Message from David Shaw

Happy New Year and I hope you have all had an enjoyable Christmas and a great start to 2012.

We have noticed that there is a lot of early business activity which is generally a sign that the economy is picking up and this is exciting for both WSC and our clients.

We are pleased to announce that Kristian Thornton has joined our Sydney team as an Accountant. Kristian has a number of years experience working in a City accounting firm and will be a great assistance to me servicing some of our long term clients. I have been looking forward to Kristian joining our team for some time. We will advise the clients accordingly that have been assigned Kristian as their account manager.

Finalisation of 2011 Tax Returns

The Tax Office has announced that they will only provide extensions in exceptional circumstances. This means that we are

aiming to have all returns which need to be completed in our office by the end of February. You may receive a phone call or email from a staff member regarding your 2011 tax information and advising you to send your information to us as soon as possible to ensure your returns are completed on time.

“Big Picture” & Tax Planning Meetings

We are endeavouring to conduct “Big Picture” meetings with our property investors who want to plan out their long term growth strategy. We are also conducting meetings with business clients in February to review their half yearly results.

We would love to catch up with all clients in relation to this and Pariss Armstrong from our office will be booking my appointments for February and March. It is a great opportunity to review your current property and business strategies coming into the new year. Please contact Pariss at [email protected] to secure an appointment.

Business Activity Statements

Business clients who lodge quarterly Business Activity Statements must have these statements lodged by the 28th February. Our accountants are currently contacting clients, so if you can assist us in getting your Business Activity Statement information together as soon as possible it would be much appreciated.

Skype Conference Calls

Please note that in my attempt to keep up with modern technology I have embraced “Skype” as a convenient way to communicate with clients. My Skype address isdavid.shaw.wscmenai if you would like to add me as a friend.

If you would like to catch up for a 5 - 10 minute Skype call this is at no extra charge.

I look forward to assisting you all in 2012.

Best regards,

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 [email protected] 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."

GST case on promotional discounts

Editor: Following a Full Federal Court decision that did not go the Tax Office's way, it has issued a 'draft ruling' explaining its new stance in relation to sales of products which contain discounts in some shape or form.

In this case, the taxpayer was a manufacturer and distributor of luxury spectacles, frames and sunglasses. As part of its marketing strategy, it discounted the frames, not the lenses, and was able to successfully argue that the sales price of GST exempt lenses could be separated from the GST taxable frames.

The Full Federal Court said that:

"Promotions that offer lower prices or greater value subject to conditions are common practice in many, if not every, arena of retail sale."

"The offer may be "two for the price of one", or "buy one, get one free", or, as here, a reduction in the price of the frame on condition that the lenses are purchased at the same time."

"How a promotion is structured is a matter for the commercial judgment of the seller. In the present case, it has clearly been decided that the discount offered should be applied to the price of the frames rather than the lenses."

ATO's new stance on mixed supplies

The term ‘mixed supply’ is used to describe a supply that has to be separated or unbundled as it contains separately identifiable taxable and non-taxable parts that need to be individually recognised.

The Tax Office states that apportionment must be undertaken as a matter of practical commonsense. Taxpayers can use any reasonable and supportable basis to apportion the consideration.

Editor: As the Federal Court states, promotions that offer lower prices to increase sales of bundled goods are commonplace in most areas of retail sales.

The ATO has now accepted that as long as there are separately identifiable taxable and non-taxable parts, taxpayers can apportion values on a reasonable basis. The 'ruling' contains a number of examples which are too long to replicate here.

If clients would like to discuss how this 'ruling' may apply to their business, please contact our office.

GST case on promotional discounts

Editor: Following a Full Federal Court decision that did not go the Tax Office's way, it has issued a 'draft ruling' explaining its new stance in relation to sales of products which contain discounts in some shape or form.

In this case, the taxpayer was a manufacturer and distributor of luxury spectacles, frames and sunglasses. As part of its marketing strategy, it discounted the frames, not the lenses, and was able to successfully argue that the sales price of GST exempt lenses could be separated from the GST taxable frames.

The Full Federal Court said that:

"Promotions that offer lower prices or greater value subject to conditions are common practice in many, if not every, arena of retail sale."

"The offer may be "two for the price of one", or "buy one, get one free", or, as here, a reduction in the price of the frame on condition that the lenses are purchased at the same time."

"How a promotion is structured is a matter for the commercial judgment of the seller. In the present case, it has clearly been decided that the discount offered should be applied to the price of the frames rather than the lenses."

ATO's new stance on mixed supplies

The term ‘mixed supply’ is used to describe a supply that has to be separated or unbundled as it contains separately identifiable taxable and non-taxable parts that need to be individually recognised.

The Tax Office states that apportionment must be undertaken as a matter of practical commonsense. Taxpayers can use any reasonable and supportable basis to apportion the consideration.

Editor: As the Federal Court states, promotions that offer lower prices to increase sales of bundled goods are commonplace in most areas of retail sales.

The ATO has now accepted that as long as there are separately identifiable taxable and non-taxable parts, taxpayers can apportion values on a reasonable basis. The 'ruling' contains a number of examples which are too long to replicate here.

If clients would like to discuss how this 'ruling' may apply to their business, please contact our office.

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.

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 9.25 1 July 2014 9.5 1 July 2015 10 1 July 2016 10.5 1 July 2017 11 1 July 2018 11.5 1 July 2019 12

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.

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.

CPI – September quarter 2011

The CPI indexation factor for the September 2011 quarter is 179.4 (an increase of 1.1 from the June 2011 quarter of 178.3).

An Important Message

While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents. Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only. Please contact your WSC account manager for more information.