Tax Return Q&A

[kenrosewall]

Thought I might start a thread where we can seek and give some novice advice for those completing this year's tax return. I have a pretty good feel for most issues and will try and help out where possible, but was also hoping someone may be able to help me out.

During the 09/10 year I received 387 MyState Ltd shares as a result of a merger between MyState Financial and Tas Perpetual Trustees, due to being a member of MyState Financial when it operated as a credit union.

Basically I paid $10 to open a bank account (which effectively gives you a share as a member) some years ago, and I recently (before 30/6/10) sold my 387 shares for approx $1.2k. I have no other shares or capital losses to apply. Therefore my question is, what is the cost base I use for calculating the capital gain and am I able to apply a discount when calculating the CGT?

Any help would be greatly appreciated.

 

[Ammo_Lover]

your cost base is what you paid for them - sounds as if you paid nothing for them. $10 to open a bank account would not count as you could take the $10 out at any time (now) ?

you can apply discount if you have held the shares for greater than 12 months and you are a resident individual.

 

[nylexbandit]

This may have the answers you're looking for http://law.ato.gov.au/atolaw/view.htm?locid=clr/cr200941/nat/ato

So basically, provided this is the situation you're looking at you can apply the discount provided you held the original shares in MSF for more than a year (obviously yes).

Basically it looks like you'll have a capital gain of around $900.

 

[nylexbandit]

Does anyone know whether it's resolved whether students can claim textbooks etc against youth allowance payments

 

[yeah_nah]

Does anyone know whether it's resolved whether students can claim textbooks etc against youth allowance payments

Its gone (back?) to the high court, so until a decision is made the ATO will stick with its original ruling that no it is non-deductible.

Either way does it really matter - what is the max income you can have but still be getting youth allowance? Surely it's pretty close to the tax free threshold, making any deductions pointless.

 

[kenrosewall]

This may have the answers you're looking for http://law.ato.gov.au/atolaw/view.htm?locid=clr/cr200941/nat/ato

So basically, provided this is the situation you're looking at you can apply the discount provided you held the original shares in MSF for more than a year (obviously yes).

Basically it looks like you'll have a capital gain of around $900.

Thanks for your help NylexBandit. I have already looked at that document on the ATO website and unfortunately it doesn't make much sense to me. I need someone to help me decipher it. I'm hopeful that the Capital Gain is $1,200 less $10 i.e. $1,190, however as I have been a member for > 1 year, the CGT discount applies, so I only pay tax on $595.

If anyone can give me a definitive answer out there, please help.

 

[yeah_nah]

Thanks for your help NylexBandit. I have already looked at that document on the ATO website and unfortunately it doesn't make much sense to me. I need someone to help me decipher it. I'm hopeful that the Capital Gain is $1,200 less $10 i.e. $1,190, however as I have been a member for > 1 year, the CGT discount applies, so I only pay tax on $595.

If anyone can give me a definitive answer out there, please help.

Cost base will be $0 as you paid nothing for the shares (you paid $10 to open the account, but not for the shares)

You will NOT be eligible for the 1 year CGT discount if you received the shares during the financial year - it is irrelevant that you have been a member for more than 1 year only the length of times you held the CGT Asset (shares) matters.
However if I'm interpreting what you're saying wrong and you held shares in one of the companies pre-merger and the outcome was you received x amount of shares in the rollover then yes I believe you would be eligible for the discount.

 

[Cuzz09]

Can I claim my eyepatch?

 

[Ammo_Lover]

Can I claim my eyepatch?

Captain Hook took the ATO to Federal Court on a similar matter (and his hook on the end of his arm saying it related to the scaring of people which was his occupation), decision still peding.
Keep an eye out, so to speak

 

[Nardz]

Its gone (back?) to the high court, so until a decision is made the ATO will stick with its original ruling that no it is non-deductible.

Either way does it really matter - what is the max income you can have but still be getting youth allowance? Surely it's pretty close to the tax free threshold, making any deductions pointless.

from memory about 5 years ago it was close to $15-20k, so no it is nowhere near the tax free threshold.

and youth allowance is also declared as an income.

 

[jonesy86]

I've always thought you can't claim self-ed expenses against any govt payments, be it youth allowance or newstart.

Self-ed deductions are only again the rest of your income.

