All TaxTime posts

Re: Trust

Sue83 — Thu, 27 Feb 2020 05:05:04 GMT

Thanks very much for the clarifications!

You've made it very clear to me where I confused myself!

Re: Trust

TaxedoMask — Thu, 27 Feb 2020 03:26:29 GMT

Trust is a "flow through" entity unless for some reason (eg. no beneficiary presently entitled) the trustee is assessed.

This means that the trust itself normally does not pay tax on the income it makes. Rather it's assessed in the "hands" of the beneficiary.

In the case of a company, if it receives say $1,000 in distributions. then it treats this as income - and pays $300 in income tax on this. Here the trustee doesnt pay any tax. Note that the trustee/trust and the company are separate entities and should be considered separately.

Re 2nd query, if the trustee buys a property, isn't it treated as acting for the Trust? Div 7A applies when private companies lending to the trust, but in this case the trustee buys and mangaing assets for the trust, div 7A shoudn't apply right?

Or maybe the Corporate Trustee as a beneficiary of the trust, its accounts need to be seperated from it's function as a trustee?

Holy ... yeah that's... "sub-optimal" to put it lightly. You cannot and should not ever mix the Corporate Trustee (in its capacity as trustee) with the Corprate Trustee (in its capacity as a beneficiary). These need to be kept distinctly separate - though generally speaking, this practice is highly discouraged as there is a high chance of getting things wrong and the consequences of getting it wrong are... severe.

Do you have an accountant and tax adviser? It sounds like you need proper advice that is outside the scope of this forum.

Re: Trust

Sue83 — Thu, 27 Feb 2020 02:00:27 GMT

Thank you for your answers!

But I am a bit confused - with the 1st query, you said No, but also said "company receving the distributions pays tax at the corporate tax rate". In this case, the trustee is a corporate/company, and receives distributions as a beneficiary, so the trustee/company pays tax at corporate tax rate?

Or maybe the Corporate Trustee as a beneficiary of the trust, its accounts need to be seperated from it's function as a trustee?

Thanks!

Re: Trust

TaxedoMask — Wed, 26 Feb 2020 06:05:52 GMT

I know a corporate trustee can also be a beneficiary of the trust; if some income of the trust is distributed to the trustee as a beneficiary, does the trustee pay corporate tax on the distribution received for the year?

No, the company receving the distributions pays tax at the corporate tax rate.

And then can use the after tax money to buy property for the trust?

You can, but in doing so you are effectively loaning funds from (what I assume is) a private company to the trust -- which is caught under the Div 7A rules.

Trust

Sue83 — Wed, 26 Feb 2020 05:32:37 GMT

Hello,

Can someone please help to answer a question regarding Trust Distribution please?

I know a corporate trustee can also be a beneficiary of the trust; if some income of the trust is distributed to the trustee as a beneficiary, does the trustee pay corporate tax on the distribution received for the year? And then can use the after tax money to buy property for the trust? I got asked this question from a friend and my instinct answer is no, but I cannot find hard evidence to argue with him.

Can somebody please advise? thanks!

TAX AMENDMENT

ali786 — Tue, 25 Feb 2020 07:19:34 GMT

I DID MY AMENDMENT FOR THE YEAR 2014-2015 AND 2015-2016 IN YEAR OCTOBER 2019.

DOES THIS AMENDED INCOME IS SENT TO CENTERLINK FOR REVIEWING MY FTB FOR THAT YEAR

OR ATO DOES NOT SEND INFORMATION TO CENTERLINK IF AMENDMENT IS PAST 2 YEARS.

My NOA was issued on 24 October 2019 for these 2 years. I called centerlink for any Top up FTB Payment for that year, so they send my uploaded NOA from humservices website for data matching. But uptill this date no data match has been done or any new of the FTB payment arrived.

I just want to know does ATO releases information to centerlink if amendment is for past 2 years.

Re: Property Subdivision holding costs

NateH — Mon, 24 Feb 2020 23:58:20 GMT

Hi ,

No need to apologise! I'll get somebody to check on this for you and get back to you with an answer

Thanks, NateH

Re: Old Tax Records

KylieS — Mon, 24 Feb 2020 22:10:42 GMT

Hi ,

We would usually only have access to the time period that you are required to keep records.

KylieS

Re: Novated lease

MayW — Mon, 24 Feb 2020 02:54:39 GMT

Salary sacrificing is a private arrangement between you and your employer.

You will need to refer to your employer and salary packaging provider for assistance.

For more information have a look at the salary sacrifice page on our website.

Hope this helps.

Thanks MayW

Re: Downloading MyGovID

KylieS — Sun, 23 Feb 2020 22:52:37 GMT

Hi @mestorius,

Understand that this would have been very frustrating for you.

This has worked for other users;

• Ensure your device ‘time and date settings’ are correct for your region or set to automatic
• Ensure your client’s device ‘language’ settings are set to English (Australia).

Once these settings are confirmed clear the cache and data as follows:

• Open phone Settings
• Select Apps

Select myGovID > Storage > Clear Cache and Data

Set up myGovID again using the same email, personal details and Identity documents. (try using an alternate internet connection that is strong).

We also have a support line to assist.

KylieS

Re: TPAR - Payment to Non Resident Overseas Contractors (IT Services)

Atul — Sat, 22 Feb 2020 23:13:08 GMT

Thank you Rachael for your reply. It really helped me in clearing some of my doubts.

