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December 2011 News Letter

Season's Greetings from all of us at RMS Accountants

As we approach the holiday season we wish you a safe and happy time with friends and family. Our office will be closed on 23rd Dec and will reopen on 3rd Jan 2012. We look forward to being of service to you in the New Year.
ATO warns us again about scams
The Tax Commissioner, Michael D'Ascenzo, has reminded the community to be aware and alert to scams claiming to be from the ATO.
"We are seeing an increase in the number, creativity and sophistication of scams being reported," Mr D'Ascenzo said.
"Scammers are ramping up their efforts and we are seeing a range of sophisticated scams, including:
  • phone calls that play a legitimate-sounding recorded 'training and monitoring' message at the start of the call;
  • phone calls from people posing as 'tax officers' that provide fraudulent ATO call-back details;
  • emails about 'the recipient's tax refund, special deals and donations' that are made to appear to have come from the ATO and use 'ATO or government' in the email address; and
  • emails containing a dangerous virus, which when opened or downloaded will crash the recipient's computer.
"You can forward suspect email scams to ReportEmailFraud@ato.gov.au or call us during business hours on 1800 060 062 to discuss a suspected scam.
"Anyone can be the victim of a scam. If something seems suspicious, too good to be true, asks you for personal details or cannot be verified by contacting an official source, it is likely to be a scam and you should report it."
Christmas gifts
Editor: Last month we covered Christmas parties and the fringe benefits tax (FBT) and the income tax consequences of holding parties for staff and clients or suppliers.
But as businesses often provide gifts to clients and staff this time of the year, we thought we would now discuss how they are handled "taxwise".
Gifts which ARE NOT considered to be entertainment
These generally include, for example:
  •   a Christmas hamper, a bottle of whisky, wine, etc.; and
  •   gift vouchers, a bottle of perfume, flowers, a pen set, etc.  
Briefly, the general FBT and income tax consequences for these gifts are as follows:
  • gifts to employees and family members – FBT is payable (except where the less than $300 minor benefit exemption applies) and a tax deduction is allowed; and
  • gifts to clients, suppliers, etc. – no FBT, and a tax deduction is allowed.
Gifts which ARE considered to be entertainment
These generally include, for example:
  •   tickets to attend a theatre, live play, sporting event, movie or the like; and
  •   a holiday airline ticket or admission ticket to an amusement centre.
Briefly, the general FBT and income tax consequences for these gifts are as follows:
  • gifts to employees and family members – FBT is payable and a tax deduction is allowed (except where the minor benefit exemption applies); and
  • gifts to clients, suppliers, etc. – no FBT and no tax deduction.
Are all allowances what they say?
A recent case that came before the Administrative Appeals Tribunal involves a claim that was made against an allowance that was described on a truck driver's payment summary as a LAFHA or living-away-from-home allowance.
The taxpayer's return treated the amount received as a 'reasonable travel allowance' which, if it were, any deductions would not require substantiation.
It turns out it was neither a LAFHA nor a travel allowance but was merely a loading which had been negotiated between the employee and the union.
As such, any claim for travel expenses required full substantiation. The taxpayer had no receipts or other evidence to prove his claim and his appeal was dismissed.
Editor: This case demonstrates how important it is for employers to correctly describe allowances and benefits on payment summaries and for employees to understand exactly what they mean.
Default assessments – non-lodgers
The Tax Office is sending default assessment warning letters to taxpayers with overdue returns where it has evidence that they received taxable income in the relevant financial years.
If the overdue returns are not lodged by the date specified, the Tax Office will issue default assessments for these taxpayers based on the estimated taxable income included in the letter.
Editor: If any client or any of their relatives are in this situation please contact our office immediately.
Employer super guarantee contributions to lift to 12%
The government has introduced legislation to the House of Reps to provide for an increase in the rate of the superannuation guarantee to phase in to 12% over 7 years starting 2013/14 as follows 
Year starting
Super guarantee rate
1 July 2013
1 July 2014
1 July 2015
1 July 2016
1 July 2017
1 July 2018
1 July 2019
New Tax Office GST property tool
The Tax Office has issued a GST property tool on its website to help people dealing with property to understand their taxation obligations and entitlements.
The GST property tool topics include residential premises, commercial premises and vacant land. The tool also carries information on claiming GST credits, margin scheme eligibility, and GST-free supplies of real property.
Editor: While we appreciate the ATO's initiative, we recommend clients consult with our office before taking any action that may affect their taxes.
Education tax refund data matching
The Tax Office has advised that Centrelink will provide it with approximately 2 million names and addresses of taxpayers who claimed Family Tax Benefit Part A for the 2009, 2010 and 2011 financial years.
These will be electronically matched with certain sections of ATO data holdings to identify non-compliance with taxation obligations in relation to the education tax refund.
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.



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