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Practice Update
JulY 2013

ATO warns investors about tax avoidance schemes

The ATO's Commissioner, Chris Jordan, has wamed investors about new and complex tax avoidance schemes being marketed as people get ready to lodge their 2013 tax retums, saying: "Tax avoidance schemes are nc longer the blatant too-good-to-be-true offers seen in the past." Many modern tax avoidance schemes are complex structures that are difficult for even experienced investors to identify, and many are marketed via social media or glossy promotional brochures, with ofiers of exclusivity and the stamp of approvalfrom so-called experts. ln one case, promoters offered an anangement for people to purchase "emissions" units generated through offshore carbon reduction activities (the scheme involved offshore arrangements with people claiming more than they paid). "lf you are getting back more money than you put in with no risk, and if no real goods or services ari neing provided, it is likely to be a tax avoidance scheme and could lead to signifi cant tax penalties".

GIC and SIC rates for September 2013 quarter

For the Eeptember 2013 quarter, the GIC (General lnterest Charge),9te i1 9.82a/o (0.0269041ir/o daily compounding rate). The SIC (Shortfall lnterest Charge) rate is
5.82olo (0.
0
1

594520% daily compounding rate).

Medicare Levy increase becomes law The DisabiligCare Australia legislation that provides for a half a

per@ntage point

increase in the Medicare levy has passed the Parliament and become law'

The legislation will increase the Medicare levy from 1.5% to 2% of taxable income from 1 July 2014. Editor: This witt have a flow-on effect to ather tax rates-tban implicitly incorponte the Medicare levy, such as FBT, the family trust distributiao tqx rate and fhe excess nonconcessron ai contributions tax rate, atl of which increase to 47% from 1 Ju$ 2414.

ATO's new'Trusts Taskforce'

The ATO's recent compliance operations hqvg uncovered evidence

of increased or evasion tax avoidance of the centre be.,at can tirat manipulation of trusts as vehicles anangements.
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The ATO will target those people that exploit trusts

to avoid or reduce tax' mischaracterise traniactions, and artiticiatty dealwith trust income

to

conceal information'

Which trusts will be looked at? and is not targeting The Trusts Taskforce is intended to target higher. risk taxpayers. genuine business or family with plann"ing aisociated tax ordinary trust arranger*nti and
dealings.

promoters' They will undertake compliance activis to target known tax scheme
inoiviouats and businesses who participate in such arangements.

"nfor."r.nt authorities).

with law ln the most serious cases, criminal sanctions will be pursued in collaboration overseas with collaboration and Wickenby authoritili (e.g., through Project

super funds keep pension exemption after death

fof deceased estates in The government has made amendments to "prwidelax certainty income stream"' situations where , plrron has died while in r6ceipt of a superannuation income that supports the Broadly, a superannuation fund is entitled to a tax exemption for pensions)' superannuation payment of superannuation income stream benefits (i.e', fund member was receiving Under the amendmentS, where a complying Superannuation the superannuation a superannuation income stream imm6Aiitety before their death, the period from the in exemption tax to the earnings fund will continue to be entifled membefs death untiltheir benefits are cashed: a by paying them out as a lump sum; andlor

by commencing a new superannuation income stream; subject to the benefits being cashed as soon as practicable'

the membecs death The level of the exemption would be no greater than. it was before qaitowing for investment eamings after the membefs death).

Simpler depreciation rules for business

less than $2 million (i'e', small The ATO has reminded small businesses with turnover of lSeft'1 the depreciation rules for business assets are now

that business entities oi simpler from lhe 2O12t13 income year onwards'

Assets costing less than $6,500 from $1,000 to $6'500 The smatl business instant asset write-off threshold has increased new depreciating assets costing allowing small businesses to immediately write-off most
less than $6,500.

Assets costing $6,500 or more of their effective life) are now Depreciating assets that cost $6,500 or more (regardless at a single rate of 30%' added to the general small business pool and deducted pool rate) for the first income year' Newly acquired assets are deducted at 15% {half the

MotorVehicles
an additional deduction of small businesses that purchase a vehicle can now also claim forward the up to $5,000 in in" in"orn" year it-ii furchased, effectively bringing Jilpreclatibn deduction to earlier in the vehicle's life' has not been written off where the vehicle is used exclusively for businest-.3nd cost of the motor vehicle is added to the immediately under the instant asset writJ-off, the year is made of up of $5'000 general small busineis poot and the OeOuc*on in the first plus 15% of the vehicle's remaining value'

Example

An SBE purchased a motor vehicle on 29 June 2013 for $20,000 which is used year exclusively in their business. Under the new rules, the deduction in the first income

Ulln* $7,i50,

ol the 915,000 remaining value' year (i'e., 15% of under the old rules the deduction would have been $3,000 in the first $2o,ooo).
being $5,000 plus
15o/o

The ATO on work related exPenses

year, the ATO With $18 billion in work-related expenses (WREs) being claimed each rryi tfrrt it will focus on o"iup"tions with a patterir of large or rising claims, as well as ctaims which do not fit the pattern for a particular occupation. What's new this Yea'r? the following This year the ATO is writing to around 218,000 people employed in
occupations:

tr A D

building construction project managers and supervisors; building construction labourers; and
sales and marketing managers-

Travelto work claims

day' Many building construction labourers drive a vehicle to work each becomes lf they can prove they have had to carry bulky equipment then this travel
deductible expense, as long as-'
a

as part of they can veriff that their employer requires them to carry such equipment their job;and does there is no alternative storage solution at the workplace. lf the employer deduc{ion' no provide secure storage, then

general in nature and anYone

intenOing

to appty the information to practical..circumstances:h"{*:ttltj::,:':.t-1 applicability to advice to independentrv verirv their interpretation and the information's