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Issue 143, 16
February 2007
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Articles in this edition include:
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LRA.Service@thomson.com Copyright:
Thomson Legal & Regulatory Limited
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PSI test — separate business
premises
Personal services income (PSI) is included in an individual’s
assessable income if it is mainly derived from an individual’s
personal exertion, whether the income is received directly by the
individual or by an interposed entity. However, this does not apply
to income derived by a personal services business (PSB).
There are several tests to determine whether a PSB exists, one of
which is the ‘business premises’ test.
In a recent decision, the Federal Court found that the
Administrative Appeals Tribunal (AAT) made an error of law in
finding that the business premises test had been satisfied on the
basis of exclusive use of premises which were physically separate
from premises used for private purposes in a case where areas of the
property such as the driveway and gate were shared between the
business and home.
The taxpayer company conducted a business from a separate two
storey building on the same land that the private dwelling of the
controller of the taxpayer was also situated. The controller was
employed by the taxpayer entity and provided business-consulting
services to the taxpayer’s clients.
The taxpayer had successfully argued to the AAT that the business
premises were separate from the controller’s residence and hence
the taxpayer was operating a PSB and not merely deriving PSI.
The Federal Court found that the AAT failed to reach a clear
position concerning whether the business had ‘exclusive use’ of
a shared garage, and that the required physical separation of the
premises had been met.
Accordingly, the AAT’s earlier decision was overturned, and the
Commissioner’s original assessment was upheld.
This article appeared in Thomson’s Client Alert Newsletter Service. Client Alert
is a monthly newsletter that promotes your business and develops
your client’s awareness of upcoming tax issues. To find out more,
phone Thomson Customer Service on 1300 304 197 or click here.
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Changes to small business concessions
The Treasurer announced on 13 November 2006 that the Government
would introduce legislation to standardise the eligibility
criteria for small business tax concessions from 1 July 2007.
Currently, separate tests exist for the GST, STS, CGT, FBT and
PAYG small business concessions. However, under the announcement,
any business with an annual turnover of less than $2 million will
be able to access any of these small business concessions. This
means that small businesses will only have to apply one
eligibility test to access a range of small business concessions.
In addition, the Treasurer stated that businesses with existing
access to CGT, FBT and PAYG small business concessions would not
lose out under the new arrangements.
See below for an outline of the proposed amendments.
This summary article appeared in the September 2006 Recent
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Australians are heading for an
unsustainable retirement: ICAA report
More than one in two Australians believe they will need to rely
on the Government for financial assistance during their
retirement, according to the findings in an independent survey,
released on 5 February, by the ICAA. The Institute says the survey
shows that only 33% of those aged 50 years and over believe they
will be self-funded. The survey also confirms that 76% of
Australians think that the superannuation opt-out scheme is a good
idea. The scheme would see employees enter into a voluntary
contribution arrangement, initially set at 3%, which would
supplement compulsory contributions.
According to Institute CEO, Graham Meyer, the survey raises a
number of issues concerning the attitude held by many Australians
towards their superannuation. ‘While more than 52% of
Australians believe that they will require additional assistance
from the government during their retirement, only 27% are actually
contributing additional funds to their superannuation, above the
compulsory 9%,’ Mr Meyer said. A superannuation opt-out scheme
would see employees volunteer additional contributions unless they
actively make the decision to opt-out, he said. Mr Meyer said
further education is still required to help people understand the
benefits of using their superannuation to save for their
retirement.
The full text of this media release can be found on the ICAA website.
This article appeared in ATP’s daily
Latest Tax News (Monday, 5 February). With tax fast-moving and
ever changing — EVERY DAY, practitioners rely on Thomson ATP’s
daily Latest Tax News for quick, accurate, comprehensive
information - no compromises. When you need to know what’s new
in tax and related news every day, there’s only one place to
look — LTN. To find out more, click here.
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