Tax Articles

In Australia, royalties earned by non-residents are subject to withholding tax, unless specific exemptions are applicable under the tax laws.Royalty Withholding Tax ScenariosWhen royalties are paid by a resident entity, meaning a business or individual that is...

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...

Defining a Controlled Foreign Company (CFC)A company qualifies as a CFC in Australia if it satisfies any one of the following three "control tests": Test 1: If five or fewer Australian residents, each with at least a 1% control interest, collectively hold or are...

The General Value Shifting Regime (GVSR) pertains to situations where the value of one asset increases while the value of another decreases as a result of certain actions. This system is particularly relevant for entities holding interests in companies and trusts that...

Website ExpensesMany businesses and other taxpayers regularly incur expenditure to acquire, develop, maintain or modify a commercial website. Beware, it is best not to assume that these costs are deductible. Remember that section 8-1 of Income Tax Assessment Act 1997...

To access certain small business concessions including temporary full expensing, small business CGT concessions, shorter review periods and FBT exemptions, entities such as sole traders, partnerships, companies and trusts must have an aggregated turnover threshold of...

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...

The tax law defines trading stock as including anything produced, manufactured or acquired that is held for the purposes of manufacture, sale or exchange in the ordinary course of business. Essentially, it is the trading items of a business. Examples of trading stock...

A trustee of a trust can make a family trust election (FTE) in respect of that trust. The FTE provides the trust with a number of conveniences under the tax law. These benefits include: less stringent testing in order for losses of the family trust to be utilised as a...

The government is currently seeking feedback on design features of the Board of Taxation’s proposed model to modernise individual tax residency, initially contained in its 2019 report. The new framework was designed to simplify the tax system and reduce compliance...

The ATO Commissioner has the discretion to ensure certain individuals who carry on genuine commercial business activities are not disadvantaged by the non commercial loss provisions due to particular circumstances that stop them from satisfying the relevant tests....

The payment of dividends or other profit distributions from a company to shareholders will be assessable income to the recipient shareholders. The assessable dividend will need to be grossed-up for the value of franking credits. Thereafter, the taxpayer will be...

According to the ATO’s small business advice and guidance area, the application of the personal services income (PSI) is one of the top questions business clients have. To recap, the PSI rules are a suite of ATO provisions designed to prevent persons who derive income...

Small businesses can access a 20% bonus tax deduction for eligible expenditure incurred on business expenses and depreciating assets for the purposes of their digital operations or for digitising operations. The bonus deduction applies to up to $100,000 of eligible...

You may be subject to the General Interest Charge (GIC) if you have unpaid tax liabilities, including late or unpaid taxes, charges, levies, or penalties. The GIC is calculated daily on a compounding basis, which increases the amount you owe over time. In this article...

The maintenance of a franking account is a requirement for companies and plays an important role in the Australian imputation system by recording the flow of income tax in and out of a company. The balance of the account represents the amount of tax ‘paid’ by the...

A partnership, unlike a company, is not technically a separate legal entity but rather describes a relationship between partners. There are two common categories of partnerships from a taxation perspective. Firstly, a general law partnership which is a partnership...

A Trust is a very common legal structure used to hold investments. Technically, a trust is not itself a stand-alone legal entity but more accurately describes a relationship between persons over property. The relevant ‘relationship’ can be summarised as follows: the...

IAS, which stands for Instalment Activity Statement, is a tax reporting document used in Australia by businesses and individuals like you who pay income tax in instalments. You use this form to report the amount of tax you owe for a particular period and make payments...