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Assessable Y – Allowable deduction= taxable income assessable income.

assessable income. 3 required: 1, to be incidental and relevant outside normal work hours: court allowed the taxpayer a
Taxable income*tax rate = gross tax payable. to the tp’s income-producing/business operations. 2, to have deduction for expenses incurred in travelling from home to
Gross tax payable+ Medicare levy and surcharge, help debt – the “essential character” of an income-producing/ business work outside normal working hours. Case: Collings (1976).
offset, rebates, tax already paid=net tax payable expense. 3, in order to constitute a deduction, a loss or The Court permitted the ty a deduction for the travel expenses
No Levy<17794.17795-20933(10% of excess over17994) outgoing must be incurred “in the course of” gaining or on the basis that the ty commenced working at home and
Over20993, 1.5% of taxable Y. Non resident no Medicare levy. producing assessable income or in carrying on a business. therefore it were incurred in the course of earning assessable
Surcharge 1% of Y 70k-90k.1.25 of 90k-120k. 1.5 over 120k. For an outgoing or loss to be deductible, it must be incurred in income, rather than to put the ty in a position to earning
Offset 1) private health insurance offset=30% of cost of private the course of producing assessable income, rather than in assessable income. Itinerant works:没有固定的工作地点 in
health insurance 2) medical insurance 20% of excess of net preparation for producing assessable income. Losses and this case, travel between home and work is deductible under
medical expenses over$1500 outgoings incurred before a business is set up are of a capital s8-1. Case: Wiener (1978). 老师一天至少要走 4 个学校教
Total*(1-%)*2.0647or1.8693*0.465 nature and not deductible. Softwood Pulp (1975) business 书 .Carrying bulky items(Heavy equipment): tys who are
CGT : 20 September 1985 前 买 的 房 子 不 用 交 税 。 flexibility study 的费用 deduct,因为 business 还没开始. required to carry bulky items to perform their employment
21september 1999 后面全是 123.4. A1, Ses104-10: Disposal Apportionment of expenditures: “to the extend that” duties are permitted a deduction under s8-1. Case: Voat (1975).
of CGT asset. Capital gains are included in the calculation of contemplates apportionment of losses and outgoings. A Alternative workplace: Taxpayers are permitted a deduction
the taxpayer’s liability, capital losses are quarantined. Applies taxpayer may obtain a deduction for that portion of a loss or under s8-1 for expenses incurred on travel between home and
to CGT assets acquired after 19/9/85.The CGT asset must have outgoing which complies with the requirement of the section an alternative workplace as the trave is considered to be
been disposed of to another entity. 有合同的时候 Where the even though another portion of the loss or outgoing may not incurred in earning assessable income. Ruling MT2027.
Disposal of CGT asset occurs and a contract, the time of the comply with such requirements. Case: Ure 借来 13%其中 2% however, a deduction would not be permitted for such expenses
contract is when the CGT event take place. 没合同的时候 If 借 给 wife, 2%can deduct because of produce assessable where the taxpayer is employed to work at different
not, the CGT event takes place when the change of ownership income, 11% can not deduct, its private nature. workplaces on a fixed basis. Travel between two places of
occurs. Collectables included Antiques (more than 100 years The Negative limb: Capital expenditures:(费用的目的是 work. Where the two places of work are related to the same
old). Work of arts(paintings, sculptures), jewellery, rare books Removing dangerous structure 不可以.) no deduction to the income-earning activity, any expenses incurred in travelling
and manuscripts, rare stamps and coins. 古董家具(furniture). extent the loss/outgoing or of capital or of a capital nature. But between the 2 working place would be deductible under s8-1 as
Capital losses from collectables are quarantined and can only a deduction is allowed if the loss or outgoing is “on revenue the travel is undertaken in earning assessable income. Case:
be offset against capital gains on other collectables. Capital account”. Tests to determine whether is capital or revenue. c) Payne (2001), 农 场 是 家 , 所 以 不 能 D. S25-100, which
gains are ignored where items were ACQUIRED for less than Australian test: business entity test- Sun Newspapers (1983): a) provides tys with a deduction for expenses incurred in
$500(500 一下买的挣到的钱不需要交税)。Personal use the character of the advantage sought. b) the manner in which it travelling between two unrelated work places. 4 conditions met:
assets (yachts,racehores).Gains are ignored where PUA’s is to be enjoyed. c) the means adopted to obtain it. Set up or 1) transport expenses are incurred in travelling directly
were acquired for less than $10000(成本低于一万不需要)。 established for the earning of profit and the process by which between work place. 2) The purpose of travel is to earn
Loss arising from the disposal of PUA’s have no tax effect. such an organization operates to obtain regular returns by assessable income in the 2nd workplace. 3) At the time of travel
Separate CGT assets. Tax effects of structural improvements means of regular outlay. Income earning process can claim, the income-earning activities at the 1st place had not
(alterations, additions)to pre–CGT assets.1buildings/structures Income earning structure is capital nature used to protect permanently ceased. 4) Individual does not reside at wither
on pre CGT land 2 if the cost of the capital improvement to the business structure can not deduct Case: Broken Hill places. Self-education: expenses are deductible under s 8-1
pre CGT asset is more than the “improvement threshold ”for Theatres(1952) ND.. (防止竞争,去除 New competitor, ND) ITAA97 where there is a sufficient connection to the taxpayer’s
the relevant year(2008/9,119594, 2009/10,124258) AND BP Australia(1965) D income-earning activities where the education will improve the
represent more than 5%(selling price) of the capital proceeds .Second negative limb: private = personal, domestic = relating tp’s prospects for promotion or higher income in the tp’s
to the home or household. Section8-1(2)(b) ITAA97 provides current job. Include course fees, books, stationery and travel to
from the CGT event. Exempt ASSETS(免税项目)Motor
that a loss or outgoing is not deductible to the extent that it is attend conferences or seminars. Case: Studdert (1991). Finally
vehicles less than one tonne and less than 9 passenger.
of a “private or domestic nature”. Examine the essential s 82A of ITAA 1936 prevents the first $250 of self-education
Decoration(medal) for valour, collectables less than 500 and
character of an outgoing (essential character test): is it expenses incurred by a tp from being deductible. The section
pua’s less than 10000 and winnings or prizes from gambling or
attributable to your personal circumstances or to your was introduced due to the availability of a tax offset for
a competition with prizes. Main residence exemption ( Div
income-producing activities? The categories of private or self-education expenses, which has since been abolished.
