The ATO says its base tax penalty amount may be increased or reduced. The base penalty amount may be increased where the taxpayer hinders the ATO, but it also may be reduced in the following circumstances. Voluntary disclosure The voluntary disclosure to the Commissioner of a tax shortfall will result in a reduction of the...

If you are planning to permanently move out of the country before the end of this financial year, you may be able to have your tax return lodged early. Generally, the ATO only accepts early lodgement of individual tax returns in certain circumstances. If you are a resident of Australia for tax purposes, returns lodged...

Investment returns can be on revenue or capital account. Similarly investment expenditure could also be on revenue or capital account. The distinction between revenue and capital is not always clear and the characterisation of a receipt will ultimately depend on the circumstances that apply to the taxpayer. The distinction between an income and capital receipt...

The law contains an integrity measure to prevent sharemarket investors from engaging in “dividend washing”. Dividend washing results in two sets of franking credits being claimed on what is effectively the same parcel of shares in publicly listed companies. The arrangement being targeted by the government can be illustrated as follows: Investor X holds parcel...

Certain start-up expenses, including costs associated with raising capital, that would otherwise be deductible over five years are immediately deductible (from July 1, 2015) where they are incurred by an SBE or an entity that is not in business. Before this date, business capital expenditure, including start-up expenses, was deductible over five years for all...

When a life insurance policy has been held by a taxpayer for 10 years or longer, reversionary bonuses received on that policy are generally tax-free. For policies held for less than 10 years, stipulated amounts are included in the taxpayer’s assessable income, and a tax offset is available. A bonus is not assessable income if...

Interest can be claimed for the cost of funds borrowed to purchase a rental property and to meet maintenance costs or running expenses while the rental property is being let (or is available to be let) under a commercial arrangement to generate assessable income. In these circumstances the interest paid is deductible even if it...

One overarching fundamental that SMSF trustees should ideally keep in mind is the sole purpose test — that is, every decision made and action taken is required to be seen as being undertaken for the sole purpose of providing retirement benefits for the fund’s members. If an SMSF trustee incurs an expense in the usual...

The death of a parent is hard on all those involved, however once the grieving  has eased, a time comes to address financial matters.  One of these issues can be what happens to any superannuation they have left. Making things harder is the fact that the new transfer balance cap (TBC) brought in as of...

A travel allowance is a payment made to employees to cover accommodation, food, drink or incidental expenses they incur when they travel away from their home overnight in the course of their duties. In most circumstances, when claiming other deductions, you will be expected to be able to substantiate the expense being claimed with documentary...