Frequently Asked Questions - Tax

"It's really a back-handed tax grab," is the view expressed by tax expert Adrian Rafferty of Accountants Rus.

In its response to the much criticised Henry Review, the Rudd Government promised that from 2012, taxpayers will be able to simply sign off on a tax return generated by the ATO. The return will make a standard deduction claim of $500, up from the current $300.

Mr Rafferty's jibe is in response to research by the "Australian" newspaper (19/5/10). According to the ATO the average tax deduction claimed by an individual taxpayer is $3,311 - a helluva lot more than the $500 automatic deduction mooted for 2012 and $1,000 automatic deduction mooted for 2013.

In fact, by signing off on these ATO prepared returns and not using an expert tax agent, "the average person could be costing themselves as much as $1,000 which is a lot of money," says Rafferty.

BOB LAMONT>>>>>>>>>>>>>>>>>>>>>>>>

The ATO's agressive stance has again been thwarted in the High Court. On 30th March the High Court unanimously ruled that trustees of discretionary trusts (often called family trusts) may treat net capital gain as income if so allowed by the wording of the trust deed.This brought certainty into a situation after the ATO earlier had muddied things in the Federal, then Full Federal Court, by successfully arguing that net capital gain was distinct from other income, no matter what the trust deed said. The High Court judgement brought the treatment of net capital gain in trusts into line with that of companies where it is defined as "statutory income". The judgement also re-inforced the longstanding view of practitioners (including CPBMAC!) that a trust beneficiary should only be taxed on their proportionate share of the income in a trust. Bob Lamont 1/4/10 >>>>>>>>

The ATO has taken another hit in its aggressive policy of making tax law on the run, then committing mega dollars in legal fees to try to ram home the specious position they have taken. Dollars belonging to you and me, in this case spent on no less than four barristers for themselves and five barristers for the defendant, BHP. On 17 March, BHP defeated an appeal to the Full Court of the Federal Court by the ATO attempting to overturn a judgement in the Federal Court last year. The three judges unanimously ruled that it was fair and reasonable that BHP Finance write off around $2.2 billion in bad debts incurred in failed businesses. As one judge said, had the ATO won, it "would place business in this country....in a tortuous straightjacket."

Of course the question that begs answering is this: Is it fair that ordinary taxpayers in this country have to wait to ride the coat tails of big business who can afford to fight the ATO's succession of aggressive, anti-business and specious tax rulings made on the run without regard for the law as it is writ? Bob Lamont >>>>

PM Rudd's great "roots and branches" revamping of the tax system has stalled. The 1000 page Henry Review was delivered to the PM on Xmas eve and still hasn't seen the light of day depsite just about everybody who can breathe in this country imploring Rudd to come clean. A few weeks ago it was mooted that the thing would see daylight in a couple of weeks. Didn't happen. Then there's those who think it might come just before the May Budget. David Uren, Economic Correspondent with THE AUSTRALIAN reckoned this on Monday 8th February: "When the review is eventually released, the government will act on only a few relatively minor areas, while either ruling out or pushing off into the never-never the vast majority of its recommendations....Labor insiders describe it as 1000 PAGES OF BAD IDEAS." Maybe its release will come later in the year after Rudd has sold his new health policy, wrestled the States into submission and regained the high ground over The Monk in an election year. Bob Lamont>>>>>>>>

Once you’ve paid for the deed of the fund (ours are prepared by Cleary Hoare solicitors and currently cost $1,023 inc GST), then what you will pay are the following:-

Yearly Levy to the ATO, currently $150.00

Accountancy Fees

These are paid to your accountants who will prepare financial statements and various other reports and prepare and lodge the tax return.

Audit Fees

These are paid to an accountant who is not in any way associated with the firm that prepared the financial statements, etc. The auditor’s job is to either certify the fund as compliant (having followed the rules) or lodge a Contravention Report, pointing out where and how rules were broken. The most commonly broken rule is the borrowing of money by the members. If a fund is declared non-compliant it will pay tax at the highest marginal rate on the value of its assets.

The level of both the accountancy fees and audit fees will depend on the size and complexity of the fund.

Whatever you do in life costs money. If you invest in a retail fund, industry fund or non-profit fund the costs are largely hidden. It still costs the investment manager to buy and sell shares, to buy and sell property, to pay staff, to pay rent, to pay accountants and auditors and so forth; the public funds (even those that say they don’t pay commissions) simply hide these costs in the detail. Really, what the perennial question is, is this…………Is the investment I make to run my own SMSF worth it?

At last count, there were 600,000 trustees in Australia who definitely think so! Why? Independence is the reason, the ability to make your own investment decisions, the availability of a plethora of investment options. It would be interesting to see how many of those SMSF’s out-performed the public funds in 2008!
 

Yes, no problems. You, of course, are expected to take every precaution to make sure your return is accurate and you take responsibility for the information therein.