Annual Leave – Leave Loading

James Murphy Tax

Question: I have an educator who is on leave without pay until the end of the year. They have requested two weeks of their annual leave. I am going to pay it. Do I have to pay leave loading on these two weeks? Do you have a template letter that I can give to the employee to sign off on …

GST on House and Land Packages

James Murphy Tax

Question: My client has purchased several blocks of land. Some with GST, some without. They are registered for GST. Their business is property development; they contract to the builder to build the house and sell it to people. Hence a house and land package. I.e., they purchased one block for $143,000 incl. GST. The block is a standard size house …

Deductibility of payments due to scams

James Murphy Tax

Question: Could you please advise whether payments by a business as a result of a scam are tax deductible? My client is a farming partnership and receives invoices by email. Several of the invoices were intercepted by scammers advising of a change of banking details on the invoices. The changed invoices were then received by my client and paid into …

Staff Refusing to vaccinate

James Murphy Tax

Question: In NSW, the public health order has been updated for early childhood workers to have both vaccines by 8 November. I have one staff member that isn’t getting it and has no intentions of getting it. I am just wondering what I do. Do I need to write a letter of termination? Or does she write a letter of …

SMSF Question

James Murphy Tax

Question: I need to clarify the following scenario. If you have a Self-managed Super Fund, are you able to use any of the funds in providing a deposit for a house ( First Home Buyer)? Answer If we are talking about existing funds in super, the answer is no… But we mention in passing the First Home Super Saving (FHSS) …

Subject: CGT on the transfer of interest

James Murphy Tax

Question: I note the rollover provisions relating to the transfer of an asset under relationship breakdown, i.e., the party receiving the asset is liable for CGT if/when eventually sold. The cost base being that of the other party. However, what is the situation when under the “divorce” agreement, the property recipient pays an agreed price for the 1/2 share of …

Purchased Leave

James Murphy Tax

Question: I would like to know how purchased leave works. Could you please help with this? Specifically, I would like to know how purchased leave is taxed. Is it taxed when taken or when the initial deduction is made? I would also like to know how superannuation works when an employee purchases leave and if any additional leave is accrued …

CGT Calculation Unit Trust

James Murphy Tax

Question: Just wondering if you could assist please with a CGT calculation for a commercial property owned by a unit trust.  It is a commercial property from which my clients run their business. They lease it to their trading entity, another unit trust. They will continue to lease the premises from the new owners.   I understand that there are …

2021 pension and late penalties

James Murphy Tax

Question 2 In Manual 2021, I cannot find an explanation of how the pension amount should be calculated. I would also like to know what penalties there are if the pension is not paid on time? I had a problem paying the 2021 pension before 30 June, and I wondered whether I could appeal to someone for leniency. It could …

GST registered provider for NDIS

James Murphy Tax

Question: My client is a registered provider for NDIS and has the GST concession as a NFP entity. Currently registered for GST Major incomes are from government funding. The question is whether this business can still claim a GST credit for expenses, such as rent and general business overhead expenses, for running a business. ATO website does not really show …

What Pay Rate?

James Murphy Tax

Our Educator is Certificate 3 in children’s service qualified and is working towards a Diploma of Early Childhood Education and Care in NSW Pre-school. We are a small Pre-school and already have a diploma trained Educator. Do we have to pay them at the diploma level because they have completed 50% of their course? Answer The employee is not entitled …

CELEBRATING 2021

James Murphy Tax

Season’s Greetings from the very merry team at … bO2 Corporate Essentials. In a year filled with challenges, we’re grateful for your support. Wishing you happiness & health in 2022. Our last day of the year is Friday 17th December.  We will return on Monday 10th January 2022. THE OFFICE CHRISTMAS PARTY, SHOULD YOU JUST CALL THE WHOLE THING OFF? …

Changing Company Registration

James Murphy Tax

I have composed a resolution concerning changing the company registration from Queensland to NSW. Can you suggest the fastest thing to do to address the resolution? The company was just incorporated yesterday. This shelf company noted that these changes would cost $1,000, which should have been confirmed before the registration. We are looking forward to your kind advice. Answer Our …

Superannuation-Performance Bonus

James Murphy Tax

Is the superannuation to be paid when I pay an employee a performance bonus? Answer Correct, you do pay super because a bonus falls within the definition of Ordinary Times Earnings (OTE).

