tax invoice do we need to have buyers address? or buyers name is enough?

There is no clear answer on Identity

Re: Client dinner's

TaxedoMask — Thu, 20 Feb 2020 04:00:19 GMT

It's entertainment.

client meal = cannot claim deduction (no GST credits)

employee meal = deductible but subject to FBT (can claim GST).

Or you calculate above but apportion 50/50 if you are using the 50/50 method.

see here.

Re: Held Refund

ChrisR — Thu, 20 Feb 2020 01:45:50 GMT

Thanks for your post.

We aim to process electronic business activity statements within 12 business days from lodgment. Any resulting refunds are usually issued shortly after.

Of course this assumes that all of your outstanding activity statement lodgments are now up to date and there are no other reasons (e.g. tax debt) for us to hold on to your refund.

You can have a look at the BAS refund section of our website for more information about why we may keep your refund or why it may be delayed.

Hope this helps.

Thanks,

ChrisR

Re: New credentials without smartphone

RuralChurch — Thu, 20 Feb 2020 01:31:41 GMT

Correct!

This is my email to my local member, Barnaby Joyce, copied to the opposition

"I wish to alert you to a decision by the ATO that has the potential to generate significant adverse publicity for that organisation (compare RoboDebt).

For many years, small businesses, charities and not-for-profit entities have been able to handle their tax obligations online using a facility called AusKey.

As of 30th March 2020 the ATO will disable this facility.

The AusKey will be replaced on that date by myGovID which must be installed on a smart phone (Apple or Android).

I am the treasurer of the local Rural Church and use AusKey for online submission of their BAS/IAS returns.

Otherwise I am independent of that organisation and do not wish my personal phone to be used to validate their online access.

Also, I am a volunteer and do not see that I should be providing a phone to service a poorly considered change by the ATO.

Banks and other major organisations have less draconian ways of securing access to business portals.

On the online forum run by the ATO (community.ato.gov.au) an ATO officer suggests that those uncomfortable with linking their personal device should use third-party business software, tax or BAS agent etc. Our church continues to exist because of its volunteers and cannot bear this additional financial burden.

I do not accept the ATO decision and will no longer be able to lodge IAS/BAS statements in compliance of ATO managed legislation."

Client dinner's

MBannister — Thu, 20 Feb 2020 01:21:53 GMT

Hi,

I am just after information regarding if taking clients out to dinner as a thank you for referrals can be claimed as tax deduction. I am trying to determine if this falls under entertainment and would not be deducatible.

Am i able to claim everything as an expenses or only the clients portion and not my own meal?

Thank you

GST and/or FBT on retirement gift to employee

TCarrington — Thu, 20 Feb 2020 00:11:05 GMT

Retirement gift to former employee over $9k including GST. We have paid for gift using company funds.

Can we claim GST on gift?

Do we need to pay FBT for retirement gift to employee?

Are retirement gifts considered as ETP?

What are the implications to the company for ETP

Re: Treating a Building Improvement Correctly

Justine_Ellis — Wed, 19 Feb 2020 23:13:08 GMT

Hi Duncan

Agree with your asset description and depreciation period comments - I have depreciated all other building related work according to the term of the lease and I also depreciate monthly like yourself.

My usual auditor is out of the country so my reason for asking here was that another person in their business advised me to receive the owners 15K as income which I don't feel is correct - this was just a quick phone conversation so it is possible I misconstrued the information.

However, for my own peace of mind I will wait for a difinitive answer from the ATO as you say and then go back to the auditor and confirm that they agree.

Thanks for your input, it is helpful.

Re: Treating a Building Improvement Correctly

DuncanS — Wed, 19 Feb 2020 22:36:16 GMT

I believe the Owner would have a Non-Current Asset Account called Building Improvements Feb 2020 and the Tenant would have a Non-Current Asset Account called Leasehold Improvements Feb 2020.

The Depreciation/amortisation rates of Building Improvements and Leasehold Improvements would be different.

I understand Leasehold Improvements are amortised over the term of the lease eg 9 years.

In my practice, I do monthly Journals for Depreciation/amortisation as business owners have told me they wish not to have depreciation recorded as a year end adjustment.

I agree with you that it is far better to determine the accounting/tax treatment at the beginning rather than after the end of the FY.