118-B)1,Moving into a dwelling-period can be extended to
domestic expenses: home office expense, self education Although s 82A continues to operate, the impact of the
period before move in…not if rented.2 changing main
expenses, travel between home and work: as a general rule, provision has been lessened by the fact that the $250 threshold
residence – two dwellings for 6 months (maximum period) or
expenses incurred on travel between a taxpayer’s home and his may be applied to any non-deductible expenses incurred by the
disposal of one.3 Absence from main residence – unlimited if
or her normal place of work are not deductible under s 8-1 of taxpayer which are necessarily incurred in relation to the
not rented – otherwise 6 years (after any period of main
residence occupancy) sec118-145(2).4 BUT one Main ITAA97. Case: Lunney: Hayley 1958. Children care: Child education course: Ruling TR 98/9. Mansfield 1996 (空姐买衣
Residence per family. Cost base elements: E1: the purchase, care expenses have long been held to be non-deductible under 服 鞋 子 ) Specific Deductions.Repairs: s25-10(1) tps are
construction cost or market value of the property. E2: s8-1 of ITAA97 as they are incurred to put the taxpayer in a permitted a deduction for expenditure incurred on repairs to
incidental costs in relation to acquiring or disposing of the position to earn assessable income and not incurred in earning premises used for income-producing purposes. S25-10(2) the
asset.( professional fees, costs of transfer, stamp duty, advertising, assessable income. case Lodge 1972, clothing and grooming ty is entitled to a deduction for the amount of the expenses that
loan application, mortgage discharge fees)买卖费用比如 legal. E3: and physical fitness 比 如 Meal. Case Cooper 1991. is considered “reasonable”. S25-10(3): No deduction for capital
Non-capital costs of ownership- i.e costs which have not been Non-commercial losses:兼职开的小店 Div 35 ITAA97: if an expenditure. "a restoration by renewal or replacement of
claimed as a tax deduction (rates, interest on loan and repairs). amount that would otherwise be deductible exceeds the income subsidiary parts of a whole” 3 个 essential attributes of repair 1,
E4: Capital expenditure to increase the assets from the activity, the excess can’t be offset against other restoration of an income-producing item to its previous
value(improvement, moving and installation expdt). E5: income(可以 offset 明年的 gain)unless: a)assessable income condition. 2, item must need restoration before it can be
Capital expenditure incurred in maintaining the title rights to from activity exceeds $20,000 – Sec 35-30. b) activity has “repaired” for taxation purposes. 3, the expenditure involves
the asset.保护 rights 打官司的费用. The cost of travel to produced a profit in 3 of last 5 year – Sec 35-35. c)value of real replacement or renewal of a part of an item, rather than entire
acquire an investment property is NOT part of cost base for property used in the activity exceeds $50,000 – Sec35-40. d) item. Normally, 1.replacement of part of an asset and not the
CGT) Indexation method: capital proceeds less indexed cost value of other assets used in the activity exceeds $100,000 – whole asset (repair) 2. functions are no better, not improve the
base( purchase price *大系数/小系数) =capital gain Discount Sec 35-45, or e) is primary production or professional arts function or efficiency and not change its character (repair) 3.
method: capital proceeds -cost base- CGT discount(50% as asset business and income from other activity doesn’t exceed no better materials (repair) Taking account of s25-10, what
disposed of after more than 12 months, 50% reduction apply for $40,000 – Sec 35-10. Despite Div 35, Commissioner has account, if any is replace a whole + improve function &
small business active asset 生 产 机 器 )=taxable capital gain 。 discretion to allow deduction of reasonable. ITAA s40-880 efficiency and change the character + different & better
Formula capital gain=k proceeds-cost base or indexed cost base prevents certain pre-business or post-business capital exp being material = improvement (FCT v Western suburbs cinema).
capital loss=RCB-k proceeds (indexation only applies to asset deductible. A non-commercial business activity is basically a For this case, notional repair of 150000 is part of improvement.
acquired before 21/9/99) business activity where the expenses in the yr exceed the business Y. The improvement, 240000 is not deductible under s 25-10, but
Deduction:Sec8-1: general deductions, 2 positive Limbs-can Commonly Encountered Types of Expenditures. Interest: will go into the dance hall’s cost base for future CGT event
deduct: (i): loss or outgoing incurred in gaining or producing deductible if incurred for purpose of gaining assessable income (E4). Identifying an “entirety” is “Renewal as distinguished
assessable income(first limb). (ii) loss or outgoing necessarily may be apportioned. Interest must be incurred “in the course from repair is reconstruction of it’s entirety, meaning of the
incurred in carrying on a business(second limb). 4 negative of” an income-producing or business activity for it to be entirety not necessarily the whole but substantially the whole
limb-can not deduct expenses, (i) Capital or that are of a capital deductible. It has been well established that the deductibility of subject matter under discussion”修改了大部分也算是全部. 3
nature: (ii) private or domestic; (iii) related to deriving exempt interest essentially depends upon the use to which the categories of expenditure on repairs which may be classified as
income; (iv) a provision of the tax act expressly denies borrowings is put. Where the relevant borrowings are used to capital expenditure: Initial repairs: tys makes good defects to
deductibility. First positive limb: Deduction incurred does not finance, for example, business expense which are themselves property which existed at the time the property was acquired.
include expenditures that are impending, threatened or deductible (such as rent, wages, advertising), interest is also The courts have held that such repairs are not deductible as
expected. Case:New Zealand Flax Case (1938) 不可以要求 deductible where the relevant borrowings are used to finance they are capital expenses. Case: Law Shipping Co Ltd v IR
claim 预期会发生的 exp. 一定要是已经发生的. An outgoing the acquisition of an income-producing capital asset, eg Comms. Repair undertaken at a later point in time may still be
is incurred when you have: definitely committed yourself to a buildings used as office premises, or shares used to generate treated as initial repairs if the defects existed at the time of
liability or completely subjected yourself to the liability. When dividend income( Taxation Ruling IT). However, where the acquisition. Case: W.Thomas&Co P/L v FCT. 买的时候不知
is the loss/outgoing incurred? Case:James Flood 1953: annual relevant borrowings are used for private or domestic purpose, 道 是 坏 的 . Need for repairs not known at the time of
leave 不可以提前 deduct,要 PAY 的时候才行 under Sec 26-10 the interest is not deducible. Case: Steele (1999). Borrow acquisition. Improvement: significantly better and improve
expense is different from interest expense, borrow expense can functionality of an item. Improvements are not deductible as
ITAA97.而且 must know the exact amount. 但是 insurance
claim under S25. Home office(taxation ruling 93/90): Expense the expenses are capital expenses and taxpayers are not entitled
company 可以 deduct provision. Case:RACV Insurance (1970) incurred by a taxpayer in running a home office generally fall
General rule: deductible in the year the liability is incurred to a deduction for “notional repairs”. Case: FCT v Western
into 2 categories: running expenses: electricity expense, Suburbs Cinema Ltd(1952) Notional repair: refers to the cost
even doesn’t produce assessable income in that year – provided cleaning costs, depreciation etc and occupancy expenses: rent, that would have been incurred by a taxpayer has he or she
it incurred to produce assessable income in future years.比如保 interest on mortgage, insurance etc. The courts have merely repaired the property, rather than improved it. Addition:
险费,付的时候就可以 claim. Case: DP Smith (1981) Second established that where the taxpayer uses the home office as a 1) Expansion of basic capital structure or 2) Extensive
positive limb: “Necessarily incurred in carrying on a business” matter of convenience only, a portion of the taxpayer’s running renovation that changes the item’s character. Depreciable assets:
Case: Snowden & Willson (1958) 公司用不正当 strategy 被调 expenses will be deductible as that portion is incurred in an asset has a limited effective lift and can reasonably be
查导致的费用算是 necessarily incurred.因为难免各个公司会 earning assessable income but any occupancy-related expenses expected to decline in value over the time that it is used.
