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Proposed GST domestic reverse charge…a good idea?

GST is a hazardous tax, not only for taxpayers, but also for the Government. Unlike income tax, the Government has a commitment to refund GST, and this part of the GST mechanism leaves the tax open to manipulation.  The hazard is greatest where the assets are the most expensive.  The domestic reverse charge mechanism will to an extent reduce the risk the Government faces from being ripped off through the GST system in relation to the most expensive items being traded in our economy.

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Income Splitting Issues Paper Released

On 11 December 2009 the Government released an issues paper on income splitting.  The paper fleshes out the UnitedFuture proposal, which has support from the Government to first reading as part of the coalition agreement.

Married, civil union and de facto couples would be able to split their income 50/50 to take advantage of lower marginal tax rates.  The lower rate will be delivered by way of a credit through the Working for Families system.

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Amended definition of beneficiary income

The definition of beneficiary income in s. HC 6 has been amended with application from the 2009-10 and later income years. The amended definition extends the 6 month period within which a trustee must allocate income to the later of the end of the 6-month period or the period within which the trustee either files or is required to file a return.

The definition was amended to address problems where tax agents were effectively required to prioritise the preparation of trust accounts and tax returns over other accounts and returns so as to meet the 6-month deadline.

However, it is common for deeds of trust to include a clause that provides that any income not allocated or paid within 6 months will be capitalised. Accordingly, care is required to ensure that the terms of the deed of trust provide that income is available to be paid or applied outside the 6 month period.

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  • Joanne Martin: Hi Would you be able to email me to discuss a small company that is an LTC which I need some advice on...
  • Rizwana Saheed: You are on the right track that there is an exemption when employees work overtime but whether or not...
  • bryan: as a group of employees we get paid meal money if we exceed 11hrs on any day. Employer says he wants to tax...
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  • Sharon: Hi Daniel, Can you please advise how owners of a profit-making LTC pay themselves? The owners used to pay...
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