Tax deductibility of donations to bushfire relief

Rod Grosvenor • February 8, 2020

Australians can claim a tax deduction for a donation of cash of $2 or more made to an organisation that is endorsed by the ATO as a Deductible Gift Recipient (DGR) . There are many different types of DGRs including Public Benevolent Institutions like the Australian Red Cross Society, or organisations established to prevent or relieve the suffering of animals like Wildlife Victoria Inc.

The Australian Business Number register allows potential donors to check whether an organisation has DGR status and the date at which they obtained this status. Importantly, if the organisation does not have DGR status when a donation is made, a tax deduction cannot be claimed (unless the organisation subsequently obtains DGR status and has the endorsement apply from an earlier date).

Included in the Treasury Laws Amendment (2019-20 Bushfire Tax Assistance) Bill 2020 is an extension of DGR status to two new charitable trusts, the Australian Volunteers Trust and the Community Building Trust.

A common complaint of donors is that they don't know how donations will be applied and indeed, to what degree those donations are depleted by the DGR's administrative expenses. It is important to note that DGRs are subject to oversight by the ATO and (usually) the Australian Charities and Not-for-profits Commission (ACNC) . They are restricted to applying their assets and income toward the approved purpose or purposes for which the organisation was established and is maintained, and all expenses must be consistent with that.

While many charities publicly share the stories of their charitable works, a more detailed view of how a charity manages the donations it receives can be obtained by looking them up on the ACNC Charity Register . Registered charities are required to lodge an annual information statement and, depending on their size, may also be required to lodge audited financial statements. These documents are made publicly available on the ACNC Charity Register.

Transactional tax issues in the era of coronavirus

By Rod Grosvenor • May 27, 2020
The global economy has suffered a massive hit from the COVID-19 pandemic. The impact of the pandemic will open up opportunities for cashed-up funds and other buyers to take advantage of strategic and investment opportunities presented by the pandemic.

Jobkeeper - Summary

By Rod Grosvenor • April 20, 2020
What is the JobKeeper Payment?

Jobkeeper - FAQ

By Rod Grosvenor • April 20, 2020
Question 1: Do businesses have to meet the decline in turnover test on an ongoing basis?

ATO scrutiny on car parking fringe benefits

By Rod Grosvenor • March 14, 2020
The ATO has started contacting certain employers that provide car parking fringe benefits to their employees to ensure that all fringe benefits tax (FBT) obligations are being met. Generally, car parking fringe benefits arise where the car is parked on the business premises of the company, used by the employee to travel between home and their primary place of employment and is parked for more than four hours between 7 am and 7 pm, and where a commercial parking station located within 1 km of the premises charges more than the car parking threshold amount. Employers have a choice of three methods to calculate the taxable value of the benefits: 1.       the commercial parking station method, 2.       the average cost method and 3.       the market value method. The method currently under ATO scrutiny is the market value method, which states that the taxable value of a car parking benefit is the amount that the recipient could reasonably be expected to have to pay if the provider and the recipient were dealing with each other under arm's length conditions.

Denying the CGT main residence exemption to “Aussie expats” –– adapting to the new rules, and why “tax residency” is now even more important than ever.

By Rod Grosvenor • February 1, 2020
Under the new foreign resident main residence rules, most non-residents have until 30 June 2020 to sign a contract to sell their former Australian main residence, with the benefit of the MRE (either on a full or partial basis). For any sale contracts entered into after that date, the majority of Australian expats (i.e. non-residents) will not be entitled to apply the MRE at all for any capital gain made on their former Australian main residence.

CGT changes for foreign residents – CGT main residence exemption

By Rod Grosvenor • January 20, 2020
Treasury Laws have now been passed  which removes the entitlement to the CGT main residence exemption for foreign resident individuals . Previously , foreign resident individuals were entitled to access the CGT main residence exemption in the same way as Australian resident individuals. Broadly, an individual taxpayer's capital gain or loss in relation to their dwelling (or ownership interest in it) is disregarded if the dwelling was the taxpayer's main residence throughout the ownership period. Subject to transitional rules, these amendments deny access to the CGT main residence exemption for foreign residents, other than where certain 'life events' occur during the period that a person is a foreign resident where that period is six years or less. Transitional rules provide that the amendments do not apply in relation to a capital gain or loss from a CGT event that happens on or before 30 June 2020. If you believe that these amendment may impact you or you would like further clarification please do not hesitate to contact Rod or your consultant at Grosvenor Business Advisers.

Tax relief and assistance with bushfire recovery

By Rod Grosvenor • January 19, 2020
Tax relief and assistance with bushfire recovery

Instant Asset Write-off- extension and increase

By Steven Dainty • December 14, 2019
Extension and increase of instant asset write-off The instant asset write-off for small business has been extended and increased during the 2018/19 income year, allowing more businesses access to the write-off. The following is a table which will show when the changes to the write-off thresholds have come into effect. These changes apply to small businesses with an aggregated turnover under $10m. Purchase date or date asset first used (or installed ready for use) for a taxable purpose Threshold 1 July 2018 to 28 January 2019 $20,000 29 January 2019 to 2 April 2019 (7:30pm AEDT) $25,000 2 April 2019 (7:30pm AEDT) to 30 June 2020 $30,000   In addition to the above increase and extension of the instant asset write-off, businesses which are medium-sized will have an opportunity to utilise the write-off. Businesses over $10m but under $50m in aggregated turnover will be eligible to write-off assets purchased after 2 April 2019 and costing less than $30,000.

ATO tax debt may affect your credit rating

By Rod Grosvenor • December 14, 2019
ATO debts may affect your credit rating Businesses with tax debts need to be aware that the ATO will now be able to disclose the details of their tax debts to credit ratings agencies, which could potentially affect the ability of the business to obtain finance or refinance existing debt. Generally, only businesses with an ABN and debts over $100,000 and that are not "effectively engaged" with the ATO will be affected. The ATO is planning a phased implementation which will consist of undertaking education efforts before it targets companies, followed by partnerships, trusts and sole traders. The aim of the laws, according to the government, is to encourage more informed decision-making within the business community by making large overdue tax debts more visible, and to reduce the unfair advantage obtained by businesses that do not pay their tax on time. Tip: Are you unsure if you have a tax debt, or perhaps you need help with working out a payment plan with the ATO for your existing debt? We can help you with all of this and more.