有恶劣的竞争. “Necessarily” does not means “unavoidable” will not be deductible as they remain a private or domestic Deduction is available for the decline in value of a depreciating
or “essential”, it only requires the relevant expenditure be expense. Case: FCT v Faichney (1972), Handley v FCT(1981). asset during an income year. The deduction is reduced by the
appropriate and adapted for the business(ie. Of commercial However, where the taxpayer’s home office is a genuine home part of the decline attributable private use. Trading stock and
necessity).Magna Alloys case(1980).To be deductible it is office, ie a part of the home is set aside for use in the land is not intangible asset. Building allowance 2.5% or 4%.
essential to establish a link or nexus between the loss on taxpayer’s income-earning activities only, a portion of both Low cost: If an assets cost < $300 and it is used predominantly
outgoing and the production of assessable income or the running and occupancy expenses incurred by the taxpayer will in earning assessable income that is not income from business,
carrying on of a business for the purpose of producing be deductible under s8-1 of ITAA97. Case: Swinford (1984). the cost of depreciation asset is immediately deductible under
Travel expense: between home and work show above. Travel
s40-80(2). This dose not apply if an item is part of a set and the entity on supplies made by that entity, input tax credit arising Franked part of distribution =60*7/3=140. Unfranked part of
cost of the set exceeds $300. 一套的东西不能分开算,一套超 from “creditable acquisitions” and “creditable importations” distribution =700-140=560. Franking account: Purpose: to
过 300 就 不 能 用 . Blackhole capital expenditure: 可以要回来 GST 的 acquisition 叫 creditable acquisition. 4 个 indicate to the company how much franking credits can be
business-related capital expenditure is deductible over 5 years 点, 1)anything acquired for a “creditable purpose” 2)where that passed to shareholders. Div 205 ITAA97. Franking deficit tax
(20%p.a) S40-880. Bad debts: s25-35 provided tps with a thing is a taxable supply, 3)the acquisition for which if at end of the year, the company has deficit in franking
deduction for the write-off of a bad debt where the debt was consideration is provided and 4)the entity making that account. Deficit shows has passed on more franking credits
previously included in the taxpayer’s assessable income or the acquisition is registered for GST. Calculating the net amount of than is warranted by the tax it has paid. Amount of franking
ty is carrying on a business of money lending. 4 requirements GST: GST payable on supplies made – input tax credits deficit tax = amount of deficit in franking account. Calculating
to be satisfied. 1) there must be a debt in existence. 2) the debt claimable. Increasing adjustments 应该交的比实际的多,所 Franking account: Credit in franking account: resident
must have been “bad”. 3) the debt must have been written off company pays a PAYG instalment. Resident company pays
以要继续交, decreasing adjustments 实际交的比应该交的多,
as bad in the income year. 4) the debt must either have been income tax. Resident company received a franked distribution.
就可以拿回.Creditable acquisitions that are denied in put tax Franked distribution is received indirectly by the resident
included in the taxpayer’s assessable income or have been in credits are penalties according to sec26-5 and entertainment
respect of money that the taxpayer lent in the course of a company through a partnership or trust. Entity incurs a liability
expenses according to division 32. A tp should lodge a GST to pay franking deficits tax – seen as pre-payment of tax. Debit
business of lending money. 已 经 交 过 税 的 钱 . To return for each tax period within 28 days of the month
prevent ”trafficking” in companies with bad debts, subdiv165-c in Franking account: Resident company franks a distribution.
following the end of that tax period, where that tax period Resident company received a refund of income tax. Resident
ITAA97 requires the company to satisfy either “same covers three months. 之前的每个季度. Return for each tax company overfranks a distribution in contravention of the
ownership test” or “same business test” 满足相同股东或者相 period within 21 days of the month following the end of the tax benchmark rule. Company with a franking account surplus
同 business 其 中 之 一 才 行 . Borrowing expense can be period.一年交一次是在下个月底前. The net amount of GST ceases to be a franking entity. Company pays a deemed
deductible under S25-25(1) when it incurred such as legal fees, payable by a taxpayer should be paid by the same date that dividend. Company engages in an on-market buy-back. Effect
valuation and survey fees, stamp duty and loan guarantee taxpayer should lodge that taxpayer’s GST return. Tax period: of Franking Credits on shareholder: shareholders may receive
insurance. Calculation of maximum amount deductible, the The tax periods that apply to any taxpayer are the three months franking credits directly or indirectly. Subdiv 207-A ITAA97
period of the loan is deemed to be the shortest of following: the ending on 31 March, 30June, 30September and 31December in regulates direct distributions of franked distributions. Entity
loan period specified in the loan contract.合同上规定的时间. each year. A taxpayer must necessarily use each calendar includes amount equal to the franking credit + the distribution
5 year from the date money was borrowed. The period month as that ty’s tax period if: the taxpayer’s annual turnover itself in their assessable income. Entity claims a tax offset
commencing when money was borrowed and ending on the is $20 million or more, that tp enterprise is carried on in equal to the franking credit. Credit rule: Excess franking credits
date the loan was repaid.实际时间. Pro-rata proportion if Australia for less than three month or the Commissioner is may be refunded if shareholder is an individual-not if company
portion of the loan was used for private purpose. Gifts: satisfied that the tp has a history of failing to comply with a tax s67-25. Only resident shareholders are entitled to offsets for
Donation for political party Max $1,500. The payment must be law administered.有不好的历史记录. Tax invoice: must franking credits s207-70. shareholder must have held the shares
a “true” gift and made with no expectation of material show the description “tax invoice” prominently, the date of for at least 45 days to claim franking credits and offset. S160.
advantage. Gift of services not deductible under TD 93/185. if issue of the tax invoice, name of the supplier, ABN of the Residency requirement: s207-70, an individual or a corporate
borrowing expense less than $100 it may be deducted in full in supplier, brief description of what was supplied, the GST tax entity that is paid a franked distribution directly is only
the year was incurred. 小于 100 可以全部直接 D. Tax loss: inclusive price of what was supplied, other additional required to gross-up such distribution under s207-20(1) and s
can be carried forward but can’t be carried back, it must first information maybe requires when GST payable on a tax only entitled to a tax offset for the franking credit under
deduct against exempt income. AI=1000,AD=1500, tax loss is invoice is $1000 or more. Generally, an input tax credit can not s207-20(2) if the entity satisfies a residency requirement at the
500, assume 300 exempt income,500-300=200 TL, carry be claimed unless the ty holds a tax invoice. Suppliers must time the distribution is made. To satisfy this requirement, an
forward. normally issue a tax invoice for all taxable supplies with a GST individual, a company or a corporate limited partnership must
Entertainment: s32-5 provides to the extent that taxpayer incurs value of $75 or more. There is no need for ty to keep recepits be a “resident” at the time the distribution made. Non –resident
a loss or outgoing in respect of entertainment is not deductible of all purchases under 75, recepit is the value document to individuals and companies will also satisfy the residency
under s8-1. s32-20 contains main exception to the prohibition claim in put tax credit. requirement at the time a distribution is made if they carry on
provides a deduction is not denied in providing entertainment Companies and Shareholders business in Australia at or through a permanent establishment
by a way of fringe benefit.如果是以 FB 的形式就可 D. Dividends: s44 ITAA 1936 contains 4 concepts. Shareholder, and the distribution is attributable to the permanent
Prime Cost method: paid, profits, dividends defined in s6. Changes in corporate establishment.
Asset’s cost*(days held/365 days)*(100%/Asset’s EF) control: provided opportunities for tax evasion through trading Resident company is entitled to a franking credit in its franking
Diminishing Value method: in “loss companies”, company losses are eligible for a account to the extent of the credit.
