Learn how business & strategic plans provide a focus and discipline for your business, and help determine where you want to be in the next 3, 5 and 10 years.
Q. We own a commercial property in country Victoria. There are two shops and 5 storage garages. I do all correspondence, invoicing, negotiate the leases, collect the rent, manage the accounts and complete general maintenance. We have held the property for approx. 14 years. Would this qualify as a small business allowing us to take the 15 year exemption and be a CGT-free sale ?
A. You refer to the 15 year exemption, which is one of the four CGT small business concessions. Under this exemption the entire capital gain realised on disposal of a CGT asset is exempt from tax if you satisfy the conditions under Subdiv152-B.
Q. I run a small restaurant in partnership with my sister. Recently we took in a 3rd partner. Are there any CGT implications? We do not have any assets in the partnership except plant & equipment and goodwill. I understand that there is no CGT on plant & equipment and goodwill.
A. When a new partner is admitted to the partnership, the existing partners effectively dispose of an interest in the partnership and the new partner acquires an interest. For CGT purposes, the new partner acquires a share of each partnership asset and the existing partners are treated as having disposed of part of their interest in each partnership asset, s106-5(4) of the ITAA 1997. This means you and your sister will dispose of a fractional interest in the business goodwill and plant & equipment.
Most businesses will be finalising their June BAS at the moment. Extra care needs to be taken with this BAS to ensure that you have everything correctly recorded for the year.
Increasingly, the ATO are matching data provided in your income tax return with the total of information returned in your business activity statements over the same year. Where they find material differences in the key numbers these differences can trigger an audit. Final revenue figures and inter-entity charges are key risk areas. Decisions about these charges and reconciled numbers should have been made by June 30.
You don’t have the luxury to wait until you finalise your tax return for the year. When you lodge your June BAS you have provided the ATO with a summary of your business income and expenses for the year. Make sure that your combined BAS for the year reconcile to your financial statements.
The ATO are fairly up front. Every year they tell you what they are targeting and why. That’s why when the Tax Commissioner released his compliance program for 2010/2011, we took a keen interest in what he had to say.
The way the tax office catch tax evasion is more sophisticated and far reaching than ever. Last year, they utilised over 500 million transaction records from third parties. That is, bank details, international transactions, investments, welfare data, super fund information, luxury car and boat purchases, employee share scheme details, property data, are all used to make sure that the income you declare on your tax return is an honest assessment.
Hayes Knight is the brand name of the Hayes Knight group, a network of independent firms across Australia and New Zealand. Each firm within the Hayes Knight group is, and acts as, a separate legal entity. Liability for each Australian entity is limited by a scheme approved under the Professional Standards Legislation.
Loading ...