Has your auditor approved your proposed accounting treatment?

Will await the ATO's thoughts.

Duncan

Re: Reimbursing a vendor for work completed.

Biggiesmalls — Wed, 19 Feb 2020 22:20:52 GMT

It's really up to them to work how much they charge for a service. It's similar to a tradesman putting a mark up on materials they use for a job to make a profit.

How does GST work on STRIPE fees and STRIPE Taxes

Kavitha — Wed, 19 Feb 2020 16:04:57 GMT

Dear team,

I want to know how GST works on STRIPE fees and STRIPE taxes.

Eg:

I have $ 83 received to my bank account from sales where there is a Stripe fee of $2.46 and a Stripe tax of $0.25 applicable to it.

Further, I have sales inside australia and outside australia as well. Hence please let me know how the above figures work with GST;

1.when it comes to Australian sales and

2.when it comes to Non Australian sales

Highly appreciate your prompt response.

Thank you.

Re: Deemed distribution - UPE

Joachim — Wed, 19 Feb 2020 02:39:33 GMT

Thank you . I will follow up the matter with the EEA.

Re: Treating a Building Improvement Correctly

Justine_Ellis — Wed, 19 Feb 2020 01:53:20 GMT

Thanks for this. I've spoken with the building owner and the point we're at is that we believe that I should:

Receive the 30K into Fixed Asset Clearing

Invoice the owner 15K.

Offset the payment of 15K against FA Clearing and receive the remaining 15K into Building Improvement Assets.

We both end with a 15K asset and corresponding payment.

Please let me know your thoughts.

Re: Treating a Building Improvement Correctly

ChrisR — Wed, 19 Feb 2020 01:45:52 GMT

Thanks for your post.

Interesting question. We're looking into this one for you and will get back to you as soon as we can.

Thanks,

ChrisR

Re: Incorrect Buyer Details on Invoice over $1000

MBAChristine — Wed, 19 Feb 2020 01:28:43 GMT

Hi,

Thanks for your response. I have addressed this with the client and the don't see what the big issue is (mindblown). That's why I was hoping for some resource directly from the ATO to back me up.

To me it's common sense.

Re: GST on per diem

ChrisR — Wed, 19 Feb 2020 01:15:19 GMT

Thanks for your post.

Interesting question. We're looking into this one for you and will get back to you as soon as we can.

Thanks,

ChrisR

Re: Incorrect Buyer Details on Invoice over $1000

SYoungTax — Wed, 19 Feb 2020 01:05:51 GMT

Hi MBAChristine,

I don't think there is anything on ATO site that would speak of this specifically. However, if what your situaiton is as you have described, I think you know that it would be best that you client request that the supplier provide him with the correct details on the purchase invoice prior to making payment on that account. This would probably save time and any future hassle should you client be reviewed/audited.

Cheers!

Re: Incorrect Buyer Details on Invoice over $1000

MBAChristine — Wed, 19 Feb 2020 01:30:34 GMT

Hi,

Thanks for your response.

My issues is more that the invoice is made out to an unrelated company - my client hasn't paid it yet. My view is that if the supplier has invoiced another business, the client shouldn't pay the invoice, they should request an amended invoice.

Otherwise two entities could be claiming GST for the same goods & my client would be claiming it fraudulently.

I can't find anything on the ATO website which defines this.

Re: GST

DuncanS — Wed, 19 Feb 2020 00:33:16 GMT

The ATO Fact Sheet states a Tax Invoice must be held.

This is what I have informed business owners for the past 20 years.

Example 1 and 2 from the ATO show the wording Tax Invoice.

The ATO Fact Sheet in Point 1 states the Document is intended to be a Tax Invoice.

I would suggest the way for a Document to be intended to be a Tax Invoice is to label the Document a Tax Invoice (as per Example 1 and 2).

Does the ATO consider the use of Bill/Receipt instead of Tax Invoice to be sufficient intent?

This is not what I would inform business owners.

My observation is that some Business Owners have not updated their POS system to include the word Tax Invoice. One would suggest this would not be overly costly and would give the customers an indication that that a business is meeting its record keeping/ATO obligations.

