Tax Facts

Tax Facts contains news and alerts relating to tax practice, for the benefit of accountants and other professionals in public practice. Please click on the links below for recent issues. You may also like to peruse Tax Facts by topic category - topics are listed below to the right.

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  • JobKeeper Payments – Legislation Enacted

    In brief:    The Coronavirus Economic Response Package (Payments and Benefits) Act 2020 has been enacted. However, that Act merely provides the framework for the JobKeeper Scheme – for the sake of flexibility, the detailed rules for the scheme are contained in Rules issued by way of legislative instrument by the Treasurer under the authority of the Act. Treasury Fact Sheets have been updated to incorporate those JobKeeper Rules – they are included among the resources available on the following Treasury website:

    More:    Businesses must elect to participate in the JobKeeper Scheme and, for either the 1st (commencing on 30 March) or 2nd fortnight of the scheme, that election needs to be made by 26 April. Information about how that election is to be made and more detail about reporting requirements are expected soon from the ATO. In the meantime, businesses that may be eligible should register their interest on the ATO website.

    In addition to the Treasury Fact Sheets, there is a useful ‘Frequently asked questions’ on this webpage:

    And the Rules (and the associated Explanatory Statement) can be obtained from the following webpage:

    ... Read More

    14 Apr 2020

    Topic: Income tax/Other news

  • JobKeeper Payment – Support for Self-Employed

    In brief:  A common worry in relation to small businesses has been whether business owners themselves would qualify for the JobKeeper Payment of $1,500 per fortnight if they are not paid salary or wages. Of course, a significant number of small business owners are in that position – they receive income as a partner or by way of trust distributions or dividends, rather than as salary or wages. The eligibility of those business owners for the JobKeeper Payment was clarified over the weekend.

    More:  According to the updated Treasury Fact Sheet:
    “Businesses without employees will be eligible to receive one JobKeeper Payment, and businesses with employees can receive one payment in addition to the payments for their eligible employees. This means that:
    • where the business operates through a sole trader structure – one owner can be nominated to receive the JobKeeper Payment;
    • where the business operates through a partnership – one partner can be nominated to receive the JobKeeper Payment;
    • where the business operates through a company – one director can be nominated to receive the JobKeeper Payment;
    • where the business has shareholders who provide labour to the company and receive dividends in lieu of wages – one such shareholder can be nominated to receive the JobKeeper Payment; and
    • where the business operates through a trust – one individual beneficiary (that is, not a corporate beneficiary) can be nominated to receive the JobKeeper Payment.”

    It will still be necessary for relevant businesses to satisfy the other necessary criteria to qualify for the JobKeeper Payment, including the requisite fall in turnover of at least 30%. And it seems that the above rules will not apply in relation to the Cash Flow Boost payments – eligibility for those will still depend on payments that are subject to the PAYG Withholding regime, whether payments to business owners or others. Businesses potentially qualifying for the JobKeeper Payment should register on the ATO website.

    The Government intends to legislate the JobKeeper Payment this week, but no Bill is publicly available at the time of writing. The updated Fact Sheet from Treasury is available at this website (copy and paste):

    ... Read More

    06 Apr 2020

    Topic: Income tax/Other news

  • Beware the email trail - evidence from revealing correspondence

    In brief:    A recent ex parte application in the Federal Court for freezing orders and other interlocutory relief against several taxpayers starkly illustrates the importance that email correspondence may play in disputes. Evidence supporting the application included an affidavit from ‘a computer forensics officer employed in the Forensics and Investigations team of the ATO.’ The evidence of that ATO officer was that documents purportedly made in 2003 had actually been created in 2015, subsequent to the commencement of an ATO audit and associated notice issued to the taxpayers’ accountant to provide information under (former) s 264 ITAA36. Further evidence based on email correspondence involving personnel from the taxpayers’ accountants was alleged to support the fact that the relevant documents ‘were created in February 2015 and backdated to give the appearance that the documents came into existence in May 2003.’