Base value* (days held/365 days)*(200%/Asset’s EF) deduction only if one of the following tests are satisfied: 1) the Non-residents withholding tax will be imposed on unfranked
Assets frist held on or after 10 May 2006,use 150% for held continuity of ownership test s 165-12. that the same persons dividends at the rate of 30%. When the dividend is fully
pre 10 May 2006 must have more than 50% beneficial control at all times during franked withholding tax will not apply i.e a fully franked
Capital Allowances Balance Adjustment: s40-285: Balancing the ownership test period in relation to the following interest: dividend is exempt.
adjustment events occurs when you dispose of the asset (Gifted, voting control, rights to the company’s dividends and rights to
sold, lost, destroyed, permanently stop using or entity change the company’s capital distributions. 2) the same business test GST Q1:Maud, a market gardener, contracts to supply Noni with
it’s interest in that depreciable asset. Termination value = sale s165-13. did the company carry on the same business in the tax fresh vegetables in return for a free meal each Friday night. Explain
year in question as it did before the change in ownership or GST consequences:
price or Insurance payout (loss or destroyed) = market value
control occurred. This test not satisfied if company has also Assume Noni has register for GST. Fresh vegetable is GST-free
(gift). Adjustable value = the cost of the asset – any decline in supply as it is fresh and unprocessed so it meets the requirement for
value of asset since purchased. TV>AV, the difference derived assessable income from new kinds of businesses or
the exemption on the food in Subdiv 38-A. So Noni is entitled to a
represents assessable income. TV<AV, represents a deduction transaction. Case: AGC Advance. Tax losses: only can be ITC for acquisition. Free meal will constitute consideration, as this
to the entity. GST carried forward, Tax losses must first deduct against exempt supply is not GST-free Supply because they are proceeded food and
Taxable supply (charge GST from customer, purchase claim income. Assessability of corporate distribution: if a resident for consumption on the premises. (s38-3) so free meal is a taxable
ITC deduction), dividends paid to the shareholder by the company out of profits supply, therefore, Noni need to pay 1/11 of vegitable value to ATO.
Input taxed supply (sell no GST pay purchase no GST deduct) derived by it from any source. If a non-resident, dividends paid Q2: Noni also enters into a contract with a reginal airline to suuply
GST-free supply (sell no GST pay purchase claim ITC to the shareholder from Australian sourced profits of the in-flight meals.Worried that the early years of business may be slow,
deduction) company. Dividends received by a resident tp are grossed up to she commences a business baking cookies with special local
Taxable supplies: must have 6 elements:1)any supply (of goods, include foreign tax paid. The grossed-up amount is then ingredients for export to Japan. Expalin GST consequences.
services or anything else) made. 2) Payment made for included in assessable income. If foreign tax has already been The in-flight meals is not GST-free Supply,(S38-3),as it is
paid on those dividends, then a foreign tax credit/foreign proceeded food for consuption on the premises on which they are
consideration.交易代价. 3) by an entity registered or required
income tax offset may be available to the tp. Imputation the supplied, so is taxable supply and need to pay 1/11 of value to ATO.
to be registered for GST. 4) connected with Australia. 5) is not Baking cookies is goods export from Australia(Sec 38-185 of the
GST- free or input-taxed. 6)in the course, or furtherance, of an franking account: to pass on franking credits to its members, a
GST ACT) is GST-free supply so no GST payable on supply.
enterprise that supplier carries on. An entity that makes a corporate tax entity must frank a distribution s202-5.
Q3: Noni has a friend visit her restaurant and provides them with
Taxable supply is liable to pay GST on the taxable supply. The Requirements: Franking entity must satisfy residency reqts, GST-exclusive prices.Expalin
amount of GST payable in the taxable supply is 10% of the non-resident companies can not frank dividends. Distribution Noni is register GST,and meal is processed food ,and comsumption
value of the taxable supply s9-70. the value of taxable supply is must be a frankable distribution entity allocates franking credit on the premises, so is a taxble supply,although price is GST
equal to ten-elevenths (10/11) of the price of the supply s9-75. to the distribution. Franking Distributions: procedural exclusive,Noni need to pay 1/11 of GST-exclusive price to ATO.
Input-taxed supplies: No GST is payable on those supplies, but mechanics: ·Company prepares a distribution statement to all Q4 Arnold visted America buy i-phone, does he need to pay GST to
there is no entitlement to an input tax credit for anything shareholders receiving the distribution. ·Franking credits are bring back to Australia?
acquired or imported to make those suplies.financial supplies allocated to the frankable distribution and these amounts are set Yes, because it is a taxable importation, it does not matter if he is
such as loan, dealings in money and issuring securities. The out on the distribution statement. ·Statement includes the carrying on business or not registered for GST purpose.
identity of the distributor date of distribution, total amount, Q5 Roberto buy $3000 material from Itlay used as business. GST?
supply of residential premises on rent.(民房出租), sale the the Yes, he is entitle to input-tax credit because it is “creditable
franking percentage, any dividend withholding tax deducted
residential premises,(卖旧房子). supply of food at school importation (s15-5) as it was acquired with a creditable purpose.
from the distribution. ·Public companies must provide the
canteens. It not required to pay GST on the making of the 题目.Andrew 经营 Hotel 给 OVERSEAS TRAVELLERS,提供
distribution statement on or before the day is made. ·Private
supply s40-1. A further consequence of making input taxed FREE BUS PICK UP, 游客买了 BREAKFAST, 吃 LUNCH 在
companies get until four months after the end of the tax year in
supplies is that the entity is not entitled to a refund of GST paid RIVER 旁,要了 GOURMET SANDWCHHES AND A BOTTLE
which the distribution was made to issue the distribution
on any acquisitions related to the making of the supply as the OF WINE 。 然 后 给 游 客 EXCHANGE MONEY , 有 个 给 了
statement-effectively enabling retrospective franking s202-75.
acquisition would not satisfy the requirements of creditable
GST-Free Supplies: No GST payable on those supplies and Benchmark Rule: 为了防止公司偏心,一开始怎么分以后都 ANDREW TIPS。Free bus pickup, it is not a taxable supply, as it is
怎么分. Prevents favouritism amongst members (and franking not made for consideration but supplied free of charge. However, it
there is an entitlement to any input tax credit for anything is not necessarily GST-Free, this depends on whether the operator
acquired or imported to make those supplies. Food, health credit tax planning) when dividends issued. All frankable
can claim input tax credits. The supply of breakfast at the hotel and
goods and services, educational material and services, child distributions during a “franking period” must be franked to the the accommodation are taxable supplies. Andrew would need to
care services, goods exported from Australia, water. Suppliers same extent = the benchmarkd franking percentage s203-25. account for GST on these supplies as all elements of a taxable
of going concerns 买 的 是 可 以 经 营 下 去 的 生 意 . GST Whatever franking percentage is used for the first distribution supply under s9-5 are satisfied. Andrew is also liable for the GST
registration: the enterprise or intending to carry on an must then be used for all distributions during the period on the supply of wine and the sandwiches. Sandwiches are taxable
enterprise, can choose to register for GST. This includes s203-25. Franking period for private company=income tax year. supplies and wine is not named in Sch 2 as a GST-free beverage, so
individuals, bodies corporate, unincorported association, Non- private companies have to six-month franking periods GST applies. GST is not payable by Andrew on the tips because it
partenership, sole trader. Taxi or hire car operation Mandatory during each income year. Maximum fanking credit is not a supply for consideration. The exchange of foreign currency
possible=700*3/7=300 Benchmark%=150/300=50% for Australian dollars is an input taxed supply (GST Act s 40-5),
registration: an entity carrying on an enterprise is necessarily
A later distribution of 1400 that income year would therefore and therefore no GST is payable on the supply, but there is also no
required to register for GST of its annual turnover is $75,000 or entitlement to Input taxed credits (ITC). If Andrew charges a free
more (150,000for non-profit bodies). GST payable=price*1/11. have to be franked at 50%,
ie 1400*3/7*50%=300 franking credits. for exchange of the money, GST payable on the transaction and
要取消 REGISTER GST 必须要在注册 12 个月后. Input tax ITCs could also be claimed on the taxable supply under s9-5.