I didnt know about 'Statement by a Supplier' form. I will get it filled by my overseas contractor. However, looking at the form, seems like its expecting an Australian address while my contractor is an Indian without any Australian address. Thinking of getting it filled somehow by writing outside the text boxes. Form has space for 4 digits postcode whereas India has standard 6 digits postcode. Even space for State is not sufficient.

Also, just looked at the sample hard copy of TPAR form, it’s also expecting an Australian address. May be online form has capability to handle overseas payee address. Will wait until July to check it online.

Thank you again for your help and sorry for my late reply. I never got alert in my mail box.

Many Thanks

Atul

Re: Australian government Taking Taxes To reverse climate change ?

Manndy — Sat, 22 Feb 2020 19:35:16 GMT

Hey, I don't think this is the right forum for your question. This is questions about tax.
Ps. Never heard of such an app.

Re: Lump Sum Part E

paulking192 — Sat, 22 Feb 2020 07:46:12 GMT

Hi Macfanboy thanks for the reply just needed some reasurance to go back to my employer for another payment summary.

Cheers

Paul

Re: Lump Sum Part E

macfanboy — Sat, 22 Feb 2020 06:29:04 GMT

Lump-Sum E is not included in your gross income.

These are for back pay from previous tax years.

You should include in your return which years they are from to help the ATO work out a possible tax offset for you.

Lump Sum Part E

paulking192 — Sat, 22 Feb 2020 01:28:01 GMT

Hi, on just having my tax done, seems that my PAYG payment summary has my Lump Sum ( $1856 from three years ago) included in Part E and in the gross payments as well. I checked my payslips and it seems that im being taxed twice for this lump sum E. Is this right? from the ATO website part E should be seperated from the gross payments, but the wording doesnt seem clear cut to me. Can someone help me out.

Cheers

Paul

Re: DVA White Card and Medicare exemption?

macfanboy — Fri, 21 Feb 2020 23:52:52 GMT

never heard of it nor do I believe it.

https://www.dva.gov.au/benefits-and-payments/income-support/you-and-your-pension/chapter-9-what-about-taxation#medicare

Re: Genuine Redundancy Tax

macfanboy — Fri, 21 Feb 2020 23:15:36 GMT

For the 2018/19 financial year, the base limit is $10,399 plus $5,200 p.a. for each complete year of service.

So it will be tax-free.

Re: Instant tax write off

macfanboy — Fri, 21 Feb 2020 23:08:58 GMT

Assuming income of only $10,000 from your business and no other deductions apart from the Motor Vehicle, you will have a $5,000 business loss to carry forward to next year.

So personal = $90,000 and business =-$5,000 = $85,000

Downloading MyGovID

mpestorius — Sun, 23 Feb 2020 22:45:21 GMT

OK [MYGOVID DOWNLOAD DOES NOT FIT IN YOUR STUPID CATEGORIES]

So far 4 hours spent

Tried to download on my very functional Android Marshmallow - 6 SMART Phone

Didn't work. Has to be NOUGAT or above. That is a smart phone less than 3 years old. ONEPLUS2 is not upgrading to Nougat.

Flew to Brisbane

Set up the IPAD with my personal identity because it is IOS 10 and above - it says Version IOS 10.3.3

I could use that I thought - Keep trying. Keep trying. Don't get discouraged. You can do this.

Didn't work

Found the other person complaining here that 10.3.3 doesn't work - It proclaims that it might be "a settings issue" but no further information is provided. I"m happy if you buy me a new Nougat+++ phone or a 11+++ IOS IPAD. But don't waste my time please.

Re: TAX FREE UK PENSION LUMP SUM

KylieS — Fri, 21 Feb 2020 03:19:46 GMT

Hi ,

We have provided information on this topic on another post.

If this doesn't provide you with enough information you should contact our early engagement area, it is a complex matter and they will be able to assist you in whether you need a private ruling or not.

KylieS

Instant tax write off

Harris1 — Fri, 21 Feb 2020 02:46:08 GMT

Hi all,

My quetsion is around the SME instant tax write off. I am fully employed at my day job and started a business (recently), nature of both jobs is different.my business is registered as a soletrader and ABN linked to my TFN.

My question is how will tax write off work? Given that I have 2 income streams now.

I have no substantial revenue from the business to deduct for example a vehicle for $15,000. Will my tax liability be combined, i.e salary and revenue from business (given that I am an individual and soletrader)? let's say total of salary (90K) and revenue (10K) is $100,000, will in this case my assesable income for tax be $85,000?

Novated lease

niroop — Fri, 21 Feb 2020 01:18:50 GMT

Hi,

I have a Novated lease with my employer now and it is coming up for re lease. I want to get a new car and this current car. I have enough funds $4k in my Salary packaging account(budgeted costs were more than my actual cost) built up in the last 5 years. Can I use this fund for my new lease or do this need to be returned back through payroll(to be taxed) and start from zero for my new car?

Any help would be great, thanks

Niroop

Re: Genuine Redundancy Tax

niknewland — Thu, 20 Feb 2020 22:25:43 GMT

Hello Kylie, yes, I was in the middle of editing my question when I fell asleep 🤷🏼‍♂️

I understand there's a tax free threshold for redundancy payments up to a certain amount but I'm unsure how to calculate this.

I was employed for 3 years and the redundancy payment I'm set to receive is $9,360. Any idea how much I should be taxed on this?

Re: Genuine Redundancy Tax

KylieS — Thu, 20 Feb 2020 21:46:53 GMT

Hi ,

Did you have a question regarding Tax on redundancy.

KylieS

Genuine Redundancy Tax

niknewland — Thu, 20 Feb 2020 14:41:06 GMT

DVA White Card and Medicare exemption?