    More:    This case involved fairly extreme circumstances, where total tax and penalties at issue exceeded $34M and documents had ultimately been seized from premises associated with the relevant accounting firm under search warrants executed by the Federal Police. However, the point is that email correspondence does not have the confidentiality that we intuitively attribute to it. Best practice is to approach the writing of any document or correspondence with the attitude that it may ultimately be viewed by a range of people, including regulatory authorities.

    Such incriminating evidence sometimes becomes unveiled from unrelated circumstances. For example, there have been reported cases where a taxpayer has been practically obliged to produce financial evidence, showing much greater business income than what has been reported to the ATO, to defend against an allegation of misrepresentation by a subsequent purchaser of the taxpayer's business. And the discovery process in proceedings for professional negligence against a professional advisor may also throw up incriminating evidence about an understatement of taxable income, perhaps even involving criminal acts. Whether or not the primary matter before the court involves taxation, the Judge will usually make orders for it to be passed on to the ATO. (DC of T v Advanced Holdings Pty Ltd [2018] FCA 1263)

    ... Read More

    24 Oct 2018

    Topic: Income tax/State taxes/Other news

  • Dangers of directorship without involvement

    In brief:    A university student has failed in an attempt to appeal against summary judgement for PAYG withholding of approximately $3.4M in respect of directors’ penalty notices issued to him by the Commissioner. The attempt failed because the West Australian Court of Appeal refused an extension of time for the taxpayer to file his appeal (which was out of time). Nevertheless, the Court went on to give reasons why it would dismiss the appeal in any case.

    The Court agreed with the decision of the Master below who had commented that the lack of detail in the taxpayer’s evidence ‘presumably reflected the appellant's lack of involvement in the day-to-day operations of the company’. The father of the taxpayer was heavily involved in the management of the company and the taxpayer's evidence was that he had had regular discussions with his father about the company's affairs and periodic meetings with the company's financial controller. However, it was held that such evidence fell well short of the taxpayer's obligation to take all reasonable steps to ensure that the company paid its PAYG withholding or to cause the appointment of an administrator or commencement of winding up.

    More:    This decision emphasises the dangers in a person accepting appointment as a director when he or she is not actively involved with the company. The judgment in the case does not indicate whether the taxpayer's father was also a director or, in any case, why the taxpayer had been appointed a director. But, whatever the circumstances, the taxpayer paid a very heavy price (including, presumably, the prospect of bankruptcy) for agreeing to act as a director. (Roche v DFC of T [2015] WASCA 196)

    ... Read More

    06 Oct 2015

    Topic: Income Tax/Other News

  • 11 year prison sentence for tax fraud

    In brief:  A former tax principal at Ernst & Young has been sentenced to 11 years prison, with a non-parole period of 7 years. The charges on which he was convicted related to conspiring to deal with the proceeds of crime and conspiracy to defraud the Commonwealth, the relevant section of the Criminal Code for that latter offence providing that:

    135.4(5) A person is guilty of an offence if:

    1. the person conspires with another person to dishonestly cause a loss, or to dishonestly cause a risk of loss, to a third person; and 
    2. the first-mentioned person knows or believes that the loss will occur or that there is a substantial risk of the loss occurring; and 
    3. the third person is a Commonwealth entity.

    Although such tax prosecutions are relatively rare, it is worthwhile reminding oneself (and some clients) of the conduct that might lead to prosecution. The relevant provisions of the Criminal Code are broadly based and, in principle, potentially apply irrespective of whether the amounts involved are large or small.

