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Newsletter August 2007

The ATO have advised they are increasing their audit activities that target taxpayers who try to conceal their income and assets offshore. However, taxpayers who contact the ATO before they are the subject of an audit, and make a full and true disclosure, will have reduced shortfall penalties.

Additional information is available at.
http://www.ato.gov.au/corporate/content.asp?doc=/content/87096.htm

From 1 July 2007, the maximum co-contribution amount will stay at $1,500, and the self-employed may be eligible.

You are eligible for a co-contribution if:

• you make a personal superannuation contribution by 30 June of that income year to a complying superannuation fund or RSA
• you don’t claim a deduction in your income tax return for the contribution
• your total income is below the income threshold ($58,980 in 2007-08 financial year)
• 10% or more of your total income is from running a business, eligible employment or a combination of both
• you are less than 71 years old at the end of the income year, and
• you do not hold an eligible temporary resident visa at any time during the income year.

You can only receive the co-contribution if 10% or more of your total income is active income. Active income is income from running a business, eligible employment or a combination of both. 
In calculating whether income is active, business income deductions are ignored. This helps self-employed people with low incomes or low profit margins.
The following table shows if your income is included in total income and if it counts as active income.

There is a Super Co-contributor at: http://www.ato.gov.au/super/scripts/ContributionCalc2007_08.asp

From 1 July 2007, a gift of listed shares valued at $5,000 or less that were acquired at least 12 months earlier, may be eligible to be claimed as a deduction. This ATO fact sheet explains the requirements for such gifts to be tax deductible.

http://www.ato.gov.au/nonprofit/content.asp?doc=/content/00103838.htm

A minor benefit is an exempt benefit for Fringe Benefits Tax purposes where;

1. The notional taxable value is less than $300,
2. It would be unreasonable having regard to the five criteria to treat the benefit as a fringe benefit.

The five criteria that must be considered in conjunction with the threshold test include;

1. the infrequency and irregularity with which similar or identical benefits are provided,
2. the value of the minor benefit and similar or identical benefits in the current year and any other year,
3. the value of the minor benefit and other associated benefits,
4. the practical difficulty for the employer in determining the value of the minor benefit and associated benefits,
5. the circumstances in which the minor benefit and any associated benefits are provided.

The minor benefits exemption does not apply to in-house expense payments, in-house property, and in-house residual benefits. These are subject to a general reduction in taxable value of $1,000 for FBT years commencing on or after 1 April 2007.

Certain low income aged persons, both pensioners and ‘self-funded retirees’ are entitled to a special additional tax offset known as the Senior Australians Tax Offset. Generally, to be eligible to claim the offset, a taxpayer must pass all of the following;

• Be eligible for a pension, allowance or benefit under the Veterans’ Entitlement Act 1986,
• Have reached veteran pension age under that Act,
• Is not in gaol

To be eligible for the offset, the person must have a taxable income below a certain cut-out threshold. The 2006/2007 levels are as follows;

• For single persons the maximum offset is $2,230 which, when combined with the low income rebate, means no tax is payable on a taxable income of $24,867 or less.
• For each partner of a couple, the maximum offset is $1,602 which, when combined with the low income rebate, means no tax is payable by a partner with a taxable income of $20,680 or less.
• For each partner of a illness-separated couple, the maximum offset is $2,040 which, when combined with the low income rebate, means no tax is payable by a partner with a taxable income of $23,600 or less.