TonyG1 — Thu, 20 Feb 2020 01:48:50 GMT

Our new Tax agent has DVA White card holders as clients who he says are exempt from paying the Medicare Levy.
He believes I qualify for a Medicare Levy exemption, based on the fact that I “receive a tax-free pension and have a DVA file”.
I’ve looked at the ATO website and this exemption is only for Gold Card holders, Blind Pensioners, Foreign resident or not entitled to Medicare benefits. Has anyone heard of White card holders receiving exemptions?

Old Tax Records

rozzaaaa — Thu, 20 Feb 2020 00:03:05 GMT

Does the ATO have records of PAYG statements from employers from upto 20 years ago?

Re: Property Subdivision holding costs

DuffSovietUnion — Wed, 19 Feb 2020 05:06:44 GMT

Hi Nate,

Thank you for your reply.

Sorry to keep bothering you, but how would you calculate the component of the pre 2016 holding costs that would be part of the CGT cost base? For simplicity, I'll say that the house they were living in until then was demolished and then split into two equal units, one of which is now their primary residence and the other which was sold.

Thanks.

Re: Property Subdivision holding costs

NateH — Wed, 19 Feb 2020 04:59:15 GMT

Hi ,

You are correct.

The capital costs of ownership, such as holding costs, will not be taken into account for the net income calculation, but a certain component of the per 2016 holding costs may be taken into account for the CGT calculation.

Thanks, NateH

Re: Property Subdivision holding costs

NateH — Wed, 19 Feb 2020 03:44:37 GMT

Hi ,

I'll double check that for you and get back to you!

Thanks, NateH

Re: Property Subdivision holding costs

DuffSovietUnion — Wed, 19 Feb 2020 01:33:30 GMT

Hi Nate,

Thank you for your reply. I think I've got most of that.

My main question was about the holding costs incurred before the house was demolished and my client was living in it, mainly interest on the home loan. Am I correct in assuming that these costs are unable to be claimed as they were pre demolition and incurred while my client was the main resident?

Re: Property Subdivision holding costs

NateH — Wed, 19 Feb 2020 01:22:59 GMT

Hi ,

Two calculations must be undertaken to work out this scenario. On the basis that the sale of the subdivided was a commercial transaction, an amount of net profit or loss needs to be calculated. As part of that calculation, the market value of the land at the time of the transaction needs to be taken into account.

Even though an amount of income based on net profits may arise, a CGT calculation still needs to be undertaken. There is an ‘anti-overlap’ rule that allows for ordinary income to be taxed and if the capital gain is greater than the income then the excess capital gain amount is added to taxable income.

Also, the capital costs of ownership, such as holding costs, will not be taken into account for the net income calculation, but a certain component of the per 2016 holding costs may be taken into account for the CGT calculation.

For CGT purposes, the third element of the CGT cost base is found at section 110-25 (4) and provides that the cost base includes:

a) interest on money you borrowed to acquire the asset; and

(b) costs of maintaining, repairing or insuring it; and

The CGT calculation involves multiple steps to this because the house that was there has been demolished, the land subdivided, and two new units constructed.

The allocation of the costs largely ignores any right to claim a main residence exemption.

Demolition of the house
Most of the cost base at 2016 will be allocated to the land that remains after the house is demolished. The exception will be for any costs that specifically relate to the house and not the land in which case they will be included in the cost base of the house.

Subdivision of the land
The cost base that was allocated to the land in the previous step is allocated to the two blocks of land on a reasonable basis (Taxation Determination TD 97/3).

Construction of new units
The costs incurred in relation to the construction of each of the units will be added to the cost base of the land associated with that unit.

Sale of unit
Apply the normal CGT provisions and then reduce the capital gain by the amount that is treated as ordinary income as a result of the profit making undertaking (do this before apply any 50% CGT discount).

Thanks, NateH

Re: TAX FREE UK PENSION LUMP SUM

rogerwalker — Tue, 18 Feb 2020 02:28:01 GMT

did anyone get a definative answer to the question of Australian tax due on " tax free lump sum from uk pension"

i have been a member of the uk miners pension (defined contribution) fund for 44 years last 12 years of which as tax resident in Australia since 2007, i thought from reading ATO pages that tax would be due only on the portion of the lump sum since leaving the uk i,e 12/44 x lump sum amount, or the increase in the fund value x 12/44 from the day i came to australia, reading from this link

https://www.ato.gov.au/law/view/document?LocID=%22PAC%2F19970038%2F305-70%22

hard to understand what is applicable earnings calc and if it applies to me.

been in touch with ATO, not very helpful at all. - no knowledge of the link and refferals, still wating for call back from them.

Re: Capactiy to Pay information

KylieS — Tue, 18 Feb 2020 01:47:00 GMT

Hi brettj,

We have some information on our website that explains that we may need you to show that your business is viable. There is also a Business viability assessment tool on the bottom of the page.

Check it out to see if it is helpful, if you are unsure I would definitely make contact with the relevant area.

KylieS

Re: Deductions for Newspaper subscriptions - Used for playing the Stock Market

ChrisR — Mon, 17 Feb 2020 05:00:54 GMT

Thanks for the post.

Subscriptions to technical, scientific, trade, business or professional journals, information services, newspapers and magazines are deductible, provided the subscriptions relate to the production of your assessable income.

For more information about personal tax deductions, have a look at the books, periodicals and digital information expenses page on our website. You can also read about claiming a tax deduction for other operating expenses for businesses.

Hope this helps.

