Tag: tax deductions

Removing the Hassle of a Shoebox Full of Receipts

Australian taxpayers will be able to claim a $500 standard income tax deduction, without receipts, instead of going to the hassle of using receipts to claim work-related expenses and the cost of managing their tax affairs.

Assistant Treasurer Bill Shorten today released a discussion paper outlining the proposed standard deduction for individual taxpayers, which was announced in the 2010-11 Budget.

“A standard deduction removes the hassle of a shoebox full of receipts for Australian taxpayers. It simplifies income tax returns for individuals and the Australian Taxation Office,” Mr Shorten said.

From 1 July 2012, the $500 deduction, which will rise to $1,000 from 1 July 2013.

“Providing a standard deduction will remove this burden for many taxpayers and increase their tax return. No taxpayers will be disadvantaged. Taxpayers with expenses above the standard deduction will be able to continue to claim those expenses when lodging their tax return under the existing rules.”

The government thinks that the standard deduction is expected to be a chosen by approximately 4.6 million taxpayers in 2012?13,  and by 6.4 million taxpayers in 2013-14.

Of those that benefit, around 66 per cent would have a taxable income of less than $50,000 in 2012?13 and around 60 per cent would have a taxable income of less than $50,000 in 2013-14.

“A standard deduction makes it easier for working families to get the best possible tax return and continues the Gillard Government’s ongoing efforts to simplify the tax system. I encourage interested taxpayers and others to make submissions to the discussion paper,” Mr Shorten said.

The Government values consultation and invites interested parties to view the discussion paper and provide comments. Copies of the discussion paper can be obtained from the Treasury website (www.treasury.gov.au). The closing date for submissions is 8 April 2011.

The original $300 exemption from needing receipts was introduced way back when Paul Keating was treasurer and $300 was  a high level of deductions. These days most union members pay close to $500 in that one expense alone.

Sportsperson management fees – tax deduction

As discussed back in 2007 at https://thomsonhall.com.au/wordpress/2008/01/16/tax-office-loses-2-court-cases-on-sportsperson-fees-appeals/ , the tax office originally denied tax deductions to 2 sportsperson for fees paid by them to their managers. The taxpayers challenged those decisions and won. We reported that the Tax Office was appealing those decisions.

On 22 August 2008, the Full Federal Court handed down a decision in Riddell v. Federal Commissioner of Taxation; Spriggs v. Federal Commissioner of Taxation.

The Full Court’s decision held that management fees paid by two professional footballers to management companies for services performed in negotiating their playing contracts were not deductible under subsection 8-1(1) of the Income Tax Assessment Act 1997.

Now the two professional footballers have been granted special leave by the High Court to appeal the Full Federal Court decision.

In the meantime the ATO will continue to apply the view as set out in Taxation Ruling TR 2000/5 Income tax and fringe benefits tax: costs incurred in preparing and administering employment agreements and deny deductions..

Tax Office loses 2 court cases on sportsperson fees – appeals

Professional sportspersons often engage managers to, amongst other things, negotiate fees and conditions with team owners. The Australian Tax Office does not believe that these fees are tax deductible.

On 23 November 2007, the Federal Court handed down decisions in Riddell v. Federal Commissioner of Taxation and Spriggs v. Federal Commissioner of Taxation.

These decisions held that management fees paid by two professional footballers to management companies for services performed in negotiating playing contracts were deductible under subsection 8-1(1) of the Income Tax Assessment Act 1997.

The Commissioner is appealing these cases in the Full Federal Court.