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Newsletter September 2004

Before paying your workers compensation policy, the rate that is levied can be checked at the following site.

http://www.workcover.nsw.gov.au/Publications/WorkersComp/Premiums/IPO2004-05.htm

The ATO has advised the addition of new features to its Business Portal which make it easier to lodge activity statements online.  Businesses can now receive instant confirmation when lodging an activity statement and they are also able to revise activity statements, update most business registration and financial institution details and view a range of accounts.  Furthermore, businesses can restrict the tax information that is accessible by their staff on the Business Portal.

The Business Portal is a secure website that can be accessed with a free ATO digital certificate.  For more information on the Business Portal, visit the following link: www.ato.gov.au/onlineservices

Advocates of income splitting have received a boost after a court ruled that superannuation contributions made by a private company for its "mum and dad" owners were not a tax avoidance strategy.  

The Administrative Appeals Tribunal (AAT) in Ryan and Commissioner of Taxation [2004] AATA 753 has decided that part IVA of the ITAA 1936 did not apply to an arrangement where a service company was established and controlled by the taxpayer and his wife.

The company paid salary and wages to them as well as made superannuation contributions on their behalf.  The superannuation contributions made for the wife of the taxpayer were in excess of the salary paid to her.  The Commissioner argued that the arrangement was a scheme where the dominant purpose was to avoid tax.

The AAT decided that the arrangement, which included the payment of salaries and superannuation contributions in excess of the salary paid to the wife, did not provide a tax benefit as envisaged by Part IVA.

The Government has announced a proposal to introduce a new Mature Aged Worker Tax Offset that is to reward and encourage mature aged workers to stay in the workforce.

It is proposed that the offset will be available to people over the age of 55 and will provide a maximum annual rebate of $500 on their earned income.  It will take effect from the start of the 2004-05 financial year and will be payable on assessment.

Taxpayers may use one of four different methods to calculate the allowable deduction for car expenses.  The methods are:

• Log book
• One-third of actual expenses
• Cents per kilometre
• 12% of costs

A car expense includes fuel, maintenance, registration, insurance, depreciation and interest paid on money borrowed to purchase a car.

In a recently issued Interpretative Decision, the ATO considered the issue of whether a taxpayer who uses the one-third of actual expenses method can claim interest incurred on a loan to purchase a car, where the cost exceeded the car limit.

The car limit applies to limit the depreciation deduction available to taxpayers.  For the 2004/2005 financial year, the car limit is $57,009.  The ATO stated that the interest deduction is not reduced to the car depreciation limit.

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