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End Of Financial Year 2011 Newsletter
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ATO warning to be cautious when claiming travel as work related or self-eduction expense
The ATO today issued a taxpayer alert warning people to be cautious when claiming overseas travel and related costs as deductible work related or self-education expenses.
Tax Commissioner Michael D'Ascenzo is concerned that some people are getting involved in arrangements to deliberately claim inflated deductions which they are not entitled to, particularly in relation to overseas travel.
"We have seen some instances of overseas seminars that have little or no connection with a taxpayer's current income being claimed as deductible work-related or investment expenses, or even self-education expenses," Mr D'Ascenzo said.
Under these types of arrangements taxpayers purchase a self-paced study package and take it with them to a holiday destination of their choice, or participate in seminars whilst travelling overseas or on cruise ships. The taxpayers then claim a deduction for the cost incurred including travel, food and accommodation.
"Arrangements of this nature may be appealing as the organisers are promoting them on the basis that the taxpayers are able to claim a deduction in full for overseas travel by participating in self-study activities, which ordinarily may not be deductible," Mr D'Ascenzo said.
"However, there is also the question whether the purpose of the travel is education rather than private.
The Top 5 2011 Online Tax Scams
Click on the link below to be taken to an interesting article from PC World, regarding the Top 5 Online Tax Scams of 2011, from reputable internet security firms.
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| It has come to our attention that the ATO is increasing their compliance work in the Fringe Benefits Tax field (FBT). FBT broadly speaking is where a tax (46.5%) is required to be paid on certain benefits provided to your employees or their associates. The ATO has released data stating that they are injecting significant resources into the FBT compliance area & that they have so far found the following results: - 7 out of every 10 taxpayers that had been investigated for FBT were non-compliant. - On average this resulted in a taxation liability of more than $70,000 & general interest charges of just under $20,000 were applied. Whilst we believe this reflects on audits of “large taxpayers” we are still concerned.
Interestingly the ATO have identified an opportunity to collect FBT by analysing registrations of new business vehicles where the one-off business investment allowance was claimed. They claim to have recognised that where a new vehicle has been purchased the taxpayer(s) may not be fully aware of their FBT obligations e.g. home garaging, travel to & from work etc. So in short, do you have an FBT exposure? If you: - Make a vehicle available to a director or employee? E.g. The car is used for work, but is garaged at home. - Provide “entertainment” by way of food, drink or recreation? E.g. Regular employee lunches at a local café. - Pay for, or reimburse, an expense incurred by an employee? E.g. Payment of travel costs where not 100% business related. If you think you, or someone you know, could be exposed please contact us ASAP. The FBT reporting deadline of 31 March approaches quickly. There are some exemptions that can be applied to reduce a FBT liability, but we need to consider each case on its own merits. |
