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• 7 Clifford Hughes Trust Loan to Company 27/09/2023 19/10/2023 TAX Trusts beneficiaries Question I have some questions regarding a family trust lending money to a related trading company for working capital purposes. There is no unpaid entitlement owed by the trust to the company. The trust has 2 beneficaries: 1) One individual beneficiary who is also the sole director and sole shareholder of the trading company; 2) The trading company. During the year the trust transferred funds to the individual beneficiary and the trading company. I think the trust lending money to the individual beneficiary eg for living expenses etc there should be no tax issues - correct? For the funds that the trust transferred to the trading company during the year: 1) Is it a Div7A loan issue? (note the lender is the trust not the company and there is no UPE.) 2) If there is no DivA 7A loan issue do we still need to set up a loan agreement? and if so is it ok to make it interest free? 3) If the trust makes a distribution to the trading company at year end we can offset the distributon payment against the funds already recevied during the year - do you see any issues with this? (The trading company has c/f tax losses of $300K.) Answer Given there are no UPEs in existence to a corporate beneficiary there should be no impediments to the trust lending to the trading company. For the sake of prudence there should be a written loan agreement so that interest paid is able to be deducted and that should also avoid any arguments of possible value shifting issues. 12946 Clifford Hughes Ability of Employee to claim Deduction for Mileage 26/09/2023 19/10/2023 TAX Deductioms Car Expense Question 1. I am seeking clarification regarding the travel claims of my client who is a tennis official under Tennis Australia. They are required to attend various tournaments as part of their official duties. Tennis Australia typically reimburses travel expenses when driving distances exceed 40km one way; however my client’s travel usually ranges from 8-15km one way depending on the tournament and location. Given that these travels are not reimbursed I would like to know whether it is permissible to claim these travels by estimating the kilometers and choosing either the cents per km method or the actual cost method whichever is more suitable based on the situation. Could you please provide guidance on the legitimacy and the appropriate method to calculate such claims? 2. Additionally my client also works as a practice exam assessor operating under their ABN. For this role should I simply calculate the kilometers traveled to different examination sites for work-related travels and claim them accordingly? I look forward to your guidance and advice on these matters. Thanks Answer A person can only claim travel between 2 places of work. They cannot claim travel from home to a place of work. There is a large amount of ATO material available on this issue. Therefore the Tennis Australia travel appears that it cannot be claimed (if I have correctly understood your query). In respect of the practice exam work even though the client is operating (ie appears to me) as an independent contractor the same principle applies - ie travel between 2 (or more) places of work can be claimed. Travel from home to work or work to home cannot be claimed. Because of the ATO view on deductibility of work travel the "reimbursement" by Tennis Australia will constitute taxable income of the client but they will not be entitled to a deduction for the mileage travelled. Separately I am concerned from the manner of your question that you are confusing the strict requirements of record keeping for the claiming of employee expenses with the more lenient requirements in the FBT area. For an employee (presuming your client receives some form of remuneration from Tennis Australia) to claim travel/mileage expenses (as between 2 places of work) they are required to keep an accurate detailed log book of every trip. The only option then is to use the cents per kilometre method allowed by the ATO on the basis of those kilometres actually travelled. Note that as I have understood it for the last 25 years the "actual cost" method is available for FBT purposes and also where a vehicle is used exclusively for business purposes. As it seems you client uses their vehicle for other non-work activities it will not meet this requirement. 12945 Daniel Goldberg Share Capital following Change of Class 26/09/2023 19/10/2023 Corporations Law Share capital Change of class of shares Question I have a company that has 1 A class 1 B class and 5 000 C Class shares. A and B class shares were issued for $1 and C class shares were issued for $0.01 on the death of A and B shareholders (this has occured) the shares become C class shares and all shares then become ordinary shares. so I now have 5002 ordinary shares. my questions. should I have 5002 ordinary shares for an issue price of $52 or for $50.02 Answer Thank you for your query. As a preliminary point the share capital of the company is distinct from the number and type of shares on issue. As a general principle if the terms of issue provide that the class of shares changes when a certain event occurs (e.g. the death of the holder) the total of the issued capital does not change. Although the answer to this question ultimately depends on the company’s constitution and the terms of the issue of the specific shares our expectation is that the total share capital remains as $52.00 but the class of the shares on issue has changed. Liability limited by a scheme approved under Professional Standards Legislation. 12944 Mark Chapman Amendments to Tax Return 25/09/2023 19/10/2023 TAX Administration and compliance Objections Question I have a client with money in a 60 month term deposit with interest paid monthy. This interest has shown up in the last 4 Prefill reports from the ATO and has been included as income. The client (in the 2023 financial year) withdrew the money early and had to pay back the interest declared on her 2019 2020 2021 & 2022 tax returns to the bank. Can this money be claimed as a tax deduction for 2023? or do I need to amend the each year? some of those returns are over 2 years from date of lodgement how do I amend this? Answer Each of the earlier year's returns should be amended and the interest received figure removed in respect of the term deposit. In respect of the earlier years (which are now out of time to amend) the only way to process the amendments is to first lodge an objection in relation to those years. While the time limit for lodging amendments and objections is the same you can request an extension of time to lodge an objection in some circumstances. If you provide a statement explaining the reason for the amendment with your objection application it may (in fact should) be accepted. If it is not accepted you should simply claim the entire amount (or the amount which could not be amended in the earlier years) as a tax deduction in 2023. This isn't technically correct but you may have no choice if the ATO refuses your objection application. 12943 Mark Mathews Company Tax return completion: Foreign Capital Gain 26/09/2023 19/10/2023 TAX Returns, Repayments and Refunds Returns, payments, refunds Question Could you please advise the correct treatment in the Australian tax return for a capital gain on a Japanese property owned by an Australian resident Company. (i.e. whether gain is shown any foreign tax offset etc.) Answer The capital gain needs to be disclosed on the return. At item 7 of the 2023 company tax return: Answer Yes to label G (Did you have a CGT event during the year?) Complete label M as appropriate (have you applied an exemption or rollover?) Insert the net capital gain amount at label A Complete a capital gains tax schedule 2023 and attach to the return if the company has current year capital gains greater than $10 000. If the company has paid foreign tax in respect of the property disposal calculate any foreign income tax offset (FITO) in accordance with the FITO rules: see Guide to FITO rules 2023. Insert the calculated FITO at label 20 of the return. Further information see company tax return instructions label 20. 12942 Clifford Hug

• 2941 Mark Chapm