From bushfire relief groups, sporting clubs, environmental groups, charity associations and many more, volunteers are an indispensable workforce and support network for many organisations. For most, if not all, having volunteers ready to lend a hand is pivotal in them being able to function or

survive.

Given that there are many hundreds of volunteers popping up all sorts of good work throughout the nation, and in the spirit of thorough tax planning, an important and practical consideration for many may be if payments to volunteers constitute assessable income and whether their expenses are tax deductible.

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Along with a more automated exchange and processing of invoices, e-invoicing also promises reduced payment times and better cash flow.

The headline above may give the impression that electronic invoices are a futuristic concept, but of course even today there is a version of e-invoices - think PDFs and other electronic documents with the information that a standard tax invoice is required to display.

But what the ATO is working towards, and what it means by electronic invoicing (or e-invoicing) is more than a mere PDF. It is the automated direct exchange transmission of invoices between the software systems used by buyers and suppliers. E-invoicing removes the need to create paper-based of PDF invoices, scan, post or email them, and manually enter them.

Now and then, taxpayers may find themselves in a situation where they simply have no records to back up a tax claim. There can be many reasons for this, such as losing documents (either paper or electronic) when moving home, or technology failures that end up with the same result (or at worst even destroy records).

And with a hot summer predicted, let's not forget the very real danger of natural disasters and the devastation these can have on people's lives, not just their financial concerns.

It's try that in these modern times the ATO's systems are able to pre-fill quite a lot of data, and this is only going to increase over time, which can mean that taxpayers can relax a little more about having to stay on top of record keeping. But there can still be situations where essential back-up documents or other evidence is required that may be unavailable for one reason or another.

The ATO seems to be always looking over the shoulder of property developers to make sure they are complying with their tax obligations.

The considerations facing the ATO can include whether an agreement to develop and sell land is a "mere realisation" or a disposal either in the course of a business or as part of a profit making undertaking or plan.

A "mere realisation" is a sale on capital account to which the capital gains tax (CGT) rules will generally apply. Landholders will usually seek this treatment if they can access CGT concessions (for example, applying the appropriate CGT discount or the small business CGT concessions) or the property is a pre-CGT asset.

Most people's "to-do" list when they are planning a trip overseas will likely include items such as travel insurance, phone chargers or taking photos of their passport - but probably the last thing on anyone's minds will be their likely tax situation before, during or after that trip-of-a-lifetime.

There are a few simple considerations, taken in the context of your personal circumstances, that may end up making quite a difference to your final fiscal outcome.

Generally you will remain an Australian resident for tax purposes if you're overseas temporarily and you don't set up a permanent home in another country.

There's usually nothing stopping you from working overseas, but you must lodge an Australian tax return and declare your "worldwide" income, even if tax was taken out in the country where you earned the income (there will most likely be a tax offset to take care of any doubled-up tax).

A new ruling has been released by the ATO on the deductibility or otherwise of "penalty interest". The term penalty interest refers to an amount payable by a borrower under a loan agreement when the lender agrees to an early repayment of a loan. The amount payable is commonly calculated by reference to the number of months of interest payments that would have been received but for the early payment.

The ATO ruling stresses that the deductibility or otherwise of penalty interest needs to the determined based on case by case circumstances. The ATO also emphasises that different provisions of the tax law will also influence a taxpayer's deduction claim outcomes.

When completing your tax return, you’re entitled to claim deductions for some expenses, most of which are directly related to earning your income.

To successfully claim a deduction for work-related expenses, it’s important that you must have spent the money yourself and weren’t reimbursed, it must be directly related to earning your income, and importantly you must have a record to prove it. You can only claim the work-related part of expenses. If an expense relates to both work and personal use, the ATO will expect that you apportion use on a reasonable basis and only claim the work-related portion.

Tax invoices are an essential element of Australia’s taxation system, and serve both to collect taxation revenue related to the goods and services on which GST is levied as well as record the credits that are claimable by eligible businesses.

A business registered for GST will generally be required to hold a tax invoice for any transaction in order for an input tax credit to be claimed. The tax invoice can usually only be issued by the entity that made the taxable supply, which generally must issue a tax invoice as a normal incident of transactions, or within 28 days of a request to do so.

Tax invoices are not required where the GST-exclusive value of the transaction does not exceed $75 (that is, a GST-inclusive price of $82.50) or if the goods or services supplied are GST-free, such as many food items. (And if you are wondering why $75, it’s merely a reflection, inminiature, of the turnover threshold of $75,000 at which a business must be registered for GST.)

If you produce assessable income at home, or some of it, and you incur expenses from using that home as your “office” or “workshop”, the ATO will generally allow that a taxpayer could be in a position to be able to claim some expenses and make some deductions. Otherwise the ATO takes the view that expenditure associated with a person’s place of residence is more likely to be of a private nature.

Deductions may be available from the use of your home to earn income in two circumstances. First, if it is used in connection with your income earning activities but isn’t a place of business (that is, your home is not your principal place of business, but you might do a few hours of work there). The second situation in which you may be able to claim a tax deduction is when the home is also being used as a place of business. The tax implications are different depending on which of these circumstances applies.