Duncan

Re: Incorrect Buyer Details on Invoice over $1000

SYoungTax — Wed, 19 Feb 2020 00:25:57 GMT

Hi MBAChristine,

Referring to ATO's webiste when you can claim a GST credit https://www.ato.gov.au/business/gst/claiming-gst-credits/when-you-can-claim-a-gst-credit/, you can claim GST credits if the following conditions apply:

You intend to use your purchase solely or partly for your business, and the purchase does not relate to making input-taxed supplies.
The purchase price included GST.
You provide or are liable to provide payment for the item you purchased.
You have a tax invoice from your supplier (for purchases more than A$82.50).

I think that bullet point 3 is relevant in this case where you have to show that your client provided or was liable to provide payment for the item that was purchased.

At the end of the day, the deductibility and hence claimability of the expense and the GST need to be "incurred", being the amount that is actually paid or when a definitive obligation to pay the amount arises.

Obviously if the purchase invoice is made out to your client, then this ticks all the above points.

Otherwise, Is there the chance that your client contact the supplier and get them to address it to the correct entity as suppliers are usually accommodating to their customers, especially as they usually are also aware of the ATO's requirement.

Is Reimbursement of Cancelled Holiday Cost Taxable Income for an ABN?

cedric42 — Wed, 19 Feb 2020 11:49:22 GMT

Please advise on the following scenario where:

* Ltd company A (major company) has subcontracted the services of Pty Ltd B (SME with multiple employees, registered for GST and subject to payroll tax)

* Pty Ltd B has subcontracted the services of Pty Ltd C (registered for GST, does not pay payroll tax)

* Pty Ltd C has a single Employee D.

* Employee D pays tax at top marginal tax rate of 45%.

* Employee D has prepaid a holiday valued at $5000.

* Ltd A has requested that Employee D cancel their holiday and will pay for reimbursement of all costs.

* Pty Ltd C will have recover Employee D holiday cancellation costs of $5000 from Pty Ltd B as Pty Ltd C is not a supplier to Ltd A.

* Pty Ltd B will have recover cancellation costs of $5000 from Ltd A.

Assuming that

1. Pty Ltd C invoices Pty Ltd B for $5000 reimbursement

2. Pty Ltd B invoices Ltd A for $5000 reimbursement

3. Ltd A pays Pty Ltd B $5000.

4. Pty Ltd B pays Pty Ltd C $5000.

5. Pty Ltd C pays Employee D $5000.

My questions are:

i) Will Pty Ltd C income of $5000 be treated as Taxable? If so, in order for Employee D not to be out of pocket - should Pty Ltd C invoice Pty Ltd B for $9434 + GST? (i.e 5000/0.53 as Employee D is on the top marginal rate of 45% and subject to 2% medicare levy?)

ii) Can Employee D of Pty Ltd C claim the cancelled holiday as a business expense?

iii) Should Pty Ltd C add GST to invoice to Pty Ltd B?

iv) Should Pty Ltd B add GST to invoice to Ltd A?

v) Should Pty Ltd B (that pays payroll tax) include the reimbursed costs paid by Pty Ltd C to Employee D in its payroll tax calculations?

vi) Are the reimbursed costs of cancelled vacation paid by Pty Ltd C to Employee D subject to FBT?

Thank you in advance

Reimbursing a vendor for work completed.

Naomi_J — Tue, 18 Feb 2020 23:35:33 GMT

Hi -

I work for an organisation. One our our clients damaged a residence of the Non-Govt Organisation they were staying at. The NGO paid a contractor to fix the damage, the contractor invoiced the NGO and charged GST which they paid. They have invoiced us for the amount the contractor invoiced them plus GST so the contractors invoice was $774.00 ($70.36 GST) and the NGO's invoice is $851.40 ($77.40 GST). This doesn't seem right - should they be charging GST on top of an amount that already had GST charged?

Thanks

Re: GST is it claimable on Google Adwords in Australia

SYoungTax — Tue, 18 Feb 2020 13:57:14 GMT

Thanks Duncan!

Good reminder about getting a tax invoice. Information can be found here: https://www.ato.gov.au/Business/GST/Tax-invoices/

Cheers!

Re: Double Tax Agreement - Withholding Tax - Sale of Business to Malaysian Company

BradPh — Tue, 18 Feb 2020 04:45:15 GMT

Thanks TaxedoMask. Appreciated your assistance.

