In the case of Jacob Berghofer v C of T – Mr Berghofer appealed against the tax return lodged by his own accountant – while he lost the case, the significant aspect was that he was appealing against the assessability of grants received as a subsidy from the government due to the introduction of the tree clearing guidelines in QLD – these were determined to be ordinary income.

In the case of Lilyvale Hotel Pty Ltd vs C of T the ATO failed to prove that the taxpayer had failed the same business test to claim losses.  This case presents the matter of agency and the fact that while a business operation may be undertaken under a management agreement by a third party (related or otherwise), the entity that is the principal that issues the management agreement is still seen to be operating the business that is the subject of the management agreement.

In the case Sonntag v C of T, the taxpayer was successful in having penalties reduced from 75% to 25% due to incorrectly reporting PAYG credits on his tax return, due to extenuating circumstances.

In WRBD v C of T, it was identified at the administrative tribunal that a “literal” interpretation of the law is not always appropriate and that it is important to apply the legislation taking into account what the “intention” of its application ultimately is.

• From 1 July onwards, individuals can only pay a maximum of $25,000 per annum tax deductible contributions to superannuation if aged under 50 years of age and $50,000 per annum if aged above 50 years of age, but only up to 30th June 2012.
• If aged under 65 years of age, anyone can contribute $150,000 per annum to superannuation without claiming a tax deduction for the amount or bring 3 years worth of contributions forward and contribute undeducted $450,000.
• Any contributions that exceed these amounts will be taxed ultimately at 46.5% in the fund.

ATO has announced its compliance focus for 2009 financial year returns – this will include scrutiny of returns with losses, high risk refunds, eligibility for tax offsets and employee share schemes. In addition to these, it will also include:

High paid company directors will be scrutinised;

Wealthy Australians with net wealth of between $5 and $30 million will be monitored;

Employees behind on super contributions and PAYG will be a centre of focus;

Overseas transactions and revenue declaration will be reviewed;

Truck drivers, sales and marketing, sales representatives and electricians will be focused on;

Investigations of investors claiming losses on investments will be increased;

Deductions claimed by investors will also be focused on;

Early access super schemes and contribution caps will be monitored within the super industry;

For a full list of all areas go to

http://www.ato.gov.au/corporate/content.asp?doc=/content/00205901.htm

• Australia has entered a Tax Information Exchange Agreement  (TIEA) with the British Virgin Islands allowing the exchange of previously confidential information to permit each country to leverage its taxes against its taxable residents.
• To help small businesses weather the global financial crisis, the Government recently announced a 20% reduction to the quarterly pay as you go (PAYG) instalment due for the December 2008 quarter.
• The ATO has announced that acquisitions of any plant and equipment exceeding $10,000 in cost will be available to be depreciated at increased rates (10% increase for acquisitions before 30 June 2009).
• The ATO has announced that with the falling fuel prices, the diesel fuel rebate is to be reduced effective for fuel acquired by Heavy Vehciles using Public Roads from 1 January, 2009 – the rate reduces from 18.51 to 17.143 cents a litre.