 

[Nardz]

I've always thought you can't claim self-ed expenses against any govt payments, be it youth allowance or newstart.

Self-ed deductions are only again the rest of your income.

as far as i'm aware i dont think theres any difference between the source of income you're claiming against....

i think the issue is that they do not allow education expenses to be claimed unless they are related to your current employment.

ie. if my work sends me on an IT course, i can claim those related expenses.

if i quit my job and sign up for the same IT course.. i can't claim

i'm no accountant, but that's my understanding of it.

 

[nylexbandit]

Yeah Nah I don't know that there's a max income once you're getting youth allowance. It's based on fortnightly income. Earn over $230ish a fortnight and you start losing it. So most fortnights I got nothing but I still got enough in other fortnights to add around $2000 to my income.

In reality on a strict reading of tax law education expenses should be claimable against youth allowance. The Full Fed Court agreed because basically you need textbooks and what not to pass uni, you need to pass uni to 'earn' the youth allowance income. Thus there's a nexus.

I don't really think they should be deductible because I see it kind of as money for nothing (but then again apprentice tradies get a whole heap of questionable deductions and payments so maybe us students should get the same- maybe I'll buy a dog to guard my books and claim his costs).

Ken Rosewall-
RE DISCOUNT-
Relevant paragraph was
50. However, for the purposes of determining if a capital gain made on a subsequent disposal of a MyState share is eligible to be treated as a discount capital gain, MSF members who choose scrip for scrip roll-over are taken to have acquired their MyState shares when they acquired the corresponding MSF Member Share (item 2 of the table in subsection 115-30(1))

So provided you got your MSF share between 20 September 1985 and more than a year before you sold it you are eligible for the discount. You just need to tick the box saying you used the scrip for scrip rollover.

RE COST BASE
it depends on whether the $10 was an establishment fee (in which case I'd say it's the cost base) or a deposit (in which case I'd say cost base is 0).

Either way you're getting a max benefit of $2.30 by listing it as $10 so you may as well have it as 0.

So you should be paying tax on $600.

Obviously don't rely on my advice solely- there should be a document on their site explaining it to you- but I'm 99% sure that's the way it goes.

 

[Eagle87]

Yeah Nah I don't know that there's a max income once you're getting youth allowance. It's based on fortnightly income. Earn over $230ish a fortnight and you start losing it. So most fortnights I got nothing but I still got enough in other fortnights to add around $2000 to my income.

In reality on a strict reading of tax law education expenses should be claimable against youth allowance. The Full Fed Court agreed because basically you need textbooks and what not to pass uni, you need to pass uni to 'earn' the youth allowance income. Thus there's a nexus.

Correct.

Permission has been granted for an appeal against the Full Federal Court to the High Court. If that is decided in favour of the taxpayer (Anstis) then the deductions stand under the law.

However, the government has already made noises about legislative amendments if they do lose on Appeal. So it may all be much ado about nothing.

RE DISCOUNT-
Relevant paragraph was
50. However, for the purposes of determining if a capital gain made on a subsequent disposal of a MyState share is eligible to be treated as a discount capital gain, MSF members who choose scrip for scrip roll-over are taken to have acquired their MyState shares when they acquired the corresponding MSF Member Share (item 2 of the table in subsection 115-30(1))

So provided you got your MSF share between 20 September 1985 and more than a year before you sold it you are eligible for the discount. You just need to tick the box saying you used the scrip for scrip rollover.

RE COST BASE
it depends on whether the $10 was an establishment fee (in which case I'd say it's the cost base) or a deposit (in which case I'd say cost base is 0).

Either way you're getting a max benefit of $2.30 by listing it as $10 so you may as well have it as 0.

So you should be paying tax on $600.

Obviously don't rely on my advice solely- there should be a document on their site explaining it to you- but I'm 99% sure that's the way it goes.

100% correct.

Assuming you acquired the original MSF share more than 12 months before the sale of the MyState shares received you will get the discount. (Assuming: you adopted scrip for scrip and the shares are held on capital account i.e. you aren't a share trader).

The initial $10 charge with most credit unions (& similar) is in fact the cost for acquisition of a share. Its almost certain that this $10 will be your cost base of your MSF share and because you elect scrip for scrip, will become the cost base of your MyState shares.

Nylexbandit was spot on.

 

[Selective Retention]

Meal allowances, I don't get them.