Thanks,

ChrisR

Re: New relationship and PHI

LynetteK — Sun, 16 Feb 2020 09:49:13 GMT

That makes sense, thank you! :-)

Re: New relationship and PHI

Iheartrefunds — Sun, 16 Feb 2020 01:19:21 GMT

As long as you are all covered it shouldn't matter. I think you'll find that your new partner doesnt have to serve out waiting periods again if he is already covered. Other health funds will waive them when you join. Check it out anyway.

Re: Tax Offsett

MCA_Accountants — Sat, 15 Feb 2020 10:19:17 GMT

Costs to rectify defaults in work you have done and received income for are tax deductible - not a tax offset.

Re: Claiming Commercial Vehicle

MCA_Accountants — Sat, 15 Feb 2020 10:15:16 GMT

You need a log book.

Chat to your accountant about whether it is best to hold it personally or in the company

Re: Capactiy to Pay information

MCA_Accountants — Sat, 15 Feb 2020 08:08:29 GMT

If unsure what the ATO want...ask them.

They are looking to ensure that you can afford to make the payments in your proposed payment plan based on your expected income. I'm guessing you are running a business and have a decent debt amount - in which case probably cash flow projections.

New relationship and PHI

LynetteK — Sat, 15 Feb 2020 05:26:30 GMT

Hi there,

need some advice regarding PHI and new relationships. I've moved in with my new partner and I have two dependant children, he has none. I don't have PHI but my partner does. For tax purposes does it matter if I have a separate PHI policy than my partner or do we need to have a joint PHI policy? We have looked into family policies but then my partner will have to go through the whole 12 month waiting period for stuff again. So legally speaking is he allowed to keep his "Singles" policy and am I allowed to get a "Single Parent with Children" policy using our combined family income when I apply for the policy (not that I am working/earning anything at the moment)?

Capactiy to Pay information

brettj — Fri, 14 Feb 2020 07:04:53 GMT

I have requested a payment plan for my tax debt from the ATO for my small business but the ATO has come back & requested 'capacity to pay' information. What do I supply, and is there a form I can complete that would ensure I supply the necessary information?

Re: Property Subdivision holding costs

KylieS — Fri, 14 Feb 2020 06:10:18 GMT

Hi @ DuffSovietUnion ,

We will do some research on this one and get back to you.

KylieS

Re: my govid

NateH — Fri, 14 Feb 2020 04:45:03 GMT

Hi ,

If you are a principal authority or authorisation administrator you can create authorisations for employees and other individuals who work on behalf of the business.

We have a page about how to set up authorisations which explains it all.

Thanks, NateH

Re: how long are you logged out of Mygov ID if you make too many mistakes

KylieS — Fri, 14 Feb 2020 01:11:58 GMT

Hi ,

It can be up to 24 hours check out the information on our help page.

Thanks

KylieS

Re: Working remotely in Mexico

TaxedoMask — Thu, 13 Feb 2020 23:59:54 GMT

No double taxation (we have a DTA with Mexico) but you will need to consider where you are a resident for tax purposes. Residency tests for Australia are here.

If you are an Australian tax resident (not withstanding the fact you are living overseas) you will be tax on your worldwide income. If you pay tax in Mexico on income derived from there, you typically get a tax credit when you declare the amount and pay tax on it here.

Working remotely in Mexico

abbeywiseman — Thu, 13 Feb 2020 23:40:28 GMT

Hi,

I am an Australian resident and citizen. I am thinking of living in Mexico for the next 6 months (maybe longer if it goes well). I will be working remotely for either an American company or the United Nations (yet to be decided). How will my income be taxed? Will I be subjected to double taxation?

Thank you!

Re: Deductions for Newspaper subscriptions - Used for playing the Stock Market

Kartik — Thu, 13 Feb 2020 09:30:51 GMT

Use the newspaper as a source of information for stock purpose only [ Financial Times ] . Not for personal use.

my govid

DiamondSinger — Thu, 13 Feb 2020 04:14:00 GMT

To link Mygov to RAM - does have to be completed by owner of business or can it be completed by Practice Manager

please let me knwo

how long are you logged out of Mygov ID if you make too many mistakes

DiamondSinger — Thu, 13 Feb 2020 04:07:25 GMT

Re: Deductions for Newspaper subscriptions - Used for playing the Stock Market

wonka5 — Thu, 13 Feb 2020 03:02:53 GMT

Do you only by the newspaper for that purpose? Or do you use the paper for personal use?

Re: Ex-gratia payments

ChrisR — Thu, 13 Feb 2020 01:55:44 GMT

Thanks for your question.

It looks like we have already answered your question in another thread. You can check it out here: Ex-gratia payments

Thanks,

ChrisR

Deductions for Newspaper subscriptions - Used for playing the Stock Market

Kartik — Wed, 12 Feb 2020 15:25:58 GMT

Hi Team,

Can we claim on costs of Newspaper Subscriptions, used as a tool and source of information to invest in the stock Market.

Kind Regards,

Kartik

Re: Property Subdivision holding costs

wonka5 — Wed, 12 Feb 2020 11:29:38 GMT

I agree with you. These costs are part of the market value uplift. Hoping someone can give us a link to a ruling to confirm as this one had me thinking

Re: Security issues

KylieS — Thu, 13 Feb 2020 00:04:55 GMT

Hi ,

Providing us with your concerns gives us an opportunity to improve our services to you and the community.

The ATO are moving away from desktop and/or browser authentication and all users will need their own compatible smart device to use myGovID. Accessing myGovID via a smart device allows use of the identification and security features provided by the smart device - like fingerprint and face verification. It also enables a user to logon to, and transact from any device and commonly supported browser (so a user can continue to use their PC or laptop). Businesses may need to adjust workplace policies to enable use of the smart device to log on to an online service.

