Practice Update – September 2024

Lowe Lippmann Chartered Accountants

Taxpayers can start lodging their tax returns


With millions of pieces of information now pre-filled (including information from most banks, employers, government agencies and private health insurers), the ATO is giving taxpayers with simple affairs the 'green light' to lodge their tax returns.


Taxpayers who plan to claim deductions this year should make sure they have the correct records, and, in most cases, "a bank or credit card statement (on its own) isn’t enough evidence to support a work-related deduction claim – you’ll need your receipts".


The ATO reminds taxpayers that the rules regarding how and when they can claim a deduction can change, including in relation to car expenses and working from home costs. Therefore, they should not just 'copy and paste' their deductions from last year, and they may require assistance from their accountant in this regard.


The ATO notes that taxpayers using a registered tax agent normally have more time to lodge..


Business self-review checklist: GST classification of products


GST classification errors can lead to significant under-reporting of GST for some taxpayers.


The ATO recently issued guidance for small to medium businesses on self-reviewing GST classification of food and health products (see ATO guide here).


The use of this guide is not mandatory, although the ATO encourages small to medium businesses to regularly self-review the GST classification of supplies, and adopt better practice processes and controls as listed in the accompanying checklist.


The checklist provides practical, step-by-step guidance for entities to:

  • self-review the GST classification of their supplies (products they import, purchase as stock or produce for sale); and
  • assess the robustness of their business systems, processes and controls that directly impact their GST classification systems.


Small business food retailers with turnover of $2 million or less may use one of the 'GST simplified accounting methods' to account for GST instead.


Receiving payments or assets from foreign trusts


Additional tax liabilities may arise when money or assets of a foreign trust are paid to a taxpayer or applied for their benefit, and they are a beneficiary of the foreign trust. These can include:

  • loans to them by the trustee directly or indirectly through another entity;
  • amounts paid by the trustee to a third party on their behalf;
  • amounts that are described as gifts from family members, but are sourced from the trust; and
  • distributions paid to them or trust assets (such as shares) transferred to them by the trustee.


Taxpayers who receive money from a foreign trust may need to ask further questions to determine whether the amount must be included in their assessable income, including:

  • whether they are a beneficiary of the foreign trust;
  • where the foreign trust obtained the money; and
  • why the money was paid to them, for example, is it a payment for services, a gift, a distribution or a loan.

Storing correct records for work-related expenses


Taxpayers need to consider what work-related expenses they will be looking to claim in the new financial year, and what records they will need to substantiate those deductions. 


Records can be kept as a paper version, an electronic copy, or a 'true and clear' photo of an original record.


Working from home deductions


Taxpayers can use two different methods to calculate their working from home deductions, and they each have different requirements:

  • With the fixed rate method, taxpayers will need a record of the actual number of hours they worked from home for the whole financial year, and at least one record for each of the additional running expenses they incurred that the rate includes (e.g., an electricity bill). 
  • To use the actual cost method, taxpayers must also keep records for any additional running expenses they incurred, and the depreciating assets they bought and used while working from home, and show how they apportioned work-related use for their expenses and depreciating assets.

Tax incentives for early stage investors


The ATO is reminding investors who purchased new shares in a qualifying 'early stage innovation company' (ESIC) that they may be eligible for tax incentives.


These tax incentives provide eligible investors who purchase new shares in an ESIC with:

  • a non-refundable carry forward tax offset equal to 20% of the amount paid for their eligible investments – this is capped at a maximum tax offset amount of $200,000 for the investor and their affiliates combined in each income year; and
  • modified capital gains tax (CGT) treatment, under which capital gains on qualifying shares that are continuously held for at least 12 months and less than 10 years may be disregarded – capital losses on shares held less than 10 years must be disregarded.


The maximum tax offset cap of $200,000 does not limit the shares that qualify for the modified CGT treatment.


Penalties imposed on taxpayer who falsely amended tax returns


The Administrative Appeals Tribunal (AAT) recently affirmed the ATO's decision to impose shortfall penalties on a taxpayer who had lodged false amended income tax returns.


The taxpayer had lodged income tax returns for the 2020 and 2021 income years through her tax agent. The taxpayer subsequently lodged amended returns to claim deductions regarding a non-existent family trust for those years. 


She did not consult her tax agent before doing so.


Following an audit, the ATO advised the taxpayer that she had no entitlement to the deductions claimed, and it imposed shortfall and administrative penalties.


The AAT concluded that the conduct of the taxpayer was reckless, and in lodging her amended tax returns without the knowledge of her tax agent, the taxpayer had not taken reasonable care. The AAT accordingly affirmed the ATO's decision to impose shortfall and administrative penalties on the taxpayer.



Please do not hesitate to contact your Lowe Lippmann Relationship Partner if you wish to discuss any of these matters further.

Liability limited by a scheme approved under Professional Standards Legislation


July 1, 2025
Large proprietary limited – are you one? Tips and traps for your assessment. In Australia, being classified as a large proprietary limited company means that you have to prepare, and lodge audited financial statements with ASIC under the Corporations Act 2001 (the Act), however many companies are not necessarily applying the thresholds appropriately. A proprietary company is large if it meets at least 2 of the following thresholds: Consolidated revenue ≥ $50 million Consolidated gross assets ≥ $25 million 100 or more employees. These thresholds seem simple, however some points to note: The calculations must be performed applying ALL accounting standards so even if you are preparing special purpose financial statements, then you will need to assess these thresholds as if you were applying all standards, including: AASB 16 Leases – this standard would add a right of use asset to your balance sheet potentially significantly increasing your gross assets. AASB 10 Consolidated Financial Statements – if you have controlled entities then the inclusion of their income statement and balance sheet may significantly increase each of the thresholds. AASB 128 Investments in Associates and Joint Ventures / AASB 11 Joint Arrangements – if you have entities over which you have significant influence or joint control then applying equity accounting or including your share of assets and revenue would affect the thresholds. In determining the number of employees, the Act is clear that it is all full-time and part-time employees (on a pro-rata basis), however casual employees need to be considered. For example, are they genuinely casual with varying hours / shifts each week or are they in substance a permanent member of your team but just employed on a casual basis.  The thresholds need to be met at the end of the financial year and therefore entities should track their performance during the year so they are aware if they will meet the definition of a large proprietary company at year end.
June 17, 2025
In a previous blog, we discussed the changes to the accounting standards relating to classification of current / non-current liabilities on the balance sheet. We have been receiving a number of questions on this topic and have provided some practical scenarios below as well as some actions for you as we approach 30 June reporting dates.
June 13, 2025
High Court special leave application granted to appeal Bendel Case decision The Australian Taxation Office has been granted special leave to appeal to the High Court from the Full Federal Court decision in FCT v Bendel [2025] FCAFC 15. During March 2025 we released a Tax Alert ( see here ) explaining the current view of the ATO following the Full Federal Court decision that an unpaid present entitlement (or UPE) owed by a discretionary trust to a corporate beneficiary is not a “loan” for Division 7A purposes. The ATO also issued an Interim Decision Impact Statement ( see here ) in response to the Full Federal Court decision, providing information for taxpayers and advisers in relation to the details of the case and issues decided by the court.
More Posts