Interaction

Directors of Companies to be personally liable for outstanding Super Guarantee and PAYG withholding.

The ATO are seeking to reinforce a director's obligation to ensure their company complies with its PAYG and Super Guarantee requirements by making the directors personally liable for their company's overdue amounts. The new measures will allow the ATO 90 days after the relevant due date to commence proceedings to recover from Directors any amounts that are unpaid and unreported by making directors and their associates personally liable.

Default Assessment Notices

The ATO has announced that they will be issuing default assessment notices based on the information they have received from third-parties e.g PAYG payment summaries, interest and dividend etc to individual tax payers with overdue lodgement returns. The taxpayer will first receive a letter titled 'Default assessment warning' if the overdue returns are not lodged by the date specified, they will issue a default assessment based on the estimated taxable income included in the letter. 

Standard work-related and tax-related deduction

The government have released draft legislation about the announcement made in the May Budget to introduced a standard work-related / tax-related deduction for individuals. To refresh your memory, the amount of the deduction is set to be $500 for 2013 tax return and $1000 for the 2014 tax return and onwards. The deduction aims to cover all work-related items including clothing, telephone, subscriptions, travel, self-education and home office and tax related items such as your tax preparation fee. If your actual deductions are more than the standard deduction you are entitled to claim but you must maintain records to support all claims. Importantly the standard deduction does not include motor vehicle or car expenses so a claim can be made in addition to the standard deduction.

CGT relief for natural disasters

The Government have released a discussion paper regarding Taxpayers affected by a natural disaster and who are eligible to participate in the Australian government agency replacement asset programs or receive assistance such as cash grants to be exempt from paying CGT or to be able to retain pre-CGT asset status for their replacement assets. Importantly the proposed date of the effect is 1 July 2011 which may be of no benefit to the taxpayers who were affected by the storms and floods earlier this year. We will keep you updated.

On the 30^th March 2010 the High Court handed down the decision in the Bamford Case that looked at a number of areas regarding trusts. Especially significant was whether a trust deed could define what the “income” of a trust is for the purposes of the Tax Act.

Previously the ATO has regarded trust income as defined by trust law principles. The Bamford Case determined that it is in fact the trust deed that determines what constitutes the “income” of the trust.  This is problematic if your trust deed does not define what constitutes income, which is the case for many older trust deeds. For example if your trust deed does not include capital gains as part of trust income then any capital gain could not be distributed to the beneficiaries and taxed at highest marginal tax rate.

Other more technical areas covered relate to treatment of unpaid present entitlements, income streaming and treatment of non-deductible expenses. It is important that any necessary changes required to your trust deed be implemented before the end of the financial year to ensure your distributions for this financial year are in order.

If your concern that your trust deed is not up to scratch, contact us for a review.