FOREIGN EMPLOYMENT INCOME: IT MAY NO LONGER BE TAX EXEMPT

The Tax Office has released its compliance activities for 2009/10. The key activities for the different taxpayer segments are discussed below.

Individuals

The key compliance activities the Tax Office will focus on include:

• capital gains from the sale of shares and proerties;
• deductions for investment products; and
• work-related expense claims (In particular claims made by truck drivers, sales and marketing managers, sales representatives and electricians.

Micro enterprises

Micro enterprises are businesses with an annual turnover of less than $2 million and self-managed superannuation funds (SMSFs).

Key compliance issues include:

• GST and CGT compliance risks associated with property transactions;
• losses on the disposal of shares;
• claims for GST refunds and the research and development tax offset, which will be subject to credibility checks;
• correct disclosure of distributions from trusts and partnerships in beneficiaries’ tax returns; and
• early warning to participants of the potential tax issues involved in tax exploitation schemes.

Small-to-medium enterprises

Small-to-medium enterprises are businesses with an annual turnover of between $2 million and $250 million. This segment includes highly wealthy people who, with their associates, control $30 million or more in net wealth.

Key focus areas include:

• private company loans and payments to shareholders (or associates) to ensure compliance with the taxation laws;
• correct FBT treatment of motor vehicles;
• superannuation guarantee issues such as late payments and incorrect calculations;
• CGT, in particular to ensure capital losses are not offset against income;
• claims for GST refunds, which will be subject to credibility checks;
• GST and property transactions; and
• remuneration of highly paid company directors and executives.

Self-managed superannuation funds

Key compliance activities include:

• adherence to superannuation regulations;
• satisfaction of the definition of an ‘Australian superannuation fund’; and
• illegal early access to superannuation.

International dealings

International dealings of taxpayers will be a focus of the Tax Office. Data matching programs will be carried out to identify unreported foreign income such as bank interest and dividends.