Review notes for taxation
Termination and Retirement
1. Superannuation (LUMP
2. Superannuation (INCOME STREAM
3. Employment Termination Payments
Unused sick leave, excess over tax-free redundancy, “golden hand shakes”, severance pay
Cn’t be rolled over to a super fund
4. Unused Leave Payments
5. Redundancy
Tax free amount=$8806+[$4404x year of completed service] [s83-175]
Excess amount taxed as ETP
Small Business Concessions & Depreciating Assets
N.B.
1.Identical materials or substantially identical materials need to be grouped tgt [s40-8012]
2. Assets costing < $1,000 each [ID 2003/946] Small Buz: cn’t be grouped Non Business: Cn be grouped Depn using effective life
3. For buildings & structural improvements (e.g. roads, bridges, pipelines, fences etc.)
Partnership/Company &Dividend
Partnerships
1. Income divided equally if there is no partnership agreement;
2. Salaries to partners are not deductible as they are distribution of income (5-090 MTG);
3. Interest expense
- for general law partnership is deductible (Robert&Smith Case; TR95/25)
-Not available to partners in rental property as not carrying on business (considered as investment)
- loan used for private purposes-no deductions;
- borrowing used to replace internally generated goodwill- no deduction
4. Exit/Entry of parteners:
-retiring partner receive their share of future assessable inc. and assessable under s.15-50
-s25-95 deduction to amounts paid for WIP after 23/9/98
5. CGT
Relates to partners not partnership (ITAA 97, 106-5)
Partners individual interests in partnership assets disposed of by partnership
Or disposing of their own interest in the partnership itself
Companies
1.
Company
Partnership
Tax
Pay as separate entity s4
No pay as partnership s90
CGT
Have CG No discount
Have both CG & discount
Loss
Cn’t distribute c/f to offset against future economic income
Cn’t offset
2. Dividend
-Distribution of profits to
1. Superannuation (LUMP
2. Superannuation (INCOME STREAM
3. Employment Termination Payments
Unused sick leave, excess over tax-free redundancy, “golden hand shakes”, severance pay
Cn’t be rolled over to a super fund
4. Unused Leave Payments
5. Redundancy
Tax free amount=$8806+[$4404x year of completed service] [s83-175]
Excess amount taxed as ETP
Small Business Concessions & Depreciating Assets
N.B.
1.Identical materials or substantially identical materials need to be grouped tgt [s40-8012]
2. Assets costing < $1,000 each [ID 2003/946] Small Buz: cn’t be grouped Non Business: Cn be grouped Depn using effective life
3. For buildings & structural improvements (e.g. roads, bridges, pipelines, fences etc.)
Partnership/Company &Dividend
Partnerships
1. Income divided equally if there is no partnership agreement;
2. Salaries to partners are not deductible as they are distribution of income (5-090 MTG);
3. Interest expense
- for general law partnership is deductible (Robert&Smith Case; TR95/25)
-Not available to partners in rental property as not carrying on business (considered as investment)
- loan used for private purposes-no deductions;
- borrowing used to replace internally generated goodwill- no deduction
4. Exit/Entry of parteners:
-retiring partner receive their share of future assessable inc. and assessable under s.15-50
-s25-95 deduction to amounts paid for WIP after 23/9/98
5. CGT
Relates to partners not partnership (ITAA 97, 106-5)
Partners individual interests in partnership assets disposed of by partnership
Or disposing of their own interest in the partnership itself
Companies
1.
Company
Partnership
Tax
Pay as separate entity s4
No pay as partnership s90
CGT
Have CG No discount
Have both CG & discount
Loss
Cn’t distribute c/f to offset against future economic income
Cn’t offset
2. Dividend
-Distribution of profits to