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					                            Tax News, Views and Clues
                                             June 2009

Proposed                            Further, the Bill will refine and   Tax exemption for certain
Amendments to the                   clarify aspects of the existing     grants
                                    small business CGT
Tax Law                             concessions, including:             The Bill will exempt from
The Federal Government has                                              income tax the Clean-up and
introduced Tax Laws
Amendment (2009 Measures
                                    ·   expanding the range of
                                        circumstances when a
                                        taxpayer’s spouse or child
                                                                        Restoration Grants paid to
                                                                        small businesses and primary
No 2) Bill 2009 into Parliament.                                        producers affected by the
                                        will be considered to be an
The amendments contained in                                             recent Victorian bushfires.
                                        affiliate of the taxpayer;
the Bill include:

·   increasing access to the
    small business CGT
                                    ·   exempting small business
                                        operators from satisfying
                                        the basic conditions for
                                                                        This amendment will apply to
                                                                        grants paid in the 2008/09 and
                                                                        2009/10 income years.
    concessions for taxpayers
                                        capital gains arising from
    owning a CGT asset used in
                                        certain CGT events;             Deductibility of Self-
    a business by an affiliate or
    entity connected with the
    taxpayers, and for partners
    owning a CGT asset used in
                                    ·   ensuring the small business
                                        CGT retirement exemption
                                        applies appropriately to
                                                                        education Expenses
                                                                        In a recent decision, the
    the partnership business;           capital proceeds received       Federal Court held that a
                                        by individuals in               taxpayer who was receiving
·   providing a general
    exemption from CGT for
    capital gains arising from a
                                    The Bill will also clarify that a
                                                                        the Youth Allowance was
                                                                        entitled to a deduction for self-
                                                                        education expenses incurred.
    right or entitlement to a tax   partner in a partnership cannot
    offset, deduction or similar    be a small business entity.         The taxpayer was studying a
    benefit; and                                                        teaching degree and did not
                                    Generally, the amendments will      derive any income from
·   exempting from tax the
    Clean-up and Restoration
    Grants paid to small
                                    apply to CGT events happening
                                    in 2007/08 and later income
                                                                        employment as a teacher.
                                                                        The court said that the
    businesses and primary                                              taxpayer’s ultimate motive in
    producers affected by the                                           undertaking the degree was
                                    Tax benefits and capital
    recent Victorian bushfires.                                         irrelevant to the
                                    gains tax                           characterisation of the
Small business CGT                                                      expenses. Rather, its opinion
                                    The Bill will ensure that a         was that the expenses were
concessions                         capital gain or loss that a         incurred as a necessary
The Bill will allow a taxpayer      taxpayer makes from a CGT           incident of deriving the
who holds a passively held CGT      event arising from a tax offset,    Allowance. Accordingly, the
asset which is used in a            deduction or similar benefit will   court held that the expenses
business by the taxpayer’s          be disregarded.                     were deductible.
affiliate or a connected entity
                                    For example, the exemption          The Commissioner’s
to access the small business                                            established view is that,
                                    will apply if a taxpayer has a
CGT concessions, subject to                                             generally, recipients of
                                    right to receive a reduction in
certain conditions.                                                     Commonwealth educational
                                    land tax available under an
The Bill will also allow partners   Australian law.                     assistance schemes payments
in a partnership to access the                                          are not entitled to a deduction
                                    The amendment will apply to         for self-education expenses.
concessions for CGT assets
                                    the 2009/10 and later income        This is because the expenses
owned by the partners that are                                          are not incidental and relevant
used in the business of the                                             to the payments.
partnership but are not
interests in assets of the
partnerships, provided certain
requirements are satisfied.

                                                                                            June 2009
                                       Motor vehicles
                                       The Tax Office will request and      Taxable      Tax payable
Warning                                collect details of individuals       income       ($)
The Tax Office has released a          and entities that have acquired      ($)
Taxpayer Alert in which it             a motor vehicle valued at
warns self-managed                     $10,000 or higher from               0 — 6,000    Nil
superannuation funds (SMSFs)           relevant state and territory         6,001 —      15% of excess
with pre-existing interests in         departments.                         35,000       over 6,000
unit trusts of arrangements
involving the transferring of                                               35,001 —     4,350 + 30% of
                                       Personal services income
benefits associated with the in-                                            80,000       excess over
house assets transitional              The Tax Office will request and                   35,000
provisions.                            collect information on amounts       80,001 —     17,850 + 38% of
The Tax Office says that such          paid to personal service entities    180,000      excess over
arrangements may involve               from labour hire firms,                           80,000
superannuation regulatory              placement agencies and
issues and taxation issues.            computer consultancies.              180,001+     55850 + 45% of
                                                                                         excess over
Broadly, the in-house assets                                                             180,000
                                       Contract payments from
rules restrict a regulated
superannuation fund from               mining companies
                                                                           Low-income tax offset
having more than 5% of the             The Tax Office will also request
total market value of its assets                                           The maximum amount of offset
                                       and collect information on
in a related party of the fund.                                            an individual resident taxpayer
                                       amounts paid by mining
However, transitional                                                      will be entitled to will increase
provisions may apply to                companies to contractors and        to $1,350 for 2009/10 ($1,200
exclude an asset from the in-          sub-contractors.                    for 2008/09).
house asset rules.
                                       Superannuation Rates
   Trustees of SMSF should review,
   in consultation with their          and Thresholds
   professional advisers, pre-1 July
   1999 investments in related
                                       The Tax Office has released
   trusts.                             key superannuation rates and
                                       thresholds for the 2009/10
PAYG Instalments                       income year.
                                       The concessional contributions
The Federal Government has
                                       cap will be $55,000 ($50,000
announced that it will cut the
                                       for 2008/09). Concessional
quarterly PAYG instalments for
                                       contributions are essentially
the 2009/10 income year for
                                       contributions that are included
taxpayers who calculate their          in the assessable income of a
instalments using the Gross            receiving superannuation fund.
Domestic Product method. The
reduction will also benefit            The non-concessional
businesses that pay their GST          contributions cap will be
quarterly.                             $165,000 ($150,000 for
                                       2008/09). Non-concessional
                                       contributions include
Data Matching                          contributions that are not
Projects                               included in the assessable
                                       income of a receiving
The Tax Office has released
                                       superannuation fund.
details of three data matching
projects it will carry out.
                                       Reminder: Individual
The information collected from
the projects will be
                                       Tax Rates from 1 July
electronically matched with the        2009
Tax Office’s data holdings to          The resident individual tax
identify non-compliance with           rates will change for the
lodgment and payment                   2009/10 income year. The new
obligations.                           rates are:

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