Tax Articles

Debt and Equity Rules

Debt and Equity Rules

Contents What is debt funding and equity funding? The taxation of debt arrangements versus equity arrangements The rules for classifying arrangements as debt or equity for taxation purposes...

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Everett Assignment

Everett Assignment

Contents What is an assignment? What is an Everett assignment?   What is the tax advantage of an Everett assignment?   What about assignments dissimilar to Everett type assignments?     Allowable...

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Taxable Australian Property

Taxable Australian Property

A foreign resident of Australia for tax purposes is generally only subject to Australian tax on Australian sourced income. However, when it comes to capital gains tax, a foreign (tax) resident will...

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TOFA

TOFA

Contents What is TOFA? Entities required to comply with TOFA rules Opting for the TOFA (division 230) framework What are financial arrangements? Determining profits and losses from financial...

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NANE Income

NANE Income

Contents What is NANE income? Why income is classified as NANE Key categories of NANE income Exclusions from NANE income What is NANE income? Non assessable non exempt income (NANE) refers to...

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Exempt Income

Exempt Income

Contents What is exempt income? Exclusion of ordinary income from assessable income Consequences of exemption Exempt income for education and training Exemptions for educational payments Defence...

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Contractor vs Employee

Contractor vs Employee

When hiring workers, it is critical to correctly classify a worker as an employee or contractor. If an employer classifies them incorrectly, they may face fines and penalties. However, classifying...

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Employee Share Scheme

Employee Share Scheme

Contents What is an employee share scheme? ESS – Employer’s perspective Employer obligations ESS– Employee’s perspective Employer obligations What is an employee share scheme?An employee share...

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Temporary Resident

Who is a temporary resident?Temporary residents are individuals who enjoy certain tax exemptions on foreign source income or capital gains in Australia. They are treated similarly to non residents for tax purposes, even if they might otherwise be classified as...

Transfer Pricing

Contents Transfer pricing rules Transfer pricing benefit in cross-border transactions Key terms in transfer pricing regulations Determining arm’s length conditions Cross-border test Transfer pricing benefit and permanent establishments Transfer pricing penalties and...

Permanent Establishment

Contents What is a permanent establishment? What are associated enterprises? Exemptions from permanent establishment Modifications by mli (multilateral convention) Activities of closely related enterprises Activities of agents Control between companies Application...

Thin Capitalisation

Contents What is thin capitalisation? How thin capitalisation works Entities affected by thin capitalisation rules Entities exempt from thin capitalisation rules Application of thin capitalisation rules Thin capitalisation rules for ADIs Thin capitalisation rules for...

Double Tax Agreement

Contents What is double taxation? The role of international tax agreements in addressing double taxation Why do double tax agreements exist? What are the steps leading to a DTA? Capital gains tax Business profits and permanent establishment Legal effect of double tax...

Dividend Withholding Tax

Contents Dividend withholding tax – basic concepts Exemptions from dividend withholding tax Dividend withholding tax – other issues Directing dividends away from foreign residents Dividend withholding tax – basic conceptsDividend withholding tax is a final tax imposed...

Interest Withholding Tax

Contents Interest withholding tax conditions What is interest? Interest withholding tax rates Various financial transactions Exemptions from interest withholding tax Collection of interest withholding tax Credit for withheld interest tax Tax file number and investment...

Royalty Withholding Tax

Contents Royalty withholding tax scenarios What are royalties? Types of australian payers Taxation of intellectual property, copyright, and lease agreements Withholding obligations beyond actual payments Withholding tax for resident businesses with overseas branches...

Source of income

The source of income for tax purposesThe term "source" of income in Australian taxation can refer to both the geographic origin and the transaction or means by which income was generated. This definition forms the basis for tax liability determination. Income doesn’t...

Controlled Foreign Company

Contents What is a controlled foreign company? CFC residency rules Scope of CFC rules Attributable taxpayers Attribution of CFC income The active income test Attributable income calculation   The Controlled Foreign Company (CFC) provisions form part of the...

Value Shifting

Contents What is value shifting? Applicability of the value shifting rules Exclusions from the value shifting rules Division 725 Division 723 Indirect value shifting rules Consolidated groups What is value shifting? Value shifting is when the value of one asset...

Software Depreciation

Contents Website expenses Domain name expenses Software expenses Depreciation Depreciation options for small business entities Website expensesMany businesses and other taxpayers regularly incur expenditure to acquire, develop, maintain or modify a commercial website....

Prepaid Expenses Tax Deductions

A prepaid expense describes a payment made in advance of the benefit of a service or receipt of something. The potential advantage of a prepaid expense is the opportunity for a taxpayer to bring forward the recognition of a deduction into a sooner income year and...

Trading Stock

Contents How is trading stock taxed? Valuation of trading stock Trading stock that stops being held as trading stock Trading stock that is disposed or sold outside of a business Division 70 of the ITAA 1997 outlines the tax treatment of trading stock. Section 70-10...

Non commercial losses

Contents Background The four objective tests and the $250,000 limit  The ATO’S discretion Examples of the ATO’S discretion BackgroundDivision 35 of the Income Tax Assessment Act 1997 (ITAA 1997) contains provisions that prevent individual taxpayers who carry on a...

Personal Services Income (PSI)

Contents What is PSI? Effect of the PSI rules Results test Unrelated clients test Employment test Business premises test Anti-avoidance The Personal Services Income (PSI) rules are designed to prevent persons who derive income from their personal services from...

General Interest Charge

Contents Instances when GIC applies Calculation of GIC Tax treatment of GIC Late payment of debts: GIC remission policy You may be subject to the General Interest Charge (GIC) if you have unpaid tax liabilities, including late or unpaid taxes, charges, levies, or...

IAS

IAS (Instalment Activity Statement) is a reporting document used in Australia by businesses and individuals who pay income tax and other taxes in instalments.What taxes do you report in the IAS? Depending on your specific obligations and business structure, the IAS...

Income Averaging

Contents How income averaging works Eligibility for income averaging Types of special professionals Types of professional income and income averaging calculation Tax payable calculation with income averaging for special professionals Income averaging is a...