The ATO has been sending some mixed messages about property development involving an SMSF and has indicated that it is one of the issues on its radar for 2018. So is property development an allowable investment for an SMSF? The short answer yes, but be careful. A longer answer is be very careful — it is very easy to trip up and breach one or other rules. The ATO is keeping an eye on this and will scrutinise any fund utilising property development.

It is very often the case that unpaid debts owed to a business can have a significant impact on cash flow and the ongoing profitability of a business. In a taxation context, the characterisation of a particular debt as either “doubtful” or “bad” is key as to whether or not the writing off of that debt would be deductible.

Have you ever gone to pay for your coffee or lunch and saw the tip jar at the local café counter, and wondered how (or if) the business and/or its staff accounts for tax on that money? Depending on a number of factors, this can add up to quite a sum over a year, assuming the café owner empties the jar each day. Not surprisingly, the taxman has thought of this scenario, and has devised guidance for dealing with “tips and gratuities”.

It is possible to receive amounts that you do not need to tell the taxman about, and don’t have to include as income on your tax return. The ATO classifies these into two different categories (or three, if you count “other” as a category).
Exempt income. This is simply amounts that have been deemed to be tax-free. Most often this includes government allowances such as disability pensions, carer payments, rent assistance and such, but also some scholarships, child care payments and so on (some of which are listed below).

New legislation recently tabled in Canberra puts a measure first announced with the last Federal Budget closer to reality. The “housing tax integrity” bill solidifies the government’s intention to deny all travel deductions relating to inspecting, maintaining, or collecting rent for a residential investment property

As a tax concept, “entertainment” can be relevant not only to fringe benefits tax (FBT), but also to income tax and even goods and services tax (GST). For a business, whether a business expense is “entertainment” will generally also determine whether the cost is deductible. If the expenditure can be shown to be directly connected with the carrying on of a business, it should be deductible.

Limited recourse borrowing arrangements (LRBAs) were once all the rage in SMSF land. However, with the tightening of banking rules this frenzy has begun to abate somewhat over the last few years. LRBAs are great in a growing market as they allow an SMSF to grow the value of assets it holds in the expectation of greater retirement income.

The ATO allows certain taxpayers to claim a deduction for the cost of buying and cleaning occupation-specific clothing, items of protective wear and for certain unique, and usually distinctive, uniforms.
To claim a deduction it is generally expected that you will be able to provide evidence that you purchased the clothing concerned, and will have diary records or other evidence of your cleaning costs.

A novated lease is a popular way for employers to reward and incentivise their staff. Through a salary sacrifice arrangement that includes a novated lease, employees are provided with a vehicle and can also reduce their personal tax liability. However, employees should understand how fringe benefits tax (FBT) might apply to their arrangement and what they can do to minimise an FBT liability.