Division 7A is part of the Income Tax Assessment Act 1936 and is intended to prevent profits or assets being provided to shareholders or their associates tax free. The operation of Division 7A A payment or other benefit provided by a private company to a shareholder (or their associate) can be treated by the ATO...

The ATO has issued guidance on making claims for mobile phone use as well as home phone and internet expenses, and says that if you use any of these for work purposes you should be able to claim a deduction if there are records to support claims. But the ATO points out that use for...

In the 2015-16 federal budget, the government increased the small business immediate deductibility threshold from $1,000 to $20,000, which was originally due to end at June 30, 2017. But a law amendment bill has recently been passed by Parliament that extends that measure by 12 months until June 30, 2018, after which the deductibility threshold...

If you’re coming in soon to discuss your tax return for yourself or your business, try not to turn up completely empty handed, or at least to turn up prepared with some records or electronic access to them. To “be prepared” is not just a great scouting motto, but a wise approach for everyone, especially...

The ATO has stated that a trust’s capital gains and franked distributions can, if not prevented by the trust deed, be streamed to beneficiaries for tax purposes by making these beneficiaries “specifically entitled” (more below) to the amounts. This allows beneficiaries to offset capital gains with their capital losses, apply applicable discounts and, subject to...

The general rule is that you can claim deductions for expenses your business incurs in its task of generating assessable income. Many of these deductions are obvious – rent, materials, supplies and so on — but there are also some less obvious options left available just before the end of the income year, should your...

Parliament has passed most of the business tax relief package announced in the last Federal Budget, but with some amendments. The legislation brings into effect the following changes for small business: Progressive cuts to the company tax rate: The tax rate will be progressively reduced to 27.5% from 2016-17 to 2018-19 for companies that are...

The recent cut to the tax rate for incorporated businesses that turnover less than $50 million a year, while generally welcomed, can bring with it some important considerations when it comes to distributing franked dividends. The rate change to 27.5% is to be staggered, starting with companies that turnover up to $10 million a year,...

If a business racks up an interest bill from borrowing funds to pay for the expenses of running the business, or to acquire other income-producing assets or investments, this expense is generally allowed as a tax deduction for the relevant year. For business taxpayers under the accruals accounting method, a claim can be made for...

The concept of a “going concern” exemption for the purposes of the goods and services tax (GST) can still cause confusion when businesses are sold. The sale of a business may be GST exempt if the enterprise is deemed to be a “going concern” — which refers to an enterprise’s ability to continue trading. The...