Re: Double Tax Agreement - Withholding Tax - Sale of Business to Malaysian Company

TaxedoMask — Tue, 18 Feb 2020 04:43:58 GMT

sounds about right though it will depend on the facts and details of the arrangement struck.

Re: Double Tax Agreement - Withholding Tax - Sale of Business to Malaysian Company

BradPh — Tue, 18 Feb 2020 04:37:10 GMT

Based on my initial reading, providing it is a full sale of the 'right' then it is not a royalty and thus no withholding?

Re: Double Tax Agreement - Withholding Tax - Sale of Business to Malaysian Company

BradPh — Tue, 18 Feb 2020 04:32:43 GMT

Yes it is a company. Just selling the business assets - plant, equip, goodwill/IP

Re: Double Tax Agreement - Withholding Tax - Sale of Business to Malaysian Company

TaxedoMask — Tue, 18 Feb 2020 04:29:56 GMT

Are you selling the shares of the company (assuming its a company here) or when you say business you are referring to business assets?

If the latter is the case, consider TR 2008/7.

Re: GST

laurap08 — Tue, 18 Feb 2020 04:12:31 GMT

Thank you ! That is a great help.

Re: GST

TaxedoMask — Tue, 18 Feb 2020 04:07:20 GMT

If you register for GST - you need to charge GST. There's no waiting to hit the threshold.

I dont understand why they won't charge GST though - since they charge you the GST on top (but you get it back from the ATO) the net effect for B2B is nil.

GST

laurap08 — Tue, 18 Feb 2020 03:42:17 GMT

Hi All,

Hoping someone can assit with my question below:

I have a subcontractor that is regisered for GST, however does not include GST amounts on the invoices that he sends to me (note services are not GST exempt).

When asked why the subcontrator does not collect GST, the response was beacuse "they wont meet the threshold".

Is this going to lead to reporting issues for me? If you are registered for GST you need to collect the GST irrevalent of the threshold? Or do you not start collecting it until after the threshold is reached?

Thanks.

Double Tax Agreement - Withholding Tax - Sale of Business to Malaysian Company

BradPh — Tue, 18 Feb 2020 03:41:44 GMT

I have a client who is selling his business to a Malaysian Company. The sale will be a CGT free due to 15 yr exemption. However, the buyer is saying th purchase is subject to 10% withholding tax on the purchase as intelletual property is considered a 'royalty' and thus subject to withholding. Does anyone know how to access an exemption here considering the sale is a tax free capital gain?

Re: Business building employee residence

KylieS — Tue, 18 Feb 2020 02:45:53 GMT

Hi ,

We will look into this one on your other post.

KylieS

Incorrect Buyer Details on Invoice over $1000

MBAChristine — Tue, 18 Feb 2020 02:44:42 GMT

Hi,

A client has received an invoice for over $1,000 which isn't made out to them directly, however states their name in a reference field. (The invoice is made out to another non-related entity).

I'm under the understanding that the supplier needs to supply a valid tax invoice addressed to their entity directly to be able to claim the GST. Can you please confirm? I have been unable to find anything specific to this situation in my research which I can demostrate to my client.

Thanks in advance for your assistance in this matter.

Re: GST

JasonT — Tue, 18 Feb 2020 02:00:33 GMT

Hi ,

Thanks for posting.

The receipt doesn't need to have the words "Tax Invoice" specifically on it. It needs to have the intent of being a Tax Invoice.

Tax invoices

I hope this helps,

JasonT

Re: New credentials without smartphone

SouthernSon — Tue, 18 Feb 2020 00:35:56 GMT

Just so I understand this correctly:

The Australian Government is now forcing it's citizens to agree to whatever terms and conditions of either one of two international & unrelated companies (which the T&C's are ever-changing) - in order to continue to function as we have previously - to deal with various government departments (including but not limited to the ATO)?

Re: ABN number for invoicing working overseas

JasonT — Mon, 17 Feb 2020 23:45:46 GMT

Hi ,

has provided some useful info and a helpful link.

Please refer to this post, it looks we've answered this question previously.

Thanks and let us know if you have any further questions,

JasonT