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April 2004 Newsletter

The Australian Taxation Office (ATO) has announced it will be releasing a draft tax determination which would effectively reduce the number of items in a building that are regarded as plant or fittings and therefore can be depreciated for tax purposes.

The changes stem from the ATO compliance program focusing on residential rental properties, which has found non-compliance and a need for additional ATO guidance.

An effective life schedule for capital items typically found in residential rental properties will also be released, which will come into effect on 1 July 2004.

The Tax Commissioner has announced concession in relation to family trust elections. 

The concession will allow family entities a one-off opportunity to lodge family trust elections and interposed entity elections with 2004 trust tax returns and nominate an earlier year from which they will be effective.

The concession will apply to trusts electing to be family trusts for the purposes of the trust loss measures, the company loss measures and the franking credit trading measures.  However, the concession is only available to entities that have acted as if they were family trusts.

The ATO has recently issued GST Ruling 2004/3 which is about using joint venture arrangements to avoid GST on the sale of new residential premises.

The particular scheme targeted by the ATO involves the use of a GST joint venture to create an "artificial" first sale of new residential premises by a joint venture operator to a joint venture participant, which would not generally be subject to GST.

On subsequent supply to a customer by the joint venture participant, the supply is claimed to be input taxed as the premises are no longer new, i.e. they have previously been sold as residential property.

28 April 2004 is the final date for payment of 9% superannuation guarantee contributions for employees for the quarter 1 January 2004 to 31 March 2004.

Please note that a written report must be provided to employees within 30 days of making the final contribution for the quarter and must detail:

• The amount of contributions made;
• The name of the superannuation provider; and
• The employee's membership or account number.

The final date for lodgement of 2003 income tax returns is the 14 May 2004.  Please contact our office to arrange for the preparation of your return as soon as possible.  Please note the interest and penalty of $110 per month up to 5 months - $550, can be charged for late lodgement of a tax return.

FBT returns are due for lodgement on the 21 May 2004.  Letters have been sent to relevant business clients in relation to completing the FBT return for the year ended 31 March 2004.  Please forward the relevant FBT information to our office as soon as possible, to allow the completion of the return by the due date.

 "Do it today - tomorrow it may be taxed or illegal"

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