The Australian Government is serious about safety and privacy online. As part of the ongoing commitment to security in a constantly evolving digital economy, AUSkey and Manage ABN Connections (MAC) will officially be decommissioned on 27 March 2020. myGovID is a digital identity credential that is unique to an individual. Individuals will access their myGovID via their smart device when logging into online government services for both personal and business/work purposes.

The app is designed to run on modern and secure operating systems, we use secure cryptographic credentials to authenticate our users and these credentials are further protected by their device biometric or password. myGovID is accredited under the Australian Trusted Digital Identity Framework which strictly controls how identity data is collected, stored and used. When using government online services, personal information won’t be shared without permission.

Based on community feedback, a new feature will be added in Relationship Authorisation Manager to allow a Principal authority or Authorisation administrator to run an access history report. This will allow the Principal authority or Authorisation administrator to view and export the access of all users or a specified user for the requested ABN including the last login to Access Manager.

KylieS

Claiming Commercial Vehicle

bgibson23 — Wed, 12 Feb 2020 02:11:36 GMT

Hi all,

I have recently registered my company as a sole director and i'm seeking advice on just how much i can use the business to fund the on raod costs of my personal commercial vehicle (i.e fuel, insurances, loan repayments, registration) The vehicle will be used almost exlusively for work related purposes and only rarely used for personal use.

My understanding is that no log book method or cents/km method is necessary for a vehicle classed as commercial. What are the type of records i must keep?

I am also wondering if it's in my best interest to transfer ownership into the company name or to keep the vehicle in my name. I am open to either option dependent on which is better.

Thank you in advance,

Braden

Re: Refund Cancelled but Notice of Assessment Issued??

KylieS — Tue, 11 Feb 2020 22:45:34 GMT

Hi Absyd13,

The cancelled stage means that we are reviewing your return, we haven't cancelled it. It is part of the process. Check out the knowledge base article that we have regarding Where's my tax return.

Thanks

KylieS

Tax Offsett

ChrisCanDo — Tue, 11 Feb 2020 21:09:18 GMT

Just wondering, is it possible to claim workplace damage?

Being self-employed, I do a lot of work for different clients at their homes. If for example though, I dropped a hammer and I broke a tile. I could go down the track of insurance, but it would cost $500 excess. It's cheaper however to repair myself... I repair it myself then, and it only costs me $100. Can I claim this $100 as an offset at tax time?

Thanks

Re: Refund Cancelled but Notice of Assessment Issued??

Absyd13 — Tue, 11 Feb 2020 09:39:54 GMT

Hi
I’m in same situation now. I’m not getting any proper response when I called them. How long it took for you to get an update from them and how long it to get this problem resolved?

Thanks
Absyd

Re: Security issues

NateH — Tue, 11 Feb 2020 03:22:23 GMT

Hi ,

Thanks for providing feedback, we are going to get back to you with a response shortly.

NateH

Re: ATO Mygov linking code error

JasonT — Mon, 10 Feb 2020 06:05:22 GMT

Hi ,

The name on your myGov profile and ATO account need to match exactly for your first and last name. The middle name or initial wouldn't be the issue.

It sounds like your details are correct and it may be something else.

Please contact us.

Thanks for your question,

JasonT

Ex-gratia payments

sylviaelter — Mon, 10 Feb 2020 05:08:39 GMT

Hi I have received an ex-gratia payment from the NSW goverment during 2018/19 and wanted to know whether this is taxable or non-taxable. The payment was for small business who experienced disruption during the Sydney light rail project. It was a payment in the form of "ex-gratia" to help with the financial assitance during the time of disruption. I have spoken to the advisers linked to this project from PKF who have informed that the payment is to be treated as a normal ex-gratia payment- can you please confirm this will be non-taxable. Thank you

Re: Return client back to ATO

ChrisR — Mon, 10 Feb 2020 04:05:36 GMT

That is sad news about your client.

If you are unsure about what to do with your client's tax refund and would like to pay it back to us, you have a few payment options. For more information on how to pay, refer to our website.

You will need your client's payment reference number (PRN) in order to make the payment. The website explains how to obtain it.

Hope this helps.

Thanks,

ChrisR

Property Subdivision holding costs

DuffSovietUnion — Mon, 10 Feb 2020 03:44:44 GMT

Hi,

I have a question about property subdivision and related holding costs.

My client purchased a house in 2012. During this time they lived in it as a primary residence and incurred holding costs e.g interest on homeloan, mortgage insurance etc.

Then in 2016 they decided to demolish the house and subdivide it into two units. The plan was to sell one at a profit and keep living in the other one, which they have now done. I have a list of all the renovation costs and holding costs from 2016 onwards and have apportioned them to claim as part of the CGT cost base as well as expenses to be deducted against the sales income and I know how to offset the sales income against the CGT to avoid double counting, and also to claim the 2016 market value of the land as the cost base for deductibility.

My question is about the pre 2016 holding costs. Are these deductible or able to be included as part of the CGT cost base? My answer is no, as these costs were all incurred when my client were living in the property as a main residence and are also part of the 2016 market value uplift, but I just wanted to make sure.

If I'm wrong and these costs are part of the cost base / deductible expenses, I'd really appreciate a link to an ATO ruling or something similar because I haven't been able to find anything.

Thank you.

Re: Tax

JasonT — Mon, 10 Feb 2020 01:32:54 GMT

Hi ,

Thanks for your question and don't stress, you've made the circumstances clear to me.

