How the Tax Office got it wrong
A number of clients of accounting firms have received letters from the Tax Office telling them they had to produce car log books for claims made in the 2005 income tax year.
The correspondence incorrectly stated that a new log book had to be completed if they purchased a new vehicle during the year.
This advice ignored a section of the Act which allows a taxpayer to nominate one car as having replaced another car, meaning that the original log book can be used for the replacement car.
The Tax Office has now confirmed that letters will be sent to the affected taxpayers to rectify the problem.
The letter in question should have stated that a new log book would be required for each additional vehicle rather than each new vehicle.

Editor: It's nice to see the Tax Office admit their mistakes. It would be nicer still if they could accept that taxpayers sometimes make innocent mistakes and maybe should not be penalized either.

Donations to certain hurricane charities to be deductible
The Government has announced that donations to certain charities for the purposes of providing relief to victims of Hurricane Katrina in the US will be tax deductible:

• Donations to the Red Cross Hurricane Katrina Appeal; and
• Donations to the Salvation Army Hurricane Katrina Appeal.

These charities have been approved for deductible gift recipient status.
The law will be amended to allow deductibility for gifts to the charities for a period of one year from the beginning of September 2005.

New simplified GST accounting method for food retailers
The Tax Office has issued a new determination setting out a 'Simplified GST accounting method' for food retailers that have "adequate" point of sale equipment.
They have provided it to help taxpayers work out, at the end of their tax period, the amount of GST they have to pay, or the amount they can claim as a refund.

NEW simplified GST accounting method
This method is only available to supermarkets or convenience stores (excluding petrolstations) that:

• have adequate point-of-sale equipment;

• only convert a minimal amount of goods from GST-free inputs into taxable supplies (5% or less of sales); and

• have an annual turnover of $2 million or less.

To use this method, eligible taxpayers examine the total sales in each tax period and work out what percentage of their total sales are GSTfree. They then apply this percentage to their trading stock purchases to estimate their GSTfree purchases.
Supermarkets or convenience stores must make an election before they use this new method. The Tax Office has stated that Election forms will become available mid-September 2005.

When does it commence?
It is effective from 1 October 2005 , although the Commissioner acknowledges that Parliament may still disallow it so the determination may not come into effect.
The Commissioner is monitoring Parliament to ensure that it is passed.
If, however, the Parliament disallows the determination, the Commissioner will alert businesses and their representatives of the disallowance via the Tax Office Website at www.ato.gov.au .

FBT on Security - reporting exclusion
Editor: The following reporting exclusion is welcome, but it would be much better if theprovision of this 'fringe benefit' was excluded from FBT altogether.

The Minister for Revenue and Assistant Treasurer has announced that the government will be legislating to exclude the provision of personal security services to employees from being reported on their payment summaries from 1 April 2004 .

The Government recognises that some employees, such as police officers, require certain security services outside of their employment activities, in the event of a credible threat to them or their immediate family by reason of the person's employment.

Employees who receive such fringe benefits will not incur the subsequent reportable fringe benefits amounts on their payment summaries. Eligibility for this fringe benefits reporting exclusion will require an appropriate security assessment, the details of which will be defined through further consultation.

GST instalment rollover
The ATO has issued a reminder to taxpayers that from this year onward, the option to pay GST by instalments rolls over.
As long as a taxpayer remains eligible, they will be sent an instalment notice for each quarter and they simply need to pay the instalment amount by the due date. They will only need to lodge instalment notices if they vary their instalment amount. Taxpayers will only receive activity statements to complete and lodge if they have other roles which require lodgment or if their reporting obligations change.

How long does the election apply?
An election to pay GST by instalments will apply indefinitely unless a client:

• revokes their election;
• has an annual turnover that, as at 31 July in a financial year, exceeds $2 million;
• is in a net refund position;
• has their election disallowed by the Commissioner; or
• is the representative member of a GST group and the group membership changes.

 Editor: If a client wishes to revoke their GSTinstalment election or if they are no longer eligible for the GST instalment option, they need to notify our office.

Bankrupt no standing to appeal
The Federal Court has held that a taxpayer could not apply for an extension of time to appeal against an assessment because, as a bankrupt, he had no standing to appeal. This is because by being made bankrupt, the taxpayer's interest in his property and liability for his provable debts had been taken from him.

Therefore, the debt constituted by the tax liability had been expunged. It followed that he could not obtain an extension of time to bring the matter to the Tribunal.