Carry-Back Losses

James Murphy Tax

There are two separate questions: Would you please provide a brief explanation as to the mechanics behind carry-back losses? And details as to who is entitled to fuel tax credit and how it is calculated. Answer The loss carry back is covered in the Form C instructions guide section S item 13. We trust you find the following link useful: …

HR Health Check docs

James Murphy Tax

I am being asked to do a HR health check at our workplace. What things would they be covering, or what information do I need to provide them? Answer This is a question that we are asked frequently. Log in to your secure portal and look at the current and up to date Covid resources available as a member. You …

Lessee and GST

James Murphy Tax

We are a not-for-profit registered charity, registered for GST and endorsed for income tax exemption, operating as a church. Another legal entity (also a registered not-for-profit charity) owns the church property. It leases it to our legal entity, which is the local church. The lessee pays property costs (e.g., rates, insurance) as part of the lease agreement. Because the invoices …

Voluntary Bankruptcy and SMSFs

James Murphy Tax

In the event of voluntary bankruptcy and SMSF, I presume the director of the corporate trustee must remove themself, and therefore fund must close. What happens to the assets in the fund? Are the funds exposed to the bankruptcy trustee if already bankrupt, and the fund must then close? If the funds remain in the SMSF (cash),  can I close …

Redundancy Payment

James Murphy Tax

I need to make a redundancy payment but need some advice on how to calculate the payment correctly. Answer We take it the payment has been negotiated and that it is only a matter of determining the tax treatment. If it is a genuine bona fide redundancy, then the following tax treatment applies. No tax will be payable on $11,341 …

Setting Up a Company

James Murphy Tax

For example (his wife and brother-in-law ) are planning of purchasing the late sisters’ property as an investment property. They intend to keep their sisters legacy at the same time as an investment for him and his wife for future generations. They will be using their own personal funds (husband and wife) for the purchase. The sale proceeds can be …

FBT – Change of Position

James Murphy Tax

An employee leaves working for a large chain as an area manager, takes a new position at an associated subsidiary being an area manager. The employer’s ABN changes, but he rolls his AL, LSL, and SL to the new employer, as it’s the same parent company. As part of the package at the large chain, he gets a salary packaged car …

Snap Lockdown Payment

James Murphy Tax

Our preschool is currently in the LGA with a snap lockdown. I am just curious if we have no children turn up to preschool – and no jobs to be done at preschool, can I send my staff home with no pay? Do I use their sick pay? If they don’t want to come to work due to mental health, …

Loan for Investment Rental Property

James Murphy Tax

If a family member lends funds for another family member to purchase an investment property and charges interest on the loan, is the interest deductible for the member/owner of the property? I assume if one claims a deduction, the other member declares the interest in their tax return. What rate of interest should be charged against the loan? Answer The …

Home Schooling

James Murphy Tax

Can an employee take carers leave for home-schooling during a Covid-19 lockdown? Answer The answer is no. Careers leave only applies and is taken when the person they are caring for is sick, ill, or injured. A business can pay it if they wish, but they are not obligated.

Dual Company Structure

James Murphy Tax

Would you please help with the following questions?  There is a Holding company and Trading company under a dual company structure.  The Holding company owns 100% shares of the Trading company and has no other business activity. Only the income for the Holding company will be the dividend income if the Trading company pays the franked dividend in the future. …

Capital Gain Tax

James Murphy Tax

Question: Background The taxpayer is a family trust which has owned a small shopping centre with 5 shops for 25 years. All shops have been leased out for the last 25 years. One shop has been leased to a related entity. The family trust sold the shopping centre in August 2020 with a profit of 2 million dollars. Tax Issue …

Semi-Retirement.

James Murphy Tax

Question: Scenario:  The seller has been in practice as a sole trader for over 27 years, just turned 60, and starting to prepare for semi-retirement. A colleague has had discussions about buying 50% of the business and eventually owning 100% down the track so are putting this in place intending to buy in on 1July 2021.  The buyer does not …

Distributions of a Discretionary Trust

James Murphy Tax

Question: Can you please advise if a Family Discretionary Trust  (owned by son) can distribute trading profit to a Company (owned by father)? Answer This is quite possible, but you need to refer to the clause of beneficiaries in the trust deed to determine if the father’s company is an eligible beneficiary.

What Company Rate?

James Murphy Tax

Question: Could you please confirm what company rate is applicable on the following? Distribution from a Family Trust to a Company. All income is from a trading business within the Trust. As more than 80% of the income, being distributed from the discretionary trust to the company is not passive income. Can you please advise what tax rate is applicable …

Proposed Merging Superfund

James Murphy Tax

Question: My client has a superannuation fund with defined benefits and member contributions with an employer. The employer proposed to merge with another super fund with an accumulation merger fund. My client question from me is : What is advantage and disadvantage of merging proposed fund? Answer We assume your client has a choice. Usually, a defined benefit fund has …