I recommend completing and providing the ex-employer with a Withholding declaration.

Indicate no to the tax-free threshold on the form and provide it to the Payer.

This way sufficient tax will be withheld and you shouldn't end up with a tax bill.

Any excess tax paid will be refunded through your tax return lodgement.

Let us know if you have any further questions,

JasonT

Security issues

JudithSearle — Sat, 08 Feb 2020 07:07:04 GMT

With mobile phones now being required by employees to access the ATO, how can the ATO guarantee that my employees will not use their mobile phones incorrectly in the workplace. Currently there is limited access to mobile phones. My offshore team has a ban on mobile phones in the workplace for security reasons. With a mobile phone, videos, photos of log in screens etc will reduce the security in my office and for my clients data. I am very concerned and unhappy at being forced into using smart phones in my workplace.

I am also upset that unless I purchase a mobile phone for each employee, I am asking them to use their personal phone for work. Not a recommended practice. Will fair work next legislate that I must recompense them for this use? If I purchase the phones- what a cost to my small business!! And an ongoing cost at that!

I am not happy that my employees will be able to access the ATO information wherever they are and whenever they like. Despite the ATO’s assurance that this is very secure, mobile phones can be accessed without facial recognition (or if someone is asleep using that) and so the assurance that mobile phones are secure does not wash with me. I have a phone with fingerprint recognition and often have to use the pin as the fingerprint recognition does not always work. What stops someone other than the phone owner doing this?

My question is this, when will the ATO acknowledge that this is actually putting our businesses at greater risk rather than increasing security? What are they going to do about it? Previously I knew that my employee had to use the AUSKEY on a particular computer in my office. They could not access out of hours, nor could that access be used by anyone other than that person in our office. Not so with the new process.

From a technology point of view, there are alternatives to using a mobile phone to implement two factor authentication. Why are they insisting that only mobile phones can be used?

My offshore team will not be able to perform their current duties under the new system either. They will only have access to limited functionality. I will have to rearrange my whole work processes due to the ATO’s inability to service the small business community effectively.

The ATO and politicians keep telling us they are making life easier for small business. They are reducing red tape and other requirements for small business. This flies in the face of that assertion.

Re: removal of ex clients from ato portal records

KylieS — Wed, 05 Feb 2020 19:58:19 GMT

Hi ,

According to the instructions on our website you remove clients through the authorisation summary.

Let us know how you go.

KylieS

ATO Mygov linking code error

Adamadam — Wed, 05 Feb 2020 10:42:04 GMT

Hi, need help. Will try to be concise.
Trying to use the linking code provided by ATO but keep getting an identification error.
I think cause on my license there is no initial for middle name. Could this be the cause?
The Medicare card has initial, the Mygov page only shows first and last name as license.
I know the ATO has my full 1st mid and last name on file.
The tax file number is correct...
What could be the problem and how do I fix it.
Thanks

Tax

T99_ — Wed, 05 Feb 2020 09:02:23 GMT

I have a casual job now which was giving me 35-45 hours a week. This week they have given me 1 shift. My ex employer said I could work for 6 days whilst not working at my current job, just these 6 days out of the rest of the financial year, do I pay tax on my ex job as a no tax free threshold this week? Or is it still registered with the ATO that I have the tax free threshold on both (thinking I wouldn’t ever go back to my old job), will I get a bill at tax time? I’m confused as my current job won’t be giving me a taxable income for the week, but my ex job will. It’s hard to explain lol.

Re: FBT on Travel

MarkA — Tue, 04 Feb 2020 07:19:32 GMT

Welcome to ATO Community always nice to see a first post.

I reviewed some information from our website which I think should prove helpful. It includes FBT and its various applications and also offers some examples to see what is acceptable to the ATO when it come to travelling for business. See Claiming a tax deduction for business travel expenses and also under that How to claim employee travel expenses.

This should take you in the right direction. If you need further assistance though please feel free to come back to us.

Kind regards

MarkA

Return client back to ATO

Samuel191 — Mon, 03 Feb 2020 22:35:51 GMT

Hi,

We've done tax return for client, after while we fund out client died, client's refund is in our trust account, how we can return client refund to ATO

Re: TFN & ABN Combined Tax Return (2 x different professions / tax offset item allowances)

RachaelB — Mon, 03 Feb 2020 00:19:44 GMT

Hi ,

You're spot on!

If you are a sole trader, all of your information is reported and lodged together on a single tax return. This can be done online via myTax as per the above instructions.

If you can't lodge with myTax, you'll need to get a tax agent to help you as business income can no longer be reported on paper tax returns.

I hope this helps,

Rachael B.

Re: Capital Gains tax

macfanboy — Sun, 02 Feb 2020 05:21:59 GMT

Main residence exemption covers you for 4.94 acres so the raining 0.06 acres will definitely be subject to Capital Gains tax.

Is it exactly 5 acres?

If you split the land into 9 titles (yours plus the other 8) and then wait for 12 months any Capital Gains will be discounted by 50% as you have owned the blocks for more than 12 months.

Capital Gains tax

Belly_54 — Sun, 02 Feb 2020 05:00:37 GMT

We have a house and associated acreage (5 acres).

We have resided in the house continuously sine 1989.

We want to remain in our house and subdivide a portion of the vacant associated land into 8 residential size blocks.

Will we have to pay Capital Gains Tax on the profit from the sale of those blocks?

Thank you

Re: 2nd job question

macfanboy — Sat, 01 Feb 2020 00:28:09 GMT

Tax is calculated on taxable income, we don't know what your taxable income is.

