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September 2011 Tax Update

Share Trading Business

The ATO are establishing distinctions between accounts held on capital, trading or revenue based on time periods held, number of trades etc.  A recent case highlighted that the GFC has impacted investors trading decisions which would normally change the classification of the investor.

The ATO has a comprehensive guidance on whether a taxpayer is carrying on a business of share trading: http://www.ato.gov.au/content/21749.htm

Beneficiary Trust Distributions

The ATO in a recent case Antonopoulos v Commissioner of Taxation - tax deduction claimed by trust beneficiary highlighted some issues around "Early Resolutions" including the ATO requesting that statutory declarations be provided to state that actual meeting were held on 30 June.  NB the trap is that if the taxpayers taxable income arrives at say $80,000 with interest, dividends and other investment income the ATO can challenge the distribution ratio / proportions.

Employees & Contractors

When any questions, queries or conversations arise with regards to whether someone is an employee or a contractor, you should take the following as a way;

"If the ATO should investigate whether you are an employee or a contractor the ATO’s start is to use their online decision tool"

Therefore you should do the same.  See http://www.ato.gov.au/businesses/content.aspx?doc=/content/00095062.htm

Superannuation

Every single complaint relating to non-payment of superannuation is investigated.  This initial review can lead on to GST or Wages audits, depending on the outcome thereof.

TFN Withholding for Closely Held Trusts

The rules apply from the first income year starting on or after 1 July 2010.

The trustee will be required to remit withheld amounts to the Commissioner by the 28^th day of the month following the month in which the Annual TFN withholding report is due to be lodged.

For 30 June balancing date, this payment will be due to the ATO on 28 October.

There are also transitional reporting arrangements in place to allow trustees of closely held trusts to report beneficiary TFNs and associated details on the statement of distribution in the 2010 Trust Return even of the beneficiary did not receive a payment in 2009/10.

Further concessions that provide an additional extension for the lodgement of the 2011 TFN Report are in place until the due date of the 2011 Trust tax return (ELS lodgement ONLY).