Monthly Archives: August 2011

Frankly my dear I’m confused

It was welcome when it came and now it’s got everyone hot and bothered. I am referring to the corporation law amendment that allowed dividends to be paid if the balance sheet test was satisfied, no need that dividends can only be ‘out of profits’. Section 254 T of the Corporations Act provided that no dividends may be paid unless: The company’s assets exceeded its liabilities immediately before the dividend is declared and the excess is sufficient for the payment … Continue reading

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Trust investments- ATO says capital and not revenue

The concessions available in the case of capital gains tax, such as the discount, have been a significant factor encouraging taxpayers opting to treat gains as capital and not revenue. But now the Tax Office is getting tougher. First it happened in the case of private equity firms claiming CGT treatment for ‘carried interest’ (see TD 2010/21) and now the Office has issued TD 2011/21 dealing with investments made through trusts. The Tax office has not given up its fight. … Continue reading

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 Taxes never felt better- Warren Buffet has the dough to match

As highlighted in my blog on missing millionaires in the U.S, the books of the Government in the U.S have never been more dismal. Tax revenue has been consistently declining and the government has just managed to raise its debt ceiling. Warren Buffet’s piece in the New York Times takes aim at the U.S Congress for being lax in taxing the rich. The man who survived many a calamity and rose above the best in the business says that discount … Continue reading

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Tax adviser liability – Nodding client is no excuse

The High Court in New Zealand in Jones v WHK Sherwin Chan & Walshe HC Wellington [2011] NZHC has awarded $4.29m against a taxpayer’s former accountants (SCW) for failing to advise on the implications of the CFC rules when restructuring the business of their client. See Bob Jones wins $ 4m over bad tax advice. Briefly, an Australian based company, Pamiers Pty Ltd lent money to a New Zealand based company Robert Jones Holdings Ltd (RJHL), both controlled by the … Continue reading

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Wrong side of deductible business losses – assessable income

The deductibility of losses is inextricably linked to the question whether the taxpayer is carrying a business. Factors contributing to ‘carrying on of a business’ have been the subject of many a decision whenever tax is disputed. The basis of decisions can be confusing and sometimes contradictory, especially when the GFC plays a part: Smith v FC of T 2010 ATC 10-146 and Case No 2010/4083 [2011] AATA 545, both decided by the Administrative Appeals Tribunal. In both cases the … Continue reading

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Triple to double A: Declining tax revenues, missing millionaires and incognito companies

In the wake of the debt crisis and the smashing of the triple AAA rating in the U.S, interesting but disturbing statistics have been released by the IRS. Income in the U.S dropped by 15.2 % in 2009 and not enough tax is being collected. Adding to the woes, the spiraling debt has reignited the question whether eventually taxes will have to go up. No wonder the Government bogged down in a quagmire of debilitating debt , with a Congress … Continue reading

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Online tax collection- Amazon & Visa    

With online retail surging ahead and leaving behind our credit card limits it is no wonder the tax authorities are looking far and wide for tax collectors. According to a report the internet economy in Australia was worth about $50 billion adobe indesign cs5 download in 2010, 3.6 per cent of gross domestic product, and was forecast to rise to $70 billion over the next five years. Significant amounts of GST will go uncollected. In the U.S, it is estimated that the annual … Continue reading

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Did the Tax Act save us from GFC

Did the Tax Act in Australia play a significant role in shielding us from the ravages of the GFC now plaguing most countries in the world? Going by the current debate in the United States it may well have. You may even put it down, in good measure, to the balance in Australia between tax treatment of debt and equity, notably the rules for recognizing debt and equity in companies. Unlike here, in the U.S, corporate earnings are taxed at … Continue reading

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