Employee vs Contractor....Again!!

What is the number one issue on the Tax Office’s agenda at the moment? Answer, are you a contractor or are you an employee?


The purpose of this article is not to set out the income tax, superannuation and workers compensation implications of being a contractor versus being an employee. The purpose of this article is to give a real life example of the types of issues that the Tax Office, and in fact the courts, are looking for when making their assessment of your circumstances.


A recent Administrative Appeal Tribunal (AAT) decision has held that a Trust carrying on a commercial and residential plumbing business did not meet its superannuation guarantee obligations in respect of five (5) of its plumbers that it treated as independent contractors.


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Does Your SMSF Hold Insurance?

Changes to superannuation regulations now require the trustees of Self-managed superannuation funds (SMSFs) to consider whether or not the fund should carry insurance to cover their members.


The types of cover include life, total and permanent disability, as well as income protection.


A failure to consider this would be in breach of the superannuation legislative requirements and could result in the Tax Office penalising the fund.


Obviously it depends on the individual circumstances as to whether it is better to carry insurance within or outside superannuation. 


Overall, the positives of having it inside the superannuation fund far outweigh the negatives.


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Is it LVR or LMI?

When it comes to borrowing funds, there are many acronyms that are thrown around by lending institutions which are often misunderstood by borrowers.


Two (2) such acronyms are LVR or loan-to-value ratio and LMI or lenders mortgage insurance.


Both these acronyms should be at the forefront of borrowers minds when it comes to borrowing funds either for investment purposes or when buying your own principal residence.


When triggered, they can be the difference between your loan being approved or being declined. They can also be the reason for choosing one (1) financial lending institution over another.


Therefore, it goes without saying that their understanding and affect on your borrowing is critical.



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Claimable Christmas Gifts

Well it’s the middle of February and Christmas is well and truly past us.


However, many of you may have just finished or are still finalising your December quarter Business Activity Statements (BAS’).


Leading up to Christmas you may have purchased gifts for your staff, customers and suppliers. As you process your December BAS, you may be considering the treatment for tax/GST purposes of those purchases.


Where a Christmas gift is not considered to be “entertainment”, an employer can avoid paying Fringe Benefits Tax (FBT) whilst still being able to claim a full tax deduction for the cost of the gift.


Non-entertainment gifts generally include items such as a Christmas hamper, a bottle of wine/whiskey, a gift voucher, flowers, a pen set or a bottle of perfume.


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