April 2018

Are you?
–  distributing assets as a result of a relationship breakdown?

At a glance:
–  When a couple separates and needs to redistribute their assets, the capital gain on the change of ownership may be disregarded under certain circumstances.

You should: 
–  Consider dividing assets as part of a formal separation agreement.
–  Contact us if you require any clarification or advice.

Normally, capital gains tax (CGT) applies to any change of ownership of an asset.

However, if you transfer an asset to your spouse because of the breakdown of your marriage or relationship there may be an automatic rollover of the asset.

A rollover means that the transferor spouse disregards the capital gain or loss that would otherwise arise.

The capital gain or loss will be recognised when the individual receiving the asset (the transferee spouse) subsequently disposes of the asset. The cost base of the asset is also transferred in full to the transferee spouse.

Generally, the rollover will apply if:

• Your marriage or relationship ended on or after 20 September 1985;
• Ownership of the asset, or a share in a jointly-owned asset, is transferred between you and your spouse, or from a company or trust, to one of you; and
• The transfer of ownership is because of a court order, formal agreement or award.

Note, you cannot choose whether or not the rollover applies.

For more information, click here.

Remember:
– This rollover provision does not apply if you and your spouse divide your property under a private or informal agreement.

This article was published on 31/03/2018 and is current as at that date

At a glance:
–  The Tax Office uses benchmarks, and other risk indicators, to identify businesses that may be avoiding their tax obligations by not reporting some of their income.

You should: 
–  Identify whether your business falls outside the benchmarks and understand why this may be.
–  Contact us if you require any clarification or advice.

Information reported in your business tax return or activity statements is compared with the key performance benchmarks for your industry.

Comparisons are made based on your business industry code, description of the main business activity on your tax return and the trading name of the business.

If your business falls outside the industry benchmark in your business turnover range, there could be a number of reasons why this may have occurred, including:

• Starting or winding down of the business;
• Higher costs or lower selling prices than your competitors; or
• Incorrect entries on your tax return.

When businesses are significantly outside the key benchmark range it may prompt the Tax Office to contact the business.

Benchmarks are used in conjunction with other information available to the Tax Office, such as banking information, to ascertain whether figures provided by businesses are reasonable.

Default assessments can be issued by the Tax Office but only when business owners have not provided accurate records or evidence to verify the business reported income.

The Tax Office may use the benchmarks to recalculate the business income and adjust the business income tax statement accordingly.

For more information click here.

Remember:
– You may be contacted by the Tax Office if your business is outside your industry benchmark range.

This article was published on 31/03/2018 and is current as at that date

Are you?
–  providing private use of commercial vehicles to yourself or your employees?

At a glance:
–  Certain vehicles, such as utilities and other commercial vehicle, used for ‘minor, infrequent and irregular’ private use may be exempt for FBT.

You should: 
–  evaluate whether the private use of your business’ commercial vehicles is ‘minor infrequent and irregular’.
–  Contact us if you require any clarification or advice.

The private use of a motor vehicle may be exempt from FBT if the following criteria are satisfied:

• The vehicle is a panel van, utility (ute) or other commercial vehicle i.e. a vehicle that is not designed principally to carry passengers; and
• The employee’s private use is largely restricted to work purposes i.e. private use is minor, infrequent and irregular.

The Tax Office recently published a draft compliance guide detailing how private use of the vehicle by an employee could be considered ‘minor, infrequent and irregular’ if certain conditions are satisfied, including the following:

• The eligible vehicle is provided to the employee to mainly perform their work duties;
• The employer takes reasonable precautions to limit the private use of the vehicle by setting work place directions and guidelines;
• The vehicles have no non-business accessories such as a child safety seat;
• The purchase value of the vehicle was below the luxury car threshold ($75,526 for fuel efficient vehicles and $65,094 for other vehicles purchased during the 2018 FBT year);
• The vehicle does not form part of an employee’s salary sacrifice package;
• Employees can travel between home and work but cannot increase the drive by more than 2km each trip; and
• The total amount of kilometres in excess of home/work trips cannot exceed 750km in a year for wholly private trips. A single wholly private trip cannot exceed 200km in a return trip.

For more information click here.

Remember:
– The draft guidelines can only be applied to eligible vehicles such as utilities and other commercial vehicles.

This article was published on 31/03/2018 and is current as at that date