If we work backward from $1,740 and make a number of assumptions your gross pay would be $2,161 per Fortnight.

Based on that you would earn $56,186 and pay $9,684 in tax and medicare for 26 fortnights.

Earning an extra $1,000 per month for 6 months (Jan - June) would be an extra $6,000 making you gross pay now $62,186 and owe $11,184 in tax.

As you have already paid $9,684 this leaves $1,500 owing.

The low income and the low-income tax offset will give you $1,147.21 back so ($1,500 - $1,147.21) = $352.79 owing in tax.

This is all based on having $0 in tax deductions.

2nd job question

Gearfighter — Fri, 31 Jan 2020 10:35:19 GMT

I have a main job I work at and earn about $1740 a fortnight after tax.
I have recently started my own company as a side job and just wondering the tax I may have to pay on the second job.
I made about $1200 for the month of January so if we use $1000 a month as a rough guide, that would be ok.

Re: Tax return for unemployed

FringeSA — Fri, 31 Jan 2020 04:05:01 GMT

Further information in case a new person is reading this.

Between August and October there is also the Tax help service for simple, low income non-business (or ABN) returns.

See link for details and eligibility - various locations all over australia

https://www.ato.gov.au/individuals/lodging-your-tax-return/tax-help-program/

Tax Clinic new service that is run via universities but is slowly expanding.

The National Tax Clinic program is a government-funded initiative to help people who may not be able to afford professional advice and representation with their tax affairs.

This program is available to eligible individuals, small businesses, not-for-profit organisations and charities.

We support this initiative but the tax clinics operate independently from us. 10 universities across Australia have been funded to run the program which means there are tax clinics in every state and territory.

Qualified clinic managers supervise students, studying tax-related courses, to provide free tax advice and support at the clinics.

for more information:

https://www.ato.gov.au/General/Gen/National-Tax-Clinic-program/

Re: Changing jobs (permanent job to another permanent job)

JasonT — Fri, 31 Jan 2020 00:25:02 GMT

Hi ,

Welcome to ATO Community and congrats on your first post.

I'd recommend not to claim the tax free threshold from the new employer.

As you're aware, claiming the tax free threshold from the new employer would most likely result in a tax bill.

This bill could be substantial and even diligent saving may not be enough if you have some unexpected expenses come up e.g. urgent medical expenses, car breaks down and required to get to work etc.

Choosing no to the tax free threshold from the new employer will ensure enough tax is withheld.

If more tax is withheld than required it will be refunded through your tax return lodgement.

At the start of the next financial year you can update the employer that you'd like to start claiming the tax free threshold by providing them with a Withholding declaration.

Hope this helps!

JasonT

Re: Paying Rent and Tax

macfanboy — Thu, 30 Jan 2020 23:43:10 GMT

It should be viewed as a "domestic" arrangement and therefore not reportable.

Generally speaking, payments from a family member for board or lodging are considered to be domestic arrangements and are not rental income.

In these situations, they also can't claim income tax deductions.

However, if the rent they are receiving is at commercial rates and they entered into the arrangement with a view to making a profit, they may be considered to have an 'at arm's length' agreement and may need to report these amounts as income.

removal of ex clients from ato portal records

jimbo9 — Thu, 30 Jan 2020 22:54:21 GMT

i have been ibformed by by software supplier that i must remove each separarely..160 of them ..on my ato portal client list

they suggested that i use the "client update " CUREL- "client update relationships" tabs as an individual to notify ato

of each removal....however this is not working either..

when i access ato portal client data..i see tfn and abn data ad sometimes addresses, tel no, email etc of each one

even though i am not able to access data... many have already had all data, di=ocs ,contactassigned to them..not me

SO THE QU IS WHY CAN I NOT DELETE THEM ?

is this all a carry over issue with ato upgrade os systems changeover from ELS to SRP ? and now RAM M2M setup ?

Paying Rent and Tax

cg1 — Thu, 30 Jan 2020 12:22:07 GMT

I am living with relatives, and paying them $100 weekly in board (identifed as rent by Centrelink). As a student recieving assistance through Youth Allowance, it has been documented with Centrelink of this arrangement. Will my relatives recieving the payment be affected in any way, such as needing to declare at tax time the $100/ weekly they recieve from me? Will this have any affect on their tax?

Re: Tax Losses and CGT Discount

NateH — Thu, 30 Jan 2020 05:38:18 GMT

Yes, that is correct - you first reduce your capital gains by your capital losses for the income year and reduce it by any unapplied net capital losses for previous income years. You would then reduce it by the discount percentage if you are able to apply the discount (see section 100-50 ITAA 1997).

In 's scenario the 50% discount would apply as only capital losses would offset against capital gains.

Thanks, NateH

Re: Property ownership vs Mortgage ownership

NateH — Thu, 30 Jan 2020 03:51:55 GMT

Hi ,

It is really dependant on the exact circumstances as to whether that paragraph applies or not (e.g. related trusts between parties). If there were any concerns about whether that applies then we'd always recommend getting in touch through early engagement though.

Thanks, NateH

Re: Tax Losses and CGT Discount

macfanboy — Thu, 30 Jan 2020 00:59:22 GMT

My sincere apologies didn't realise that it was a carried forward tax loss.

Sometimes, I incorrectly assume that the person asking the question hasn't given us all the facts.

Sorry..

Re: Tax Losses and CGT Discount

DuncanS — Thu, 30 Jan 2020 00:34:23 GMT

I have spoken with the ATO today on this matter.

