No 10% withholding if vendor is an income tax exempt entity
As reported in previous Top Tax Tips and Nexia Updates, from 1 July 2016 all purchasers of certain types of Australian property must withhold 10% of the purchase price, unless the transaction is excluded from these rules or the parties undertake certain actions before settlement date (e.g. a resident vendor obtains a clearance certificate from the ATO).
Another specific case where such withholding will not be necessary is where a tax exempt entity sells property – in such a case, the withholding amount will be varied to nil – a variation that makes sense because a tax exempt entity is not subject to income tax on a capital gain made from the sale.
If you are selling a property in Australia for $2 million or more, we can assist in obtaining the required ATO clearance or explain the obligations imposed on buyers of such properties.
Remember to account for trading stock you use for private purposes
If you use an item of trading stock for personal use (e.g. if you consume a cake that was baked in your bakery) – you can’t just ignore this transaction – but will have to treat this transaction as a sale of trading stock and include the value of the trading stock in your assessable income in your annual income tax return.
Because keeping track of the value of trading stock used for private purposes over the course of the year may be difficult, the ATO publishes industry–specific guidelines each year that sets out what would be a reasonable estimate of the value of such consumption of trading stock in that particular year.
Please contact us if you or your family consume your business’s trading stock (e.g. such as a bakery, butcher, restaurant, caterer, delicatessen, greengrocer, takeaway food shop or convenience store) so that we can ensure that you treat the private consumption of trading stock correctly.
Are you affected by Cyclone Debbie?
If you have recently been affected by natural disasters (e.g. the recent Cyclone Debbie), lodging tax returns is probably the last thing on your mind.
However, once you are ready to turn your mind to operating your business again, the good news is that if your business has a postcode in a Cyclone affected area, you should receive an automatic one month deferral of lodgement obligations (e.g. tax returns that were due 31 March 2017 will now be due 30 April 2017)
Even if you do not qualify for the automatic deferral, but have been affected by the Cyclone, we can negotiate with the ATO on your behalf to assist you to:
Obtain lodgement deferrals of activity statements and tax returns without penalty;
Obtain additional time to pay tax debts without incurring general interest charges (GIC);
Make arrangements to pay debts by instalments and fast-track refunds; and
Vary your PAYG instalments.
If records have been lost in the natural disaster, we can also assist you in reconstructing your records.
How can Nexia Edwards Marshall NT help you?
For any questions or to discuss any of the above in relation to your personal situation, please contact Sarah McEachern or your Nexia Edwards Marshall NT Advisor.
