The case of the taxpayer who was paid too late

HomeInsights

The case of the taxpayer who was paid too late.


What a difference timing makes. A recent case before the Administrative Appeals Tribunal (AAT) is a reminder about the tax impact of the timing of employment income. 


When the job ended, the taxpayer moved to Australia and became a resident. Once in Australia, the former employer honoured the performance bonus and paid it as a series of instalments.


The dispute between the ATO and the taxpayer started when the Commissioner issued amended assessments taxing the bonus payments received.


The dispute focused on when the bonus was derived. Had the bonus been derived while the taxpayer was still a non-resident then it would not have been taxed in Australia.


This is because non-residents are normally only taxed in Australia on Australian sourced income. Employment income is typically sourced in the place where the work is performed (although there can be exceptions to this).


Australian tax case law says that employment income is normally derived on receipt. In the taxpayer’s case, this was when he received the payments from his former employer, not when he became entitled to the bonus. Because the taxpayer received the bonus when he was a tax resident of Australia, the bonus was subject to tax.


The difference for the taxpayer was quite dramatic. Had he been paid the bonus when it was due, he would have paid no tax as Kuwait does not impose income tax.


Let's work together.

Please call us if you are concerned about tax residency or managing overseas income. We want our people to be the best they can be.


CONTACT US  CONTACT US 



Education Bonds: Saving for Private School

Darren and Jenny have one child and are planning for his secondary education at a Melbourne private school. Utilising education bonds, they aim to ensure they have sufficient funds to cover all tuition fees and associated costs throughout his education.


Navigating Australia’s Bracket Creep: Strategies for Managing Rising Tax Liabilities

As Australia's highest marginal tax bracket impacts more individuals, a growing number of Australians face rising tax obligations due to "bracket creep," where wage growth outpaces tax rate adjustments. This trend is expected to persist, with tax-efficient strategies the backbone for financial advice to help individuals secure long-term wealth.


5 things to know about car loan refinancing

Car loan refinancing involves replacing your existing car loan with a new one. The new loan pays off your existing debt, allowing you to start making payments on the refinanced car loan.


How to apply for a car loan with a new job

Lenders often view job stability and income consistency as key factors in their loan approval process, which can make it tricky if you're settling into a new role.


5 important steps before making an offer

Making an offer on a property for the first time is both exciting and nerve-racking. It’s important to take several steps to ensure you’re making a well-informed decision


Market Wrap - September 2024

The presidential election in the US on 5 November could dominate headlines during October, before the next meeting of the Federal Reserve later that same week. Investors are already debating whether a further reduction in borrowing costs in the US could be announced following this meeting.


Melbourne's housing prices fall to the sixth lowest among the capital cities

Melbourne's housing market has experienced a significant shift in recent years, with its median dwelling value now ranking sixth-lowest among Australia's capital cities.


6 common refinancing traps to avoid

Refinancing your home loan can be a great way to save money, but it’s important to avoid common pitfalls.


7 tips for styling your spring open home

Spring is a popular time to sell homes, with warmer weather and blooming gardens creating an inviting atmosphere that brings out the best of any property.


Smart Financial Planning for New Parents: 9 Essential Tips to Manage Parenthood Costs

Discover 9 essential financial planning tips to help new and expecting parents manage the costs of parenthood with confidence and ease.


The hidden costs of late payments

Cash flow is the lifeblood of any business and when payments are delayed, it creates an immediate strain.


6 misconceptions about small business loans.

Small business loans are often misunderstood. These misconceptions can prevent owners from taking advantage of valuable opportunities to grow their businesses.


Luxury retail drives cbd revival as sydney leads the pack

Australia's CBD retail markets are showing signs of recovery post-pandemic with luxury brands leading the charge.


Commercial property cycle offers opportunities for investors

There are still excellent opportunities for commercial investors in retail and industrial sectors thanks to the current property cycle.


Business growth signals positive outlook for commercial property

The Australian business landscape is expanding, signalling a potentially strong future for commercial property markets.


SMART Life - Issue 18 - Spring 2024

The global economy is being shaped by conflicting triggers. These include productivity-boosting technology innovations, geopolitical tensions and the strident efforts of central banks to bring inflation under control. We examine the economic outlook and discuss the implications for your retirement savings.


Episode 15: Baby Boomers & The Great Wealth Transfer

In this episode of The Accountant That Builds, host Shannon Smit discusses the massive wealth transfer expected from Baby Boomers to the next generation, estimated at $84 trillion. Shannon highlights the opportunities and challenges of this transfer, focusing on estate planning, tax liabilities


The Great Wealth Transfer: What Baby Boomers Need to Know About Preserving and Passing Down Wealth

Over the coming years, we’re about to witness the largest wealth transfer in history as Baby Boomers pass their hard-earned fortunes to younger generations. With an estimated $84 trillion set to be transferred, mostly from savings, investments, and real estate, this shift holds both incredible opportunities and significant challenges for families.


Understanding the Taxable Payments Annual Report (TPAR): A Guide for Australian Businesses

The Taxable Payments Annual Report (TPAR) is a mandatory report for Australian businesses in certain industries to disclose contractor payments to the ATO by August 28 each year, ensuring accurate tax reporting.


Will You Pay More For Aged Care in 2025?

Changes to aged care fees are coming, and they will impact both home care and residential care. After a long wait and lots of speculation, the government has released details of the proposed changes.


Aged Care Financial Advice Case Studies

Our aged-care financial advice case studies showcase real scenarios where our clients saved thousands by leveraging strategies regarding the family home, negotiating RADs and optimising care facility choices.


