Tag: tax deductions

Treasurer flags ‘carry-back losses regime’

In a recent speech, the Treasurer, the Hon. Wayne Swan MP spoke on the possibility of introducing a carry-back losses regime .

In Germany, Ireland and the UK losses can be carried back to the previous year. The Canada and France have allowed three year carry back in recent years.

Mr Swan said

It may make sense for Australia to have a carry back period within this range. Perhaps with a cap, like many of these countries, to protect the integrity of the tax system.

The business tax working group will deliver its report on the tax treatment of losses in the next two weeks.

Govt to close education expense deduction claims

As reported earlier , the High Court ruled in 2010 that receipients of Youth Allowance and certain other benefits that are paid only if the beneficiary is undertaking a course of education are allowed to claim a deduction for the costs of undertaking the course

The Australian Government has now released draft amendments to disallow deductions against taxable government assistance payments that are eligible for a rebatable benefit following the High Court’s decision in FCT v Anstis [2010] HCA 40.

Government assistance payments that are currently eligible for the beneficiary rebate include, but are not limited to:

  • Austudy
  • ABSTUDY
  • Newstart Allowance
  • Youth Allowance (student)
  • Youth Allowance (jobseeker)

The amendment is proposed to have effect from 1 July 2011.

 

Charity donation schemes: ATO warning

The ATO has warned taxpayers of arrangements that promote tax deductions for gifts of pharmaceuticals to charities for overseas use, similar to that outlined in TA 2010/8 – Gift deductions for donation of pharmaceuticals to charities operating overseas. The ATO says taxpayers should be aware that any arrangements they enter into with similar features may result in penalties as well as their deductions being denied. 

 

About the pharmaceutical arrangement

In the arrangement that the ATO investigated:

  • participants entered into contracts in 2009-10 to purchase and transfer pharmaceuticals for use in treatment programs to charities that are registered deductible gift recipients.
  • participants made an initial payment of about 7.5% of the purchase price of the pharmaceuticals. The balance of the purchase price is due and payable up to fifty years after the contract was entered into. The participants also made a prepayment of interest, reflecting an interest rate of approximately 0.1% per annum, on the balance of the purchase price.
  • the promoter claims:
    • the pharmaceuticals were delivered by the vendor to a bonded warehouse in a country outside Australia.
    • ownership of the pharmaceuticals was transferred to the participant, who then immediately transferred ownership to the nominated charities.
    • entities associated with the promoter of the arrangement arranged and paid for the pharmaceuticals to be shipped to places nominated by the charities.
  • participants were told that they could claim a deduction for the full contracted purchase price of the pharmaceuticals in 2009-10, the year that they entered the arrangement.