Partly Franked dividends=Franking credit on distribution
credit: where GST is payable by an entity registered for GST or Investment adviser fees: Lauren regularly consults her investment
*(1-corporate Tax Rate)/Corporate Tax rate. Example:$700
required to be registered for GST, that entity may be entitled to advisor for stock mkt analysis. Despite the fact that investment
distribution to members with $60 in franking credits allocated. advice relates to making input taxed supplies, GST Regulation
claim, by way of a subtraction form the GST payable by that
precludes professional advice from being a financial supply. However, where goods have been exported and then returned to OZ amount of tax paid by company (ITAA97 s205-15, item 1)
Therefore, the supply is not input taxed and the investment adviser without having been subject to any treatment, repair or 2) a franking credit arises if a company pays income tax. The
will be making a taxable supply. A 1000(11000*1/11) ITC can be renovation,they will qualify as a non-taxable importation GST act. amount of the franking credit is based on the amount of tax paid by
claimed as the supply qualifies as a creditable acquisition. The Company and shareholders: company (ITAA97 s205-15, item 2)
supply is not precluded from having a creditable purpose as it is a 做 FRANK ACCUNT 的题目首先要注意是不是 RESIDENT,看 3) a franking credit arises if a company recerives a franked
taxable supply where consideration was provided. Additionally, she 清楚时间,如果题目没写明,就要分 2 种情况。 distribution from another resident entity. The amount of credit is
is registered for GST. Consequently, only 10000 will be deductible On 1 July, Frankers has a nil balance in its franking account. In based on the franking credit on the distribution ( s205-15 item3)
under ITAA97 s8-1 as the balance can be claimed as an ITC. relation to its tax liability on taxable income derived during the 4)a franking credit arises if a company receives a franked
Purchase and sale of shares: share trading is a financial supply and previous year. Frankers made a final PAYG instalment on 21 July distribution indirectly from partnership or a trust. The amount of the
therefore input taxed. This means that Lauren will not have a GST $25500(cr). In relation to its tax liability on taxable income derived franking credit is based on the company’s share of the franking
liability for the share sale. Conversely, she will not be entitled to during the current income year, Frankers pays PAYG instalments of credit on the distribution (s205-15 item4)
claim an ITC for purchasing shares as it fails to be a creditable $22170(cr) on each of 21 October, 21 Jan and 21 April. Franker 5)a company’s franking account is in deficit at a particular time to
acquisition. receives a dividend of 180000 with a franking credit of $60900(cr) the extent that the sum of the franking debit in the account exceeds
Tutorial questions: 1. gift to sun but not consideration. In this case, on 1 June in the current year. No other transactions affect the the sum of the credits in the account at that time( s205-40(1) ). Thus,
there is a relationship between son and father. Because they are franking account during the current income year. Frankers wants to the company has a franking deficit of $(money) on that (date)
relatives, although there is no consideration paid by son, the father pay a dividend of $350000 on June. 6)As the company has a franking deficit, so it is required to pay
is still treated as receiving GST from his son. So it is treated as Q1: Advise he of the maximum: franking credit in relation to the franking deficit tax. Since franking accounts are maintained on a tax
normal GST taxable supply. He doesn’t collect 10% from his son, distribution. basis, the amount of the franking deficit tax payable is the same as
he need pay 10% GST by himself. Total credit=25500+22170*3+60990=153000 the amount of the relevant franking deficit. Thus, the company will
Hold a valid tax invoice for amounts more than 75 in 2009, Maximum=350000*3/7=150000 have to pay $191715 franking deficit tax on the 30 June 2009
suppliers must issue a tax invoice for all taxable supplies with a Q2: the consequences which pays a dividend of 350000 with a closing balance of its franking account. There will also be a penalty
GST value of 75 or more, lack of ABN number will invalid the franking credit of $100000. for excessive over franking as the franking deficit tax liability of
invoice or failure to produce a tax invoice prevents any ITC to be =153000-100000=53000 $191715 is more than 10%of the total franking credits arising in the
claimed Q3: the consequences which pays a dividend of 350000 with a company franking account for the 08/09 tax year. Under ITAA97
Wages is not GST item. There is no GST input tax credit. S9-20:an franking credit of $180000. s205-70, the company loses the entitlement to offset 30% of the
enterprise is an activity, or serious of activities done in the form of =153000-180000=27000 Franking deficit tax. amount of the franking deficit tax (30% * $191715=57515)against
a business including any profession, trade, employment, etc but Q4: In 2008/09, Ray receives a salary of $60000. He also receives a its tax payable.如果正常 positive 的 credit amount: the closing
excluding employment as an employee. dividend of $700 with a $300 franking credit attached. Discuss the balance of the franking account as at 30 june 09 is carried forward
No GST is payable on deposit as a deposit does not constitute consequences. and represents the opening balance of the franking account on 1july
consideration, it will change into consideration when it is paid on Gross-up: 60000+700+300=61000 09 for the 09/10 franking period.
settlement date. An ITC is claimable for the hire fee, but for a (61000-34000)*30%+4200=10500 Debits in the franking account s205-30
refundable deposit there is no GST consequence because it will not 10500-300(entitle to 300 ranking credit) =10200 Item1 the amount of franking credit when franks a distribution
form part of the consideration. However, if the equipment is 61000*1.5%=915, No surcharge 因为收入<70000 Item2 receive a refund of income tax
damaged or returned late and all or part of the deposit is not 10200+915=11115 Item 3,4 the entity franks a distribution in contravention of the
refunded, the amount lost will be consideration and will give rise to Q5: What difference would it make if his salary for the year had benchmark rule and the amount of the franking surplus
a taxable supply by the hire company. In such a case, the hire been $350000, or if he were a self- funded retiree receiving only
company will be liable for GST on the retained deposit. Notes:1)a franking debit arises if a company franks a distribution,
income from investments of $20000 the amount of the franking debit is the amount of the franking credit
2. s 23-5 GST act, if expected annual turnover is over 75000 for a Low income tax offset maximum offset 1350, and reduced by
profitable organisation or 15000 for a non-profitable on the distribution (s205-20 item1)
4cents for every $1 exceeds 30000 taxable income, 最多 67500 2)a franking debit arises if a company receives a refund of income
organisation, such an entity could be required to register for GST
taxable Y (35k+300+700)=36k tax. the amount of the franking debit is reduced on an attribution
purpose. As the expected turnover is lower (22000), this restaurant
is only entitled to register. The decision of whether to register is 1350-(36k-30k)*0.04 if retiree can exempt. basis if a company is not a franking entity for the whole of the
depending on the final GST liability position for 2009/10 year. As Franked distributions are not subject to withholding tax and are relevant income year ( item 2) it it assumed here that the company
expected expenses are much higher than the expected revenue, it excluded from assessable in come as if they had been subject to was a franking entity during the 08/09 year.
would be more favourable to the TP to start registration for GST withholding tax s 128D. date amount debit credit balance
straightaway and claim a higher ITC than wherever GST collected. If a company is a non-resident company, since the distribution paid Underfranking a distribution will result in lost imputation credit and
Rent of the restaurant building- commercial rent, ITC; but if it is a by Coldstream pty ltd was fully franked, there will be no an under franking penalty will arises. Overfranking distribution: an
residential rent, it is input-taxed, no ITC Painting, furnishing and withholding tax payable by the company. The distribution is overfranking tax will be imposed, this will result in lost imputation
cleaning of the building – taxable supply, ITC Advertisement in excluded from assessable income under s44 (1)(b) as if it had been credit from next tax payment to imputation account.