Have an elderly client with the same circumstance as Brendan who exchanged to sell two investment properties in June 2019.

Kylie,

Please confirm that Capital Losses are applied to Gross Capital Gains then the 50% discount is applied.

In Brendan's case, a net capital gain of $10,000 is applied against the $100,000 Tax Loss leaving a Carried Forward Tax Loss of $90,000 (given no other Income/Expenses).

Duncan

Re: Tax Losses and CGT Discount

BrendanT — Wed, 29 Jan 2020 23:34:22 GMT

mate it's a carried forward tax loss, not a carried forward capital loss.

Re: Tax Losses and CGT Discount

macfanboy — Wed, 29 Jan 2020 23:20:25 GMT

As I informed you earlier discount only applies AFTER accounting for loss, never before it.

Re: Tax Losses and CGT Discount

BrendanT — Wed, 29 Jan 2020 21:03:34 GMT

Yep thats right Duncan.
Any thoughts?

Re: Tax Losses and CGT Discount

DuncanS — Wed, 29 Jan 2020 08:17:24 GMT

I understand Brendan's question mentions income loss and whether the 50% discount applies to a capital gain before applying to the income loss.

Duncan

Re: Property ownership vs Mortgage ownership

DuncanS — Wed, 29 Jan 2020 07:49:22 GMT

Nate,

Paragraph 41 refers to extremely limited circumstances where the legal and equitable interests are not the same.

This was my understanding (I am not a lawyer nor a mortgage broker).

I am interested why a Tax Accountant would think otherwise.

Is the ATO aware of any circumstance where the legal and equitable interests are not the same?

Duncan

Re: A US an Australian citizen is returning to Australia

macfanboy — Wed, 29 Jan 2020 06:42:12 GMT

A 401k is not considered a foreign super fund therefore the way it is taxed in Australia is different.

When an Australian resident takes money out of their 401k they need to add the accumulated interest portion to their income tax return as it is assessable income and it will be taxed at marginal tax rates.

They do not need to add their own or their employer contributions (the principle) to their income tax return as this is not assessable.

The ATO have two rulings on the legal database that refer to the relevant legislation here and here.

You would also be entitled to the Foreign income tax offset for tax withheld in the United states.

Re: Tax Losses and CGT Discount

macfanboy — Wed, 29 Jan 2020 06:00:50 GMT

Assuming you have a carried-forward capital gain loss of $100k, then you would use part of it to use up the $20k leaving you with $80K carried forward a loss for the next year.

There is no option to use it or not you have to at the first available moment and you do not discount it first.

FBT on Travel

IrenaCycon — Wed, 29 Jan 2020 04:17:45 GMT

Employee travel oversea for 4 day conference, and take extra 20 days holiday, I know if we pay for the fly then employee have to pay FBT

My question is if the employee pay one leg of fly and we pay one leg of fly- FBT its payable?

Tax Losses and CGT Discount

BrendanT — Wed, 29 Jan 2020 03:25:12 GMT

If I have $100k tax losses carried forward and in the following income year I have a $20k gross capital gain is my carried forward tax loss going to be $90k or $80k? Assume I'm eligible for the 50% CGT general discount

A US an Australian citizen is returning to Australia

Markstr01 — Wed, 29 Jan 2020 02:22:46 GMT

A dual registered US and Australia citizen has been in the US for 25+ years. Still has an Australian bank account and mom is still there and is not in good health. He is returning (probably for good) to care for her.

What is his option for his US 401k? Can he take a distribution in the US before he leaves and pay the US tax?

Thank you!

Mark

Re: Property ownership vs Mortgage ownership

NateH — Wed, 29 Jan 2020 00:51:51 GMT

Hi and ,

is correct here. It's also worth looking at paragraph 41 which talks about there being limited circumstances where the legal and beneficial interests will be different and where the parties are related, we will assume the legal ownership will follow the equitable ownership.

Thanks, NateH

Re: tax cuts for this year

Rodni29 — Tue, 28 Jan 2020 16:00:58 GMT

good themes

Re: Property ownership vs Mortgage ownership

DuncanS — Mon, 27 Jan 2020 02:13:41 GMT

Thank you to macfanboy for Tax Ruling 93/32. Legal Ownership appears the consideration.

It does appear dated 1993 but I cannot think of any tax changes affecting the Ruling.

It would be interesting to get references from the Accountant who believes tax treatment is determined by the mortgage details. Given the amounts, this is an important issue.

Will await the ATO's input.

Duncan

Changing jobs (permanent job to another permanent job)

Juan1 — Sun, 26 Jan 2020 23:10:44 GMT

Hi,

I wanted to ask a question about changing jobs in the middle of the FY (around this time) and the tax-free threshold. I have a permanent job, and I am considering moving to another permanent job (so, switching companies, I won't be receiving income from both at the same time). I know that, given what I've earned with my current employer in the FY so far, I'm over the tax-free threshold. So my question is, on question 8 of the Tax file number declaration form "Do you want to claim the tax-free threshold from this payer?" Should I choose yes or no? Or is it just up to me? I know that choosing yes would most likely result in a bill from the ATO when I do my taxes this year (so I would have to save for that) but I just wanted to know if that is just the way to go in this scenario. And if I choose No, should I let the ATO know in July or August that after this FY I would like to claim the tax-free threshold with the new company?

Thanks!

Re: Property ownership vs Mortgage ownership

macfanboy — Sat, 25 Jan 2020 01:39:53 GMT

As explained in TR93/32 paragraph 49, income and deductions are shared between the ownership interests. In your case the ownership is one person. Therefore one person declares the income and claims the deductions.