Income tax can't be treated like a game - photo by Alan Cleaver

 http://www.flickr.com/photos/alancleaver/ / CC BY 2.0

 Don’t want to rush you…………..

But, if you want to take advantage of the ATO’s 50% business tax break, you only have SEVEN WORKING DAYS left..!!

If you buy a new eligible asset for your business by the 31 December 2009, you will be entitled to an immediate 50% tax deduction of the cost PLUS the normal depreciation deductions.

We covered this in detail as part of our Federal Budget 2009 review in our previous reincarnation as Austax.

If you won’t actually receive the car, computer, etc that you bought until AFTER 31 December 2009, don’t panic..!

The rules are that the PURCHASE needs to happen before 31 Dec 2009. You have until 31 Dec 2010 to receive, install and use the actual asset.

You may find that this is the case with motor vehicles purchases where the vehicle gets shipped to you months later.

So, the key is to have a legal contract / purchase agreement signed and paid for BEFORE 31 December 2009.

That way, you will still be entitled to the 50% tax break even if the asset is only installed or ready for use after the year-end.

So, don’t be a scrooge and buy your business a new set of wheels or a fan-dangled computer today…!

Go on… Your accountant will love you for it….

Cheers!

Taxabull Team

FINAL CONCLUSION

The Symone Antis v. FC of T case confirms that education expenses should be allowaed as deductions against Youth Allowance income.

This is a massive win for tertiary students around Australia earning Youth Allowance income!!

From a revenue perspective, the court ruled that Youth Allowance is assessable income as per s 6.5. It doesn’t fall under educational scholarships which is exempt income as per s 6-20.

In fact, it is specifically mentioned in s 51-35 that,

“‘The following payments made to or on behalf of a full time student at a school, college or university are not exempt from income tax under item 2.1A of the table in section 51 10:”

The court also ruled that “the expenditure in question was incurred in the course of gaining or producing the respondent’s assessable income within the first limb of s 8-1″.

It is amazing that the Commissioner was pursuing the case so vigourously considering the facts of the case. Perhaps it is indicative of the overall aggressive tact taken recently by the ATO.

Here’s a quick recap for those who are new to this case…

SUMMARY FOR THOSE WHO MISSED THE CASE RULING

Symone (the taxpayer) is claiming that her education expenses should be tax deductible because being enrolled in a tertiary education is one of the prerequisites for her entitlement to Youth Allowance.

So, she claimed various expenses such as textbooks, depreciation on the computer, travel, etc.

The ATO claimed that this was bogus because she incurred these education expenses to finish her teaching degree and eventually qualify as a teacher.

They are arguing that the expenses are not deductible because it wasn’t incurred to derive an income. That is, she was not earning money as a teacher yet at this point in time.

They also rejected the argument that the education expenses was a valid deduction to get Youth Allowance income.

 TIMELINE OF EVENTS

Cheers!
Taxabull Team