national and local newspapers- taxable supply, ITC Dining room subject to withholding tax (s128D) and the company will not be Deduction
equipment – taxable supply, ITC food and drink- if raw and entitled to any franking credit (ITAA97 subdiv 207-C). In other Q1: Jennifer is an associate at Jones and Smith, a medium-sized
unprocessed food will be GST-free, but all the others are taxable words, as non-resident of Australia, she is, subject to ITAA 36 s128 firm of chartered accountants. She was advised by the staff
supplies, ITC wages- no taxable supply, no ITC D, only assessed on distributions paid out of Australian source development officer that she would improve her prospects of being
题目:Total revenue 15000, 10000 relates to the general banking profits (s 44(1)(b)). However, since the introduction of the made a partner if she obtained a higher degree in accounting. She
distribution imputation system the tax treatment of distributions has approached you as a tax agent to prepare her tax return. She
operations, It spent 5000 on computer services (2000 直 接 是
received by non residents from Australian sources depends more on seeks your advice on whether
provision of advice and safe-keeping services), 3000 on wages,1000 the franking provisions than on s44(1)(b). Unfranked distributions she can claim deductions for the following expenses:
on leasing arrangements for the building and 500 on stationary. are subject to withholding tax and then excluded from assessable (a) Bus fares that she paid for traveling from home to work in the
SALES: Of the total supplies of 15000 made by NAT Bank, only income by the operation of s128 D. Franked distributions are not morning, from work to university for work-related studies in the
5000 relates to taxable supplies. The general banking services of subject to withholding tax (s128B(3)(ga)) and are excluded from evening, then from university to home. 不能D, s8-1 private nature
10000 are input taxed financial supplies and are not subject to GST. assessable income as if they had been subject to withholding
Able to claim input tax credits on creditable acquisitions. However, case: Hayley. 从work-uni可以s25-100
tax(s128D). (b) the cost of her evening meal eaten between classes at the
an acquisition is not for a creditable purpose to the extent that it Permanent basis from 1/1 2009, 1.10.2008, fully franked
relates to making input taxed supplies. Therefore, input tax credit is university; 不能D, s8-1, private nature. Case: Cooper
distributions from BHP 2000, 1.2.2009, partially franked
only available to the extent of 5000/15000=33.33%. (c) Other expenses at the University included: HELP fees ($2,400);
distributions from ANZ(franked to 60%) 4000, 15.3.2009,
Purchases: 9500 total exp, only 6500 could be considered to be photocopying ($450); and stationery ($350). HELP不可以D,因为
unfranked distribution from Fosters 3200, 30.6.2009, Fully franked
creditable acquisitions, as wages and salaries of 3000 are outside the
distribution from Westpac 4000. ANSWER: 2008 不算 因为要 HELP已经是政府提供的benefit, 不能在这个基础上要求D,
GST system. The remaining expenditure should be considered on photocopy n stationary可以D,因为和income相关,case: Studdert
the basis of GST Act s11-15, things acquired in making input taxed 到2009 才成为OZ resident. PFDF ANZ 4000, Grossed up for
franked portion: (ie 2400*30/70) 1029, Unfranked distribution from (d) Childcare costs for minding her three year old son. In the
supplies are specifically excluded for the meaning of “creditable absence of the childcare, Jennifer could not remain in her job, nor
purpose”. 5000 里 2000 元 是用来 directly making of taxable Fosters 3200, fully franked distribution from wespac 4000, Grossed
up for franking (4000*30/70) 1714, assessable income 13943. undertake her part time studies.不可以D,s8-1, Domestic. Case:
supplies and so a full input tax credit is available. The remaining Lodge (e) She would also like to know what records she needs to
Continuity of ownership, same business tests:To satisfy this test,
3000 is used for making both input taxed and taxable supplies, produce to enable her to claim the deduction for the expenses in
shares carrying more than 50% of all voting, dividend and capital
therefore ITC should be apportioned. 1500 stationery fee 也是一样. question. Individual exp <=$10, or total <=$200就不用written
rights are to be beneficially owned at all times during the
Apportioning ITC should be 4500*33.3%=1500 ITC available. “ownership test period” by one or more persons who individually or evidence. s82A First $250先扣掉,b)和d)的钱可以用来充$250。
题目 projected GST turnover will be approximately 120000 pa, it together held shares carrying similar rights at all times during the Q2: Borrowing expenses paid by a construction company amounted
will be required to be registered for GST. This will be the time when loss yr. The “ownership test period” is the period from the start of to $480. The term over which the loan was repayable was 6 years.
Polyfoam first meets the registered threshold, as it is conducting an loss yr to the end of the income yr in which the loss is claimed The expense was incurred on 1 March 2009. The funds were used
enterprise under GST act s9-20, through importing and exporting (ITAA97 s165-12). An examination of the changes in shareholdings for business purposes.
goods. As current GST turnover is 84000 pa, registration for the from 2007 to 2009 indicates that the continuity of ownership test is 可 以 claim, apportion s25-25, borrow exp use shortest period.
GST is likely to be backdated, the extent to which registration can satisfied for the loss incurred in 2008, but is not satisfied in respect 480/5*122/365. if <$100 可当年全D.
be backdated is limited by GST ACT s 25-10. of the loss incurred in 2007. Thus, special pty ltd can, under this test, Q3: In October 2008 Donna made the following payments to
IMPORTS/CREDITABLE PURPOSE: Generally GST will be claim a deduction for the 2008 loss of 20000 as an offset to its “Kwiktax”, a firm of registered tax agents.
payable on imported goods. Entry for home consumption means that 25000 taxable income in 2009, but is not entitled to claim for the Preparation of the 2008 tax return 200 D s25-5
goods have passed out of customs control. Accordingly, GST is 200 loss. Objection to the 2007 assessment 180 D s25-5
payable by the importer and not by the overseas supplier (GST Act Same business test---where a company fails to satisfy the continuity Financial advice on investment in shares 175 ND capital nature 可
s13.5). The GST is calculated as 10% of the value of the of ownership test, a prior yr loss is deductible where the company
importation. The value is CIF value. The customs value is based on 加到cost base
carries on, at all times during the yr of recoupment, the same
the free on board (FOB) value plus the additional costs of Advice on tax planning 300 D s25-5 recognized tax
business it carried on immediately before the change in beneficial
transporting the goods to Australia, including insurance and any adviser: register tax agent legal practitioner.
ownership of shares which disqualified it from satisfying the
customs duty or wine tax. Calculation of the GST is therefore 10% Total 855
continuity of ownership test. To the ATO, “same business” means,
of 27000. The GST is payable in the same way and at the same time To what extent would the expenditure be allowed as a deduction for
the identical business. Additionally, s165-210 makes it clear that to
as customs duty. However, in practice, a special Deferred GST the year ended 30 June 2009?
satisfy the same business test the company must not have derived
Scheme will enable approved importers to defer the GST until the Would it make any difference, if instead of using the services of
assessable income from a business of a kind in which it did not
first Business Activity Statement is submitted after the goods are Kwiktax her friend who is a tax tutor at Macquarie University had
engage in prior to the change in ownership of shares. A company
entered for home consumption subject to certain conditions. helped her prepare her tax return for cash payment of $150?
cannot commence a business or initiate a transaction in order to
Loan and credit card facility: finance company lend money to Q4: The owner of a dance hall, on ascertaining that a portion of the
meet the same business test. In this situation, change its business in
Polyfoam---finance company is a taxable supply, the acquisition of ceiling of the hall was in need of repairs, decided to replace the
july 2008, the losses incurred in 2006/07 are also lost under this
the equipment from a registered supplier would constitute---a whole of the ceiling with a different but better material. The new
particular test.
taxable supply(ITC) Polyfoam provides credit card facility is---a ceiling, in addition to enhancing the appearance of the hall,
Credit in the franking account s205-15 ITAA97 improved the acoustics. The total cost of the material and of
financial supply,which will ve input taxed (not ITC) Item 1 pay a PAYG instalment
Export:主要是讲天数 the supply of exports is GST-free if the erecting the new ceiling was $240,000. It was estimated that the
Item 2 pay income tax cost of repairing the ceiling, rather than replacing it, would have
supplier exports them from Australia before or within 60 days after Item 3 the franking credit on a franked distribution to the conpany
receving any of the payment for them. If the goods have been been $150,000. Taking account of s25-10 (ITAA 97), what
Item 4 franking credit on indirectly franked distribution to entity amount, if any, is allowed as a deduction?
invoiced before any payment is made, they must be exported before
through a partnership or the trustee of a trust Case: Western suburb s25-10, both improve (capital nature) and
or within 60 days after the invoice is given. Export by polyfoam is
Item 5 incurs a liability to pay franking deficit notional repair all ND.