My meal allowances are listed on my PAYG summary, does this mean I have to put them in my earnings regardless? Even if they are under the commissioners allowance amount?

Also how much can you claim these days without receipts?

 

[jonesy86]

Meal allowances, I don't get them.

My meal allowances are listed on my PAYG summary, does this mean I have to put them in my earnings regardless? Even if they are under the commissioners allowance amount?

Also how much can you claim these days without receipts?

Pretty sure u gotta declare ur meal allowance at I2 and you can claim deductions of up to $24.95 per meal without receipts.

 

[Eagle87]

Pretty sure u gotta declare ur meal allowance at I2 and you can claim deductions of up to $24.95 per meal without receipts.

Correct, assuming they are overtime meal allowances and assuming, if asked, you would say that they were fully expensed. (The $24.95 is the 2010 financial year rate - it changes each year).

Technically, if the overtime meal allowance is paid at or below that rate and you are covered by an industrial agreement (award etc) then the allowance does not need to be shown on your payment summary. If its not shown, you cant claim. If it is shown, you can claim up to the statutory amount provided you spent it - but no receipts proving this are required.

 

[Selective Retention]

How do you classify if it is overtime or not in a casual job with variable hours? The reason I get the meal allowances is that I work > 10 hour shifts on occasion and this is written in to the award.

Cheers.

 

[Eagle87]

How do you classify if it is overtime or not in a casual job with variable hours? The reason I get the meal allowances is that I work > 10 hour shifts on occasion and this is written in to the award.

Cheers.

The award will state that for any employee (casual or otherwise), a shift of more than 8 hours (in all likelihood) qualifies as working overtime and qualifies for the overtime meal allowance when 2 extra hours are worked (that can vary). It sounds like that is your position.

Assuming the amount paid (for 2010 FY) IS 24.95 per meal or less then (assuming you are prepared to say you spent it if asked) you can claim that amount as expensed without receipts. If its been included in your payment summary, show it as income under "allowances" and claim it as an expense under the work related expenses area. If its not in your payment summary (because they dont have to include it) then you cant claim an expense because the income hasnt been declared.

Importantly, when claiming, you dont need receipts (for claims of up to the $24.95) BUT it is supposed to have been spent.

 

[kenrosewall]

Thanks for your replies Nylex and Eagle. I tend to agree with you both in that I am entitled to a 50% discount, and I feel the $10 should represent the cost base (as intially it was required to become an owner of the credit union effectively.

 

[haywood jablome]

Anyone know if the address to send a non-lodgment advice is valid for mail sent from overseas?

The address listed on the form is:
AUSTRALIAN TAXATION OFFICE
GPO BOX 9845
IN YOUR CAPITAL CITY

It mentions an agreement with Australia post, I just want to make sure if I send it to that address from overseas it gets there. Anyone know?

 

[Caj]

Anyone know if the address to send a non-lodgment advice is valid for mail sent from overseas?

The address listed on the form is:
AUSTRALIAN TAXATION OFFICE
GPO BOX 9845
IN YOUR CAPITAL CITY

It mentions an agreement with Australia post, I just want to make sure if I send it to that address from overseas it gets there. Anyone know?

if you are an os resident for tax purposes then you dont need to do anything at all, there is no need to lodge a non-lodgment advice.

 

[haywood jablome]

if you are an os resident for tax purposes then you dont need to do anything at all, there is no need to lodge a non-lodgment advice.

How will they know the reason I didn't lodge a tax return form? I am a non-resident for taxation purposes of Australia.

 

[Caj]

How will they know the reason I didn't lodge a tax return form? I am a non-resident for taxation purposes of Australia.

Here's a link to the ATO website which tells you whether you need to lodge a return or not. If you don't need to it doesn't say that you need to lodge a non-lodgement advice.

I lived OS for 4 years and didn't lodge during that time. I have been back for 4 years and haven't been questioned on it.

BTW, you're overestimating the capabilities of the ATO, remember they are a government organisation full of public servants

http://www.ato.gov.au/individuals/content.asp?doc=/content/64144.htm&mnu=43667&mfp=001/002

 

[haywood jablome]

I guess that answers it then. Thanks. I will be waiting patiently for the ATO to send a please explain, unless they somehow have access to immigration and when I left the country etc.. Who knows.