Super Guarantee and Employee Terminations: Compliance Essentials for Employers

WEBINAR 11 SEPT // 12PM

In the third session, we'll delve into superannuation guarantee changes, including proposed changes to payday superannuation, new rates and bases, and the impact on SG liability. Gain insights into employer deductions, termination of employment considerations and more.


How to record bad debts in Xero


How to record incorrect payment against an invoice in Xero


Allowances, FBT, and Compliance for Employers

WEBINAR 4 SEPT // 12PM

Master allowances and reimbursements, understand their PAYG and super guarantee implications, and learn to navigate travel vs. living-away-from-home allowances. Gain insights into FBT considerations, new ATO record-keeping requirements, and effective salary packaging arrangements.


4 factors that influence car loan interest rate

Understanding the factors that influence your interest rate can help you secure a better deal.


How to Prepare a NFP Self-Review Return

Starting July 1st, 2024, non-profit organisations (NFPs) in Australia with an ABN, but not recognised as charitable, must annually submit a NFP self-review return to the ATO to confirm their tax exemption status. This process involves three main sections:


Motorbike Loan Or Personal Loan?

The choice between a motorbike loan and a personal loan depends on your financial situation, credit profile and preferences.


Will BNPL or Online Betting Impact Your Mortgage Application?

When applying for a mortgage, lenders scrutinise your financial habits to assess your creditworthiness.


Employee vs Contractor: Know the differences and get your employment right

WEBINAR 28 AUG// 12PM

Explore the crucial differences between employees and contractors. We'll discuss when genuine contractors are considered employees for PAYG withholding and SG, key factors determining employment or contract arrangements, and new guidance from the ATO.


Selling your investment property with a lease in place this Spring

As a landlord, there are several things to consider when deciding to sell a property with a current lease this Spring.


6 factors to consider when choosing an investment property this spring

With Spring selling season just around the corner, it can be a great time for buyers to find an investment property.


Million-Dollar suburbs set to surge across Australia

The number of Australian suburbs with an average house price of $1 million or more is expected to increase significantly in the coming year.


5 Benefits Of Asset Finance For Australian Manufacturers

Asset finance is a powerful tool that allows manufacturing businesses to acquire essential equipment and technology without large upfront costs.


Mitigating risks in debtor finance

Debtor finance offers a great way for businesses to better manage their cash flow.


Online retail slowdown impacts industrial property outlook

The rapid growth in online retail sales during the pandemic has plateaued, potentially affecting demand for industrial property.


Brisbane property prices could surge 50% by 2032

Property prices in Brisbane could see a boom of over 50% in the lead-up to the 2032 Olympics.


Episode 14: Process Perfection: Crafting a Lean, Agile Business with Systems

Systemisation is more than just a buzzword—it's a game-changer for businesses aiming to achieve sustainable growth. In our recent podcast episode, I had the chance to explore this topic with Dave Jenyns, the visionary founder of SYSTEMology and SYSTEMhub.


The Power of Systemisation: Why, How, and What Types of Businesses Can Benefit

Systemisation is the backbone of a successful business. It is the process of creating repeatable and efficient workflows that streamline operations, reduce stress, and foster growth. This blog explores why businesses should embrace systemisation, how they can implement it, and what types of businesses stand to benefit the most.


CASE STUDY: The A.I First Accountant feat. Shannon Smit

Explore how adopting an AI-first approach can transform businesses! David Jenyns from Systemology chats with Shannon Smit who shares how AI and robotic process automation (RPA) have revolutionised the operations at Smart Business Solutions.


Foreign investors dominate commercial property market

Investment in Australia's commercial property market surged in the second quarter of 2024, with foreign investors leading the charge in major office acquisitions.


The Employer Essentials Series

WEBINARS // THE EMPLOYER ESSENTIALS SERIES (4 PART)

Join us for a comprehensive 4-part webinar series designed for small business owners seeking growth and better financial management. Presented by Shannon Smit from Smart Business Solutions, each session will delve into critical aspects of compliance review framework for workers and employers, providing practical insights and strategies to help you navigate complex financial landscapes and make informed decisions.


Now is the time to invest in commercial property

Rapid population growth, high construction costs, and significant interest rate cuts forecasts will provide a strong tailwind to the sector.


Four ways to psychologically prepare for retirement – before you leave work

Retirement can feel like a shockwave, particularly if life’s circumstances or a redundancy means that you don’t get to choose the timing.


Exise Tax Explained

Understanding and effectively managing excise tax is crucial for the success of distilleries and craft alcohol producers in Australia. With proper planning and strategic execution, businesses can thrive in this heavily regulated yet dynamic market.


Strategic Education Funding and Wealth Preservation

Even amidst loss, there are ways to secure a strong financial future for your loved ones. Our advisers are here to help you create a resilient plan with tools like education bonds, ensuring your family's needs are met today and for years to come.


The important role technology and geopolitical forces

As countries around the world isolate from globalisation, we’re seeing an increasingly fragmented global economy.


Market Wrap - July 2024

With inflation coming off the boil, there was optimism that borrowing costs have peaked and could be lowered later this year. In turn, this could be beneficial for corporate earnings.


Small Business Productivity: Industry & Regional Trends

Building on the findings from Xero Small Business Insights (XSBI) report, Small business productivity: Trends, implications and strategies, this special report presents industry and regional labour productivity data for small businesses.


Brisbane overtakes Canberra as property prices hit new highs

Property prices continue to go from strength to strength with new data showing values are once again reaching record highs.


How single-income can manage the rising cost of living

Inflation in Australia is still elevated at 3.6 per cent, managing on a single income is tougher than ever.