GST-free because within 60 days. Should keep relevant records to
prove that the timing requirements for exports.Generally, a supply is Notes: 1)a franking credit arises if a company pays a PAYG Q5: What amount would be allowed as a deduction for the decline
not GST-free if the supplier re-imports the goods back to Australia. instalment. The amount of the franking credit is based on the in value of the following items purchased by a taxpayer and used
solely for the purpose of producing assessable income? Borrowing exp: no, the borrowing expenses are capital in nature, 30/06/2009 60000
(a) a lathe purchased on 1 July 2007 at a cost of $24,000 and no deduction is allowed for them under s 8-1.(ie, purchase a house) Don’s personal transactions:
estimated to have a life of 7 years; 24000/7=$8000 However, a specific deduction is allowed under s25-25 for Fully franked dividends from St George Bank 700,
(b) a car purchased on 1 June 2008 at a cost of $80,000 and borrowing expenses (such as loan charges, legal expenses and stamp Interest from Canada (950 less 150 Canadian tax) 800
estimated to have a life of 6 years; duty) incurred in relation to a loan which is used for producing Answers:
$57180 for car limit,超过57180都用57180计算 purposes. The borrowing expenses are deductible over the period of Partnership assessable Y
57180/6*30/365 or 57180/6*30/365*200% the loan or five yrs, whichever is the shorter period, beginning with Fees $350000+(60000-45000) 365000
(c) a computer software program with an effective life of 3 years the yr in which they are incurred. If the borrowing expenses Bank interest 2000
and purchased on 1 July 2007 incurred in any yr are 100 or less, they are deductible in that yr. Total assessable Y 367000
costing: (a) $600, or (b) $275. Hence, the deduction available for holly under s25-25 for the Partnership deduction
600/3=200 or 600/3*200%=400 2008/9 tax yr is … Employees wages 74000
$275<$300 可以全deduction. Roof replacement expenses: initial repairs to an income-producing Improvements to business premises 1199
Q6: On 1 October 2008, she purchased a new 1.8 liter-Holden for property are not deductible under s25-10 as such repairs are (50000*2.5%*350/365)
$35,000. She uses the vehicle when visiting clients. The car has an generally capital in nature. Hence, the cost can not be deductible. Wages to Mick’s wife 6000
estimated effective life of 7 yrs and using the prime cost method. But, under s43-20, capital improvement to an income-producing Other allowable deductions 94000
She maintained a log book for a 12 week period and all receipts. building applyies. Total deductions(2) (175199)
She provides you with the following information relating to the year Purchase of gas water heater: yes. The decline in value of a
ended 30 June 2009 and wants you to work out the maximum depreciating assets (ie, heater) which is used for a taxable purpose Partnership net income(1) 191801
deduction t (ie the production of assessable income in the form of rent) use
Total kilometers traveled 15,000 diminishing value method to calculate Distribution to each partner 191801
Business kilometers traveled 6,000 Professional advice on management of income tax affairs: Less: salary and interest on capital 35000+1500 (36500)
Interest on car loan 2,300 deductible under s25-5 provided the fee was paid to a recognised Available for distribution 155301
Answer: Division 28 allows four alternative methods for calculating professional tax adviser. Costs in objecting to an income tax Mick 155301*50%+35000=112650
deductions for “car expense”. assessment would be an expense in the management of tax affairs. Don 155301*50%+1500=79151
1, Cents per kilometre Payroll and GST advice: Deductible under s 8-1(1_ as a
Under the cents per kilometre method, the amount of the deduction business-related expense. S25-5 would not apply because it relates Don’s taxable income
is determined by multiplying the business kilometres the car only to income tax affairs. Distribution 79151
travelled (up to a maximum of 5,000 km). No condition and Lump sum: the lump sum paid for the transfer of licences in an Fully franked dividends 700
substantiation rules. 2, 12% of original value method The deduction expense of a capital nature and would not be deductible. Franking credit(700*30/70) 300
is calculated under s28-45. More than 5,000 km. The deduction is Bad debts: it would be deductible under s8-1(1) as an expense Gross interest from Canada 950
equal to 12% of the acquisition cost of the car or 12% of its incurred in gaining assessable income. Section 25-35 would also 81101
market value if it is leased. The amount of the deduction can not aply if the qualifying tests were met. Less: allowable deductions 5000
exceed 12% of the “car limit” ($57180). And No substantiation Robber: Recovery form insurance would be assessable (super contribution)
requirements. Puchase price: no Annual rate: yes s8-1 Labour: no Agent fee: Taxable income 76101
3, 1/3 of total expense method. yes s8-1 Solicitor fee: yes s8-1
The deduction is equal to one-third of each “car expense” incurred Fines: no (s26-5) Madad pty ltd v FC of T 84 ATC Tax on $76101=4200+(76101-34000)*30%= 16830.30
by the taxpayer during the year. More than 5,000 km Sell debts to a finance company at a discount price: no, it is Less non refundable tax offset
The taxpayer can keep the records for the period he or she held the ceasing the business, rather than expenditure incurred in carrying on Low income rebate __0__
car during the income year accordance with Subdiv 28-H. business. Net tax payable 16830.30
4, Log book method Bonus: yes, the bonus is deductible to the employer under ITAA97 Plus Medicare levy 1.5% of taxable income 1141.52
The amount deductible is the amount of each car expense multiplied s 8-1. For the employee, the bonus is income assessable under either Medicare levy surcharge 1% on 76101 761.01
by the “business use percentage”. s6-5 or ITAA 36 s26(e), with the payment being an allowable 18732.83
The business use percentage is based upon log book records kept deduction to the employee if the charitable institution qualifies Less refundable tax offset
under Subdiv 28-G (require to keep a log book for a period of 12 under ITAA97Div 30. Franking credit 300
weeks for the first income year) Interest paid on the overdraft: yes, under s8-1, as the funds were Foreign tax 150
A “car expense” is a loss or outgoing to do with a car (eg, interest used in the business to derive assessable income. The purpose of the
loan is the most important factor. Tax payable
on a car loan, fuel and oil costs, depreciation, maintenance,
registration and insurance costs) S 26-5 ITAA 97 provides the Important considerations which taking into account form tax 1.The “net income” of a partnership means its “assessable income”
amount payable by way of penalty is not deduct. perspectives when doing a tax planning are including: the attitudes
less all “allowable deductions”(sec 90)
Dep = Asset’s cost X Days held X 100%/365 Asset’s effective life of the ATO is a major factor must always be taken into this; look for,
In calculating the net income or loss of partnership, the partnership
= 35000*(272/365)*(100%/7)= $3,726 and document, purposes other than tax avoidance; obtain a through
is treated as if it were a resident taxpayer.
