According to the rules of the Australian Taxation Office regarding availing of an invalid and invalid carer tax offset, an individual is not entitled to claim this offset if
In view of these conditions placed by the ATO, for claiming invalid or invalid carer tax offset, the Invalid tax offset available in the 3 scenarios has been worked out below.
John would not be entitled to claim any amount for an invalid tax offset as his ATI is more than $100000.
As the adjusted taxable income of John is below $100000 and the adjusted taxable income of Paul is below $11150, John will be eligible to claim an invalid tax offset for the year 2018-2019.
The amount of invalid tax offset available to John is $2563
2717- ((900-282)/4) = $2563
As the adjusted taxable income of John is below $100000, and the adjusted taxable income of Paul is $0, John will be entitled to claim the full amount of invalid tax offset decided by the ATO for the year 2018-19. The amount of invalid tax offset available to John is $2717
2717- 0= $2717
As per the rules of the Australian Taxation Office, in relation to the Fringe benefits provided by the employers to their employees, certain payments or financial benefits that are provided by employers would be considered as fringe benefits, and the employer would be required to pay tax on the taxable value of fringe benefits. In this case, Oliver has been provided with two types of fringe benefits by his employer- interest-free loan and waiver of debt
As per the FBT rules, if an employer provides a tax-free loan to an employee this shall be regarded as a fringe benefit and the taxable value of fringe benefit would have to be worked out by using the benchmark rate prescribed by the ATO for the year 2020, which is 5.37% (ATO, n.d.d). Oliver would only be required to disclose the value of the fringe benefit received by him in his tax return for the year 2020, but he would not be required to pay any tax on the same. Oliver's employer would be required to calculate the taxable value of interest-free loan fringe benefit provide by him and pay FBT on the same (ATO, n.d. c).
Value of fringe benefit = 12000*266/365*5.37% = $470
Grossed up value of fringe benefits= 470*1.8868= $886.79
FBT payable by employer on this benefit = $886.79 *47% = $417
As Oliver’s employer has waived off half of the total amount of loan, the said debt waiver shall be regarded as fringe benefit made by the employer (ATO, n.d. b). Oliver would only be required to disclose the value of the fringe benefit received by him in his tax return for the year 2020, but no tax would be payable by him.
Value of fringe benefit = 6000
Grossed up value of fringe benefits= 6000*1.8868= $11320.8
FBT payable by employer on this benefit =$11320.8 *47% = $5321
Note: It is assumed that the employer would not be able to claim GST credits. Hence, a lower gross-up rate has been used.
According to the Co-ownership rules of the Australian Taxation Office, a partnership that is involved in carrying out the business of letting rental properties must distribute the net income for loss from letting rental properties, as per the terms agreed in their partnership agreement. The net profits and losses from rental properties should be distributed as per the partnership agreement irrespective of whether the legal interests of the partners in these rental properties are different from the profit/loss sharing ratio that has been provided in the partnership agreement (ATO, n.d. e). However, if there is no partnership agreement in place, then the net profits or losses from the business of letting rental properties should be divided amongst all the partners in equal proportions (ATO, n.d. f).
In this case, as David and Emma have entered into a partnership agreement, the net profit or losses made by the partnership from the business of letting rental properties would be distributed in the as per terms of the agreement. Thus, Emma and David are in partnership as investors, and they are required to file a tax return for their partnership as well as separate tax returns for each of them as individuals.
According to the rules of the Australian Taxation Office, in relation to salary sacrificing super, if an employee enters into a salary sacrifice agreement with their employer, then this salary sacrificed super contributions would be considered as super guarantee contributions made by the employer.
The employer would be required to exclude these salary sacrificed contributions for arriving at taxable income of the employee and would not be required to withhold any tax on the salary sacrificed contributions. Further, if this salary sacrificed contributions are paid by the employer into a complying super fund, then these contributions would not be regarded as fringe benefits and no FBT shall be payable on the same. However, if these are paid to a non-complying super fund, then no FBT shall be payable on the same. Thus, Eastern Medical Centre would not be required to withhold any PAYG on the salary sacrificed contribution of $ 17000 however, if this amount is paid to a non-complying super fund, then EMC would be required to pay FBT on same.
