Important: This is not advice. Clients should not act solely on the basis of the material contained in this Bulletin. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. The Bulletin is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval

Commissioner’s Discretion

The Tax Office recently released a practice statement that outlines how the Commissioner will exercise his discretion in providing relief to taxpayers where they have made an inadvertent omission or honest mistake in dealing with their shareholder loans.

The amnesty will apply for the 2001 to 2006 income years, provided that the taxpayer takes corrective action by 30 June 2008.

Under the shareholder loan rules, loans or payments by private companies to shareholders or their associates may be deemed to be dividends paid by the company. The shareholder loan rules also provide the Commissioner with the discretion to disregard a deemed dividend.

The statement outlines the circumstances in which the Commissioner may exercise his discretion, including where:

· it is clear in the Commissioner’s view that the taxpayer has made a genuine mistake or inadvertent omission;

· the taxpayer has sought to take corrective action prior to 30 June 2008;

· the deemed dividend from the shareholder loan occurred between 30 June 2001 and 30 June 2006; and

· the taxpayer’s income tax return lodgements are up-to-date.

If the above conditions are satisfied, the taxpayer need not apply in writing seeking the Commissioner’s discretion in relation to their shareholder loan. The discretion can automatically apply on a self-assessment basis.

STS Taxpayers

The Tax Office has released two publications relating to accessing the simplified tax system, specifically relating to calculating STS group turnover and the 25% entrepreneur’s tax offset.

The publications indicate that this will be the last year in which the STS will operate in its current format. New changes have been introduced making further amendments for small business taxpayers.