The Australian Treasury has recently released a draft legislation proposing amendments to the Goods and Services Tax (GST) input tax credits to ensure that the tax law operates as intended. These proposed changes aim to address certain complexities and provide greater clarity for taxpayers. In this blog post, we will delve into the key aspects of the proposed amendments and their implications for businesses.

In a bid to modernize the individual tax residency rules, the Australian Treasury is seeking public input on a proposed framework based on recommendations from the Board of Taxation's 2019 report. This initiative aims to establish a more robust and contemporary system that aligns with the evolving needs and circumstances of taxpayers. The consultation offers a unique opportunity to contribute to shaping the future of tax residency regulations. In this blog post, we will explore the proposed model, its key features, and the aspects for which Treasury seeks public input.

When it comes to land tax exemptions in New South Wales (NSW), there are specific provisions that cater to the needs of approved childcare and education services. These exemptions play a crucial role in encouraging and supporting the provision of quality education and care for children. In a recent case, Mourched v Chief Commissioner of State Revenue (NSW) 2023 ATC ¶20-873; [2023] NSWSC 668, the Supreme Court shed light on the exemptions applicable to land used for childcare services, including ancillary services. Let's delve deeper into the details of this case and its implications.

Under section 10(1)(u) of the Land Tax Management Act 1956 (NSW), land used solely for the purpose of providing childcare services may be eligible for exemption from land tax. To qualify, the land must serve as the place where children are educated or cared for by the service. The case in question revolved around the interpretation and application of this exemption.

In an effort to promote transparency and fairness in government procurement processes, a new measure has been introduced that requires tenderers for large government contracts to disclose their country of tax residency. Effective from 1st July 2023, this measure, which aligns with the Buy Australia Plan, aims to create a level playing field and ensure open competition.This will provide an overview of the residency disclosure requirement and its key implications for businesses tendering for Commonwealth Government contracts valued at over $200,000.

1. Record-keeping requirements for working-from-home deductions have changed. Clients must maintain accurate records regardless of the deduction method chosen.

2. The ATO has introduced a streamlined lodgment deferral function in Online Services for Agents. This new feature allows us to request deferrals conveniently and should be utilized once the old process is phased out.

3. Understanding why tax refunds may be lower or why clients might receive unexpected tax bills is crucial. Factors such as the end of the Low and Middle-Income Tax Offset (LMITO) and offsetting credits or refunds against other debts could affect the final amount.

4. Reporting capital gains, losses, and main residence exemptions for property transactions is essential. This includes situations where clients used their homes for income-generating activities or when applying the 6-year rule for main residence exemptions. Pre-filling reports in Online Services for Agents can assist in this reporting process.

5. Clients should ensure that all sources of income, including additional employment, government payments, rental income, and income from partnerships, trusts, and units, are declared accurately. If clients have a side hustle, determining if they are classified as running a business and fulfilling associated tax obligations is vital.

By discussing these topics with us, clients can effectively navigate the complexities of Tax Time 2023 and ensure accurate and compliant tax reporting.

Q: The family trust receives an $80,000 unfranked dividend from Company A at the end of the year. The trustee of the trust is a company. Can all the income of the family trust, minus any expenses, be directed to one beneficiary who happens to be the director of both the trustee company and Company A?

Q: The ATO says bottled water is GST-free, and fruit/vegetable juices are GST-free if they're over 90% pure. Peggy sells bottled juices in her café, where most customers dine in, but some also take away drinks. She wants to know if she should charge GST on bottled drinks.

Q: M company, jointly owned by Australian and UK shareholders, does similar business in both countries under the same brand. M company, based in Australia, hires a digital marketing agency for advertising design. It then passes on some of the design costs to the UK company. Does the UK company need to pay GST for the design services?

Q: A client has a few different businesses. One has a turnover above $2 million, while another has a turnover below $2 million. When preparing the tax return for the smaller entity, can the accountant apply the 28.5% company tax rate, or does she need to consider the entire group, which has a turnover above $2 million?

Q: A client borrowed $30,000 from his company last year, and the company had no net assets at the end of the year due to offsetting losses. How should this be handled in the accounts? Does it need to declare a dividend for the loan, apply it to the balance sheet, or mark it for Div 7A purposes? Also, the client made another $5,000 loan to himself in the following year, during which the company incurred a loss of $32,000. How is the distributable surplus calculated considering the $30,000 loan from last year?

Q: Fiona Wilkes bought a car for $33,000 in October 2011 for her delivery business, with plans to use it 90% for business and 10% for personal use. Over the years, the car's usage changed. How does this affect the net amount of GST?

Here's a simpler version:

Q: A client wants to know about the GST implications of selling commercial property as a going concern. Since there's no GST on the property sale itself, what about other expenses like commission and legal fees that do have GST? Can the GST on these be claimed?

Q: I'm planning to hire a US IT consulting firm. They'll send invoices to my company, and I'll pay them in US dollars. Do they need any special permits to consult in Australia? Do they require an ABN? Will the US firm have to pay GST?

Here's a simpler version:

Question: A client runs a marine mechanics business and bought a boat for transporting divers. The boat uses petrol, which qualifies for fuel tax credits.