Among the first batch of tax legislation the government dealt with in the new year was a bill that contained changes to the "same business" test.

The same business test is relevant in a number of contexts, but most particularly in determining if a company is eligible to claim deductions for past year losses, current year losses and bad debts, and to determine if the existence of unrealised losses may affect future deductions and offsets that may be otherwise available. The need to satisfy the same business test however generally arises if there has been a change in the business's ownership or control of the company.

For more than two years now (from 1 July 2016) two key tax incentives have been available for investors considering putting their money behind qualifying start-up businesses - or as the ATO has dubbed them, early stage innovation companies (ESICs).

The incentives provide eligible taxpayers who invest in new shares in an ESIC with:

(1) a non-refundable carry forward tax offset equal to 20% of the amount paid for their qualifying investments. This is capped at a maximum tax offset amount of $200,000 for "sophisticated" investors and $50,000 for non-sophisticated investors (more below) each income year.

(2) modified CFT treatment. Under this incentive, capital gains on qualifying shares that are continuously held for between one and 10 years may be disregarded. However capital losses crystallised on share held for less than 10 years are also disregarded.

Going into new business with other people is exciting and can be extremely rewarding. A formal agreement can set the ground rules and stop owners getting caught out if things don’t quite go as well as planned.

Whether your firm is structured as a partnership or a company, you and your business partners need to agree on the terms of your professional relationship. This will be a partnership agreement, a shareholders’ agreement or, where you are operating a trading trust, a unitholders’ agreement.

As the FBT year runs from 1 April to 31 March, the months of October to December mark the "third quarter" of the FBT year, and so, as an early fix before year's end, here is an overview of the FBT elements that can attract the ATO's attention.

This can be a timely period for a compliance check-up, so that employers who provide fringe benefits to staff can have better assurance they are not going to be tapped on the shoulder. This may still leave time for a fix-up (if possible) before the FBT year winds up, but certainly might help steer you clear of obstacles for the next FBT year.

Read more in our

Not so many years ago, the concept of raising funds via crowdfunding would more likely be seen as a way to fund community-based, local-issue or help-your-neighbour initiatives. But increasingly these days crowdfunding is viewed as a viable source of seed capital, and is no longer regarded as the shy little sister of venture capitalism.

Some quite serious money can be raised through crowdfunding, using internet platforms, mail-order subscriptions, benefit events and other methods to find supporters and raise funds for a project or venture. And when these efforts are put in place, the ATO is more likely than not to take an interest and will generally be on the lookout to make sure any tax obligations are not forgotten in the glow of success.

A recent change to the rules around superannuation means that more Australians may be eligible to claim a tax deduction for putting money into super.

Before June 30, 2017, if more than 10% of your income was sourced from salary or wages from an employer, you were rendered ineligible to claim any tax deduction for after-tax contributions you may have made to your superannuation fund.

But this rule has been removed....

To help pensioners who are rich in assets but poor in income, the government launched a version of a commercially available financial product, the reverse mortgage.

The government's answer for pensioners who find themselves in the above situation is its pension loans scheme (PLS), whereby a pensioner can apply for a non-taxable loan using some form of real property as security. The PLS does not provide a lump sum, but a regular fortnightly payment.

At present the scheme is only open to those on a full pension, but the 2018 Federal Budget announced the government intends to open the PLS to all pension-age retirees (not just those who qualify for the Age Pension).

It is sometimes said that a superhero like the DC Comics character Superman can be uninteresting because he is, for all practical purposes, indestructible. Critics have said the knowledge that he will most likely win can make Superman's adventures monotonous.

A similar accusation could be leveled at the Federal Commissioner of Taxation (the flesh and bone personification of the ATO). To most people, including a hefty majority of small and medium businesses, the Commissioner appear to be immune from defeat. He has extraordinary powers - he can require a taxpayer to produce almost any documents even if he doesn't know whether the taxpayer has done any wrong; his assessments (or amended assessments) are generally valid even if he doesn't follow the requirements of the taxation legislation; and, perhaps most worryingly to taxpayers, he can often (but not always) enforce those assessments and recover tax debts even if that tax is subject to a dispute.

The Australian Competition & Consumer Commission (ACCC) is the government body responsible for enforcing the Franchising Code of Conduct, and if you or someone you know are considering entering into a franchise arrangement, this will probably be a good starting point to get an idea of what to expect.

The code imposes strict obligations on franchisors to make sure that franchise agreements are fair (you can use the search tool on the ACCC's website to find it).

It is a requirement that both franchisees and franchisors act in good faith in all their dealings with one another. Another significant point that should be kept in mind is that penalties for failure to comply can be significant. However, if you've got a plan and are determined to forge ahead, it is also good to know that from a tax point of view, starting and running a franchise business is broadly the same as starting and running most other small businesses.

While bitcoin may be the most well known cryptocurrency, there are nearly 1,500 in existence. In its simplest form, a cryptocurrency is a "peer-to-peer electronic cash system", which means that the currency is not in a physical form like cash but sits in an electronic register.