As per the Superannuation rules, any salary sacrificed contributions made by the employee are taxed into the Superfund @ 15% if the amount does not exceed the concessional contribution cap of $ 25000. As the total concessional contributions received by Anna’s super is $ 30000 ($ 13000+$ 17000), Super contributions up to 25000 will be taxed at 15%, remaining will be taxed at 47%.
Total tax on contributions to Super = $ 6100
According to the rules of the ATO, every business entity in Australia is required to be registered for GST if their GST turnover is more than $75000. Each such business must also charge GST on each eligible sale made by them (which is not GST free or is exempt from GST). As per the ATO, an eligible sale transaction or a taxable sale is a sale that is made in return for certain payments in terms of money or for any consideration in kind that includes services or rights as well (ATO, n.d. h). A taxable sale must have been made in the normal course and must be connected to Australia.
In this case of D.K. Pty Ltd and Mr. Dennis Denuto, the former has made an offer to the latter to provide negotiation services for negotiation of renal contracts of D.K. Pty Ltd and said that the company would provide a rent-free office to Mr. Dennis in exchange for the services provided by him. Hence, it can be rightly concluded from these facts that the said arrangement between D.K. Pty Ltd and Mr. Dennis fulfill the criteria for “taxable sale” as the company is providing rental service to Mr. Dennis not for a monetary consideration but for a consideration in kind which is the services that will be provided by Mar Dennis in return for this. Thus, D.K. Pty Ltd would be required to charge GST of 10% on the market value of consideration. i.e. market value of the services to be provided by Mr. Dennis.
Mr. Dennis would also be required to charge GST on the negotiation services provided by him to D.K. Pty Ltd as this sale is a “taxable sale” and Mr. Dennis is required to be registered for GST and charge GST on his sales. As per the taxation ruling TR 2001/6, the seller is required to charge GST on the market value of the consideration received by them (ATO, n.d. g). In this case, as Mr. Dennis has received a rent-free office in Sydney as a consideration for his services, he will be required to charge GST at the rate of 10% of the amount of 38000 (market rental value of the office).
D.K. Pty Ltd will be eligible to claim an input tax credit for GST on sale made by Mr. Dennis and Mr. Dennis will be eligible to claim an input tax credit for GST on sale made by D.K. Pty Ltd.
ATO tax rates. (n.d.). Dependant Invalid and Carer Tax Offset (DICTO). Retrieved from https://atotaxrates.info/tax-offset/dependant-spouse-offset/invalid-and-carer-tax-offset/#:~:text=For%20the%202019%2D20%20year,Income%20as%20set%20out%20below.
ATO. (n.d. a).T6 Invalid and invalid carer 2019. Retrieved from https://www.ato.gov.au/Individuals/Tax-return/2019/Supplementary-tax-return/Tax-offset-questions-T3-T11/T6-Invalid-and-invalid-carer-2019/
ATO. (n.d. b). Debt waiver fringe benefits. Retrieved from https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Types-of-fringe-benefits/Debt-waiver-fringe-benefits/ ATO. (n.d. c) Loan fringe benefits. Retrieved from. https://www.ato.gov.au/general/fringe-benefits-tax-(fbt)/types-of-fringe-benefits/loan-fringe-benefits/
ATO. (n.d. d). Fringe benefits tax – rates and thresholds. Retrieved from https://www.ato.gov.au/Rates/FBT/?page=1#Statutory_benchmark_interest_rate
ATO. (n.d. e). Co-ownership of rental property. Retrieved from https://www.ato.gov.au/Forms/Rental-properties-2019/?page=3
ATO. (n.d. f). Taxation Ruling. TR 93/32. Retrieved from https://www.ato.gov.au/law/view/document?docid=TXR/TR9332/NAT/ATO/00001#P35
ATO. (n.d. g). GSTR 2001/6. Retrieved from https://www.ato.gov.au/law/view/document?Docid=GST/GSTR20016/NAT/ATO/00001 ATO. (n.d. h). Taxable sales. Retrieved from https://www.ato.gov.au/Business/GST/When-to-charge-GST-(and-when-not-to)/Taxable-sales/#SalesForPayment
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