    More:  The case involved false depreciation claims ‘of many hundreds of millions of dollars’ which supposedly offset very substantial income from financing arrangements involving several major banks. The resultant potential tax loss for the Commonwealth was approximately $135M and the defendant and his co-conspirator received over $63M. That latter amount represented funds paid to the conspirators’ company, that were paid overseas before being transferred back into Australia for the benefit mainly of the 2 conspirators. The judge remarked on sentencing that, “Having regard to its size, scale, timespan and tactics [the defendant's] offending falls into the worst category of cases under s 135.4(5).” (R v Dickson (No 18) [2015] NSWSC 268)

    ... Read More

    01 Apr 2015

    Topic: Other news

  • No FBT relief for Qantas employee car parking

    The Full Federal Court has held that Qantas was liable to pay FBT in relation to car parking that it provided for employees on its premises at airports. Qantas’ arguments against liability hinged on the definition of a ‘car parking fringe benefit’, an element of which is that there must be a ‘commercial parking station’ within a kilometre of the premises at which the parking spaces are provided. And to be a commercial parking station, car parking spaces must be available in the ordinary course of business to members of the public.

    There was no argument that there are commercially operated parking stations within a kilometre of Qantas’ premises where it provides employee parking at airports. Qantas sought to confine the concept of ‘public’ in this context by reference to the plain rationale of the legislation that car parking fringe benefits are intended to apply in relation to vehicles used by persons commuting between their homes and ordinary places of work, rather than a broader concept of anyone using airport parking stations. However, this argument was rejected – the Court held that ‘there is no rationale for imputing into the definition [of public] a requirement that the commercial parking station be one that employees of the employer commuting to work by car would or could in fact use.’ (C of T v Qantas Airways Ltd [2014] FCAFC 168)
    ... Read More

    17 Dec 2014

    Topic: Other News

  • Another win against ATO's assessment of SGC on contractors

    Plumbing contractors engaged to carry out maintenance jobs under the applicant's sub-contract from a government housing authority were held to be independent contractors, rather than employees, for the purposes of SGC legislation. Consequently, SGC assessments issued to the applicant were set aside.

    As is always the case in such matters, all the evidence must be considered. However, the AAT specifically acknowledged that what must be performed is not a mechanical task of checking off against a list of indicia ‘without recognising that different significance may attach to the same indicators in different cases’. The Tribunal concluded that:

    Having regard in particular to the evidence in relation to control, to the non-representation of the employer by the worker, to the results character of the oral contract for engagement of the worker, to the capacity of a worker to delegate, to the assumption of risk by the worker and to the significant ownership by the worker of tools and equipment I conclude that the workers were not employees within the usual meaning of that word.

    It was held also that neither were the workers working under contracts wholly or principally for their labour, for the purposes of the extended definition of an employee for SGC purposes.

    Practitioners should be wary about relying too heavily on a couple of recent wins in this area by taxpayers. Those wins resulted from genuine factual situations that were distinctly different from employment. (XVQY v Commissioner of Taxation [2014] AATA 319)
    ... Read More

    05 Jun 2014

    Topic: Other News

  • Amendments to the Personal Property Securities Regime

    A Bill was introduced into Parliament on 19 March to repeal the provision that deems a lease or bailment of serial-numbered goods for more than 90 days to be a ‘PPS lease’. A PPS lease is a security interest, therefore potentially requiring registration to protect the owner. Serial-numbered goods are specified in the regulations – examples are motor vehicles and aircraft.

    The biggest beneficiaries of this amendment will be businesses operating in the leasing industry. But it is unlikely to be of much benefit for businesses with leases or bailments of goods to associated entities. In general terms, and although the amendment decreases the scope of a PPS lease, the only category of lease or bailment that will fall outside the definition of a PPS lease after the amendment will be those that are not in substance a means of finance and whose term does not extend beyond 1 year. Further amendments to the PPS regime may result from a substantial review of its operation that is due to be completed by 31 January 2015. (Personal Property Securities Amendment (Deregulatory Measures) Bill 2014).
    ... Read More

    03 Apr 2014

    Topic: Other News

  • Tax Strategies' 20th Anniversary

    April 6 will mark 20 years since Tax Strategies commenced practice. We are proud to achieve this milestone and very grateful for the substantial ongoing support that we enjoy – thank you. And it is particularly gratifying that we still advise a number of firms who have been with us right from the start or from very early days.

    We have plans to make our anniversary year a special one, starting soon ….
    ... Read More

    05 Mar 2014

    Topic: Other News