Issue 172 - 24 April 2008

	Issue 172, 24 April 2008 Welcome to the latest issue of Thomson’s Tax & Accounting Insight, your free news service for tax and accounting professionals. Tax & Accounting Insight is the easy way to keep up with the latest developments in your industry. Watch your inbox for your fortnightly issue of this free, informative service from Thomson.		Articles in this edition include: Earned and unearned income of minors — calculating the tax payable Initial 2020 Summit report looks at tax changes Introducing Thomson Reuters Editorial Enquiries: Tel: 1300 304 197 LRA.Service@thomson.com Copyright: Thomson Legal & Regulatory Limited ABN 64 058 914 668 100 Harris Street Pyrmont NSW 2009 All rights reserved. To subscribe, please click here. To unsubscribe, please reply to this email with Unsubscribe in the heading. Disclaimer: The information contained in this bulletin neither represents nor is intended to be legal or professional advice. While every care has been taken in its preparation, no person should act specifically on the basis of the material contained herein. If expert assistance is required, competent professional advice should be obtained. Privacy Policy
	Earned and unearned income of minors — calculating the tax payable Q. My client’s daughter, who is still at school, is aged 16. She has a part-time job at a local supermarket, earning on average $110 per week. Her total earnings for the year are $4,680. Her other income for the year consists of: $530 interest on a savings account my client established in her name — the capital in the account largely consists of gifts by family members, but it has been supplemented by some of the daughter’s earnings; $740 in fully franked dividends on shares held in the daughter’s name; and $450 distributed by a trust established by her grandfather, who is still alive, using money he derived from his business. Is my client’s daughter liable to pay tax on any of her income and, if so, how is the tax calculated? A. The first thing to establish is whether the $530 interest belongs to the daughter or your client. On the basis of the information provided, the interest belongs to the daughter: see Taxation Ruling IT 2486. Accordingly, the interest will be included in her assessable income. Although the daughter is presently entitled to the trust income, she is a minor (i.e. aged under 18) and is therefore under a legal disability. Accordingly, the trustee is assessable and liable to pay tax in respect of the trust income (section 98 of the Income Tax Assessment Act 1936 (ITAA 1936)). The trust income is still included in the daughter’s assessable income, but she receives a credit for the tax paid by the trustee (section 100 of ITAA 1936). If any of the trust income includes franked dividends, the trustee is not entitled to a refund of any excess franking tax offsets — the daughter as the beneficiary is entitled to the refund under Subdivision 207–B of ITAA 1997. As regards to the dividends received by the daughter, the grossed-up amount (i.e. the dividends plus the attached franking credits) is included in the daughter’s assessable income, but she is entitled to a tax offset equal to the franking credits (section 207–20 of ITAA 1997). If the amount of the offset exceeds the amount of tax payable by the daughter (including if no tax is payable), the excess is refundable to the daughter (sections 63–10 and 67–25 of ITAA 1997). This issue appeared recently in *Thomson Tax Q&A. Thomson Tax Q&A* is issues based and uses actual scenarios confronted in practice to help you understand how developments affect your client’s tax position. New Q&As are added regularly and the answers provided online are updated to take into account tax changes that impact on the issues raised. It therefore provides an up-to-date database of real solutions to actual tax issues facing tax advisers in practice. To obtain more information, or to subscribe, simply contact your nearest Thomson representative or call 1300 304 197. Return to TOP
	Initial 2020 Summit report looks at tax changes The Australia 2020 Summit — Initial Report has outlined some of the contributions at the Summit. A more detailed Final Report of the Summit will be prepared in May 2008 for the Prime Minister and publication on the Internet. Some of the ideas to come from the Summit included: the national goal for inflation should be set between 2% and 3%; a major theme concerned the need for a holistic tax system that is fair, simple and efficient; that the Federal Government should undertake a comprehensive review of state and federal taxes, within a two year timeframe including interim reporting. This review should consider measures to simplify taxes, reduce inefficient taxes, harmonise, ensure a progressive system, as intended, and address negative interaction with the welfare system; and creation of an independent body to carry out a ‘clean sheet of paper’ review of the roles and responsibilities of federal, state and local governments in areas of major economic activity. This article appeared in Thomson’s daily *Latest Tax News* (Monday 21st April). With tax fast-moving and ever changing — every day, practitioners rely on Thomson’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. Return to TOP
	Introducing Thomson Reuters The Thomson Corporation has completed its acquisition of Reuters Group PLC, forming Thomson Reuters, the world’s leading source of intelligent information for businesses and professionals in the financial, legal, tax and accounting, scientific, healthcare, and media markets. This means the Thomson businesses in Australia and New Zealand are now part of the Thomson Reuters global information powerhouse. Thomson Reuters has more than 50,000 employees with operations in 93 countries on 6 continents and 2007 pro forma revenues of approximately US$12.4 billion. Effective 17 April 2008, Thomson Reuters shares began trading on exchanges in Toronto, New York and London. Thomas H Glocer, chief executive officer of Thomson Reuters, said, ‘This is a very exciting day for our shareholders, customers and employees. Thomson Reuters will deliver the intelligent information needed to give businesses and professionals the knowledge to act. We call our information ‘intelligent’ because it is not only insightful, highly relevant and timely, but it is also made available in formats which applications can consume and to which they can add further value. We are witnessing the maturation of the information economy and content from Thomson Reuters will be its currency.’ Thomson Reuters has also unveiled its new branding. Mr Glocer said, ‘The dynamic new corporate identity is a marked departure from the historical look and feel of the two companies and represents Thomson Reuters positioning as the world’s leading source of intelligent information to businesses and professionals.’ Return to TOP
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