Business travel percentage=6,000/15,000= 40% understanding of the factual background; assess the costs, benefits
2.CGT (any capital gain or losses arises from the disposal of an
Car expense include: & practically of the plan; consider the legal environment; tailor the
plan to the taxpayer; assess the risks; keep proper & adequate asset of the partnership is reflected in the returns of the individual
Interest on car loan, Registration and insurance, Petrol, partners), deductions for losses of previous years, deductions for
Repairs and maintenance, Car washes, Depreciation, therefore Total records; ensure the plan is flexible.
Government makes certain type of GST free or Input-tax supplies super contributions are not taken into account in calculating
expense is $ 8,582 allowablr deductions, certain special concessions are not available
Cents per kilometre method= 5,000 * 0.74 = $3700 12% of because: 1) GST free: to make Australia’s exports competitive; to
offer relief to the loss-wealthy; 2) Input-tax: practical difficulty to to partnership---excluded.
original value method= 12% * 35,000 = $4200 1/3 of total expense 3.Partners are assessed to tax in their individual capacities on the
method =1/3 * 8,582 = $2861 Log book method = 40% * 8,582 measure value added; to offer relief to the
share of the net partnership income regardless of whether that share
= $3433. Fine is not deductible under s 26-5 ITAA 97 loss-wealthy(W6B,345,33) 。Telephone entitled to claim ITC , but
has been distributed(sec 92)
The maximum deduction that she can claim is use 12% of original if the telephone is also used for private purpose, it will only be
Partnership income or loss retains its character in the hands of the
value which can claim $4200 for the use of the car. entitled to a apartial credit equal to the proportion of business use
individual partners.
Non-commercial loss Example: 20000 ded – 15000 income = 5000 for which the goods were acquired s11-30
Losses can be carried forward indefinitely by the partner for
deduction (first yr), 12000 income -9000 deduction = 3000 income Partnership deduction in later income year until absorbed.
assuming that none of exceptions in s35-10 (1) applies; she cannot Parterships at general law: 1)the relationship the exists between 4 .A partnership is not a separate legal entity for tax purposes,
set off the excess business deductions of 5000 against her salary as a persons” carrying on business in common with a view to profit. therefore a partner cannot be an employee of an partnership. It is not
solicitor. This amount can however be carried forward and offset 2)for tax purpose, general law definition plus an association in assesable income for individual..Salaries to partners are not
against future income she derives from the same business. 3000 of receipt of income jointly. FCT v McDald(1987) the agreement deductible in computing the net partnership income, but it is a
the 5000 quarantined carry-forward loss can be applied against the between them would no effect for tax purpose and income and distribution to partner. exception: where a partner is entitled to a
business income for the yr. the balance of 2000 would need to be losses would be allocated on the basis of their ownership interests in “salary” under the terms of the partnership agreement.
carried forward until absorbed against income from the same the jointly owned property. 6. Each individual partner is entitled to claim a share of tax offset(eg
business in future yrs to until one of the exceptions applies, at which Changes in composition, Dissolves the old and a new for franked distributions) and withholding taxes paid to which the
time the 2000 can be applied against her employment income. partnership comes into existence, unless the partnership partnership is entitled.
Business currently being carried on, post-business exp., agreement provides otherwise. Additional: Drawings to partner is not deductible for partnership
pre-business exp. Blackhole Example: 30000 expenditure during Income of minors and not a distribution to individual partner as well, it is simply a
06/07 to establish child center in 08/09. Apart from s 35-10, the Y amount 0-416 417-1307 1308+ return of capital. 7.Internal loans: 1)Interest paid on money lent
30000 would be deductible under s40-880 in equal proportions for to a partnership by a partner is deductible to the partnership
Tax rate nil 66% 45%
the 5 yrs 06-11. Section 35-10 (2B) prevents him from deducting provided the loaned amount is used by the partnership in producing
the amounts arising from the pre-business exp until the business 1)These rate do not apply to minors under 18 who are excepted
persons(minors engaged in full/part time employment, its assessable income, ie working capital. 2)Interest received by, or
commences. Under s 40-880 deductions for 2 yrs 6000+6000 are credited to, the partner is assessed as income derived by the
quarantined until the business commences in 08/09. Until business handicapped, double oophan, married). 2)these rates do not
partner(in her/his capacity as a lender and not as a partner).
passes one of the tests in 08/09, can offset the amounts quarantined apply to excepted assessable income under s 3)Interest paid to partners on capital contributed to the
form the 2 previous income yrs against the income from business. 102AE(1)ITAA36(employment Y, business Y, Y form partnership(treated in the same way as salary) neither assessable to
Repair: Repairs to the roof: yes, only to part of the roof using investment of a)compensation for unjury or dealth benefits. the partner, nor deductible to the partnership in calculating its net
materials equivalent to those originally used b)inherited property. c)family breakdown. 3)the tax offset for income. Partner 以capital的形式投资,partnership要给interest不能
Painting of the surgery: yes, the expenditure satisfies the low income earners applies to minor’s whose taxable is less D. 当working capital不够, partner 借钱给partner 的interest可以
provisions of s25-10 the need to repaint the bedroom did not arise at than $30000.
the time the house was purchased by holly (ie. Initial repair, but D, partner收的利息自己要assess.drawing to the partner, it is not
Partnerships。 Mick and Don has a partnership. For the year ended deductible for partnership, it is not a distribution to individual
arose out of everyday wear and tear of the rental property)
30 june 2009, they share profits and losses 50/50, after salaries and partner as well, it is simply a return of capital only. Any capital
Replacement of the floor: no, not a repair, but the replacement of a
interest on capital. Calculate the net income of the partnership, the
depreciable item Despite the fact that the wooden floor was in need gain or loss arising from the disposal of an asset of the
distribution to each partner, Don’s taxable income, his tax assessed
of replacement in the best possible way, the use of a concrete partnership is reflected in the returns of the individual partners
and Medicare levy.
material would suggest that an improvement to the property has een
Receipts 350000 and not in the partnership return, calculated using partner’s
achieved by holly, not a repair that is deductible under s 25-10(FC
Cash receipts during the year 2000 share of the cost base of the asset. Partnership 算net income,
of T v Western Suburbs Cinemas Ltd) Case N61, 81 ATC 325 有profit分下去,有loss可以personal deduction. Foreign losses:
Bank interest
replace from rotten wooden floor with a better concrete floor was an
Expenditure quarantined within the partnership, are not available for
improvement and not deductible under s 25-10.
Wages to employees 74000 distribution to the return. May be carried forward to offset
Resealing the car park: no, not satisfy the requirements of s 25-10.
Improvements to business premises 50000 against assessable foreign income of later years. Share of
it is an improvement of the entirety and , as such, would be capital (commenced 30.04.2007,completed 15.07.2008)
in nature and not deductible outright. However, as the resurfacing is income or loss: partners are assessed to tax in their individual
Drawings- Don 20000 capacities on their share of the net partnership income s92,
a structural improvement, the capital expenditure can be written off
Salary to Mick 35000
at the rate of 0.025 pa from the date that the carpark is first used for
Interest on capital-Don 1500 whether distributed to them or not. 知道分多少就行,不用等
income producing purposes. Assuming that date is 10 April 2009, 到分到以后。 给普通员工工资可以D,给partner不能. 除非
Wages to Mick’s wife(the Commisioner considers 10000
the amount allowable as a deduction in the 2008/2009 tax yr is $45: That only 6000of the amount is reasonable) 合同上签和合约. Salary to associates, deduct the reasonable
8000 * 82/365 * 0.025 = 45
Super contributions 5000/partner 10000 portion.
Gardening exp: no, would not be regarded as a repair, but should Other (all allowable deductions) 94000
come within the normal deduction provisions of s 8-1 (1) and be
Additional Info
fully deductible to the taxpayer.
Debtors 01/7/2008 $45000