What makes bitcoin work, where previous attempts at electronic cash did not, is in the magic of something called blockchain. One of the problems with earlier electronic cash was that it was possible for those with the skills to fool the system and allow multiple transactions of the same piece of currency.

Where some businesses have tripped up in the past is where the source of benefits provided is not clear cut - that is, where non-cash components of remuneration are sourced not directly from an employer, but from an associate, a related company or from a third-party provider.

For fringe benefits tax (FBT) to apply, the conventional wisdom is that the benefits involved are provided instead of cash salary, and further that such benefits are usually paid in respect of an employment relationship. Hence the pool of accepted FBT-attracting items — laptops, cars, entertainment expenses and so on. But as mentioned, it has often been the case that employer taxpayers have made the mistake of assuming that because a benefit is provided by “someone else”, they are not liable for FBT — that is, where non-cash components of remuneration are sourced from an associate, a related company or from a third-party.

It is very often the case that unpaid debts owed to a business can have a significant impact on cash flow and the ongoing profitability of a business. In a taxation context the characterisation of a particular debt as either “doubtful” or “bad” is key as to whether or not the writing off of that debt would be deductible.

Generally, the characterisation of a debt would be premised on the following principles:

- Doubtful debt – is a receivable amount that might eventuate to be a bad debt in future. Doubtful debt often represents a mere accounting provision and is not deductible for tax purposes for the current financial year but may evolve into a bad debt the following year.

As a tax concept, “entertainment” can be relevant not only to fringe benefits tax (FBT), but also to income tax and even goods and services tax (GST).

For a business, whether a business expense is “entertainment” will generally also determine whether the cost is deductible. If the expenditure can be shown to be directly connected with the carrying on of a business, it should be deductible.

The example of someone taking a client out to lunch can certainly be shown to be in connection with a business. However, there is still a lurking danger within the relevant sections of the tax law that says that if such an expense also represents “entertainment”, by the Australian Taxation Office (ATO) view, then that cost can be taken out of the deductibility equation. In this article, we explore these ins and outs in some detail.

Christmas will be here before we know it, and the well-prepared business owner knows that a little tax planning can help make sure there's no unforeseen tax problems.

The three benefits typically provided include:

- Christmas parties for employees (and perhaps their family members, and even clients)

- gifts to employees, their family members, clients and

- cash bonuses.

After what seems like waiting an eternity, the government has finally put to Parliament its draft legislation around two of its schemes.

The proposed schemes, the First Home Super Saver and Contributing the proceeds of downsizing to superannuation, are both pieces of legislation that are an attempt to bring into action proposals from the 2017 Federal Budget.

The proposals aim to:

1. assist home buyers to save a deposit through their superannuation, and

2. assist retirees to use some of their superannuation money from downsizing their present living arrangements.

To save you having to laboriously search for the right tax rate or relevant threshold, the essential information is right here in one place.

This guide includes tax rates, offset limits and benchmarks, rebate levels, allowances, and essential superannuation as well as fringe benefit tax rates and thresholds (including current gross-up factors). Student loan repayment rates and salary levels are also included.

The CGT relief concessions that are available to small businesses can be very generous. However they can also be complex and confusing, so knowing a few of the finer details can go a long way to ensuring your small business can take best advantage of them.

It’s never too early to consider an escape plan, so when setting up a business structure consider the effect of the proposed structure on potential exit strategies down the track. The small business CGT concessions, if properly utilised, provide opportunities for smart exit strategies, and therefore consideration can be given on how you may be able to access and maximise the concessions in the future.

A travel allowance is a payment made to employees to cover accommodation, food, drink or incidental expenses they incur when they travel away from their home overnight in the course of their duties.

In most circumstances, when claiming other deductions, you will be expected to be able to substantiate the expense being claimed with documentary evidence, and produce that evidence should the ATO request it.

However an exception to substantiate claims applies to travel allowance expenses if the ATO considers the total claimed to be “reasonable” (more below) and to be no more that the allowance provided. Guidelines on these amounts are updated annually.

Just when many Australians are considering getting away for a winter break, the ATO is reminding taxpayers that it is paying close attention to rental properties located in popular holiday destinations around Australia.

The ATO recently issued a statement saying that last year it identified a large number of mistakes with deductions for rental properties, particularly with regards to holiday homes.

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The general rule is that you can claim deductions for expenses your business incurs in its task of generating assessable income. Many of these deductions are obvious – rent, materials, supplies and so on — but there are also some less obvious options left available just before the end of the income year, should your circumstances suit, to further reduce your enterprise’s tax burden for the year.

Given the state of the Australian Property Market in Australia these days, a not-uncommon situation can arise, where a residential property owner seeks to demolish and sub-divide the block containing the family home and build residential units.

A recent case to the Administrative Appeals Tribunal (AAT) brought into focus a growing phenomenon, that you should keep in mind for work related or business expense deduction claims, especially where the acquisition of claimable assets is made in a certain way.