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.

Tax Tips:

• Keep all receipts no matter what and ask your accountant if you can claim them;
• Check for claims on home office expenses – this is available to many individuals and businesses that do work form home, without affecting he capital gains on their property;
• Take care spending money to save taxes – this will only put a drain on cash flow and the saving is only a maximum of 46 cents for every dollar spent – so you are behind;
• Utilise superannuation to plan for retirement and save on taxes annually – consider a geared fund to increase return opportunities;
• Buying a commercial property through a Self managed Super Fund will mean you can pay yourself rent rather than someone else – tax deductible;
• If you own a commercial property you can transfer this to super without selling it and claim the tax deductions without having to pay any cash – ie non-cash deduction;
• Business owners that pay themselves salaries from their business, may well be incurring more tax than they need to – utilise drawing options and other non-PAYG withholding tax options;
• Make sure you consider the use of trusts as an option for operating businesses from or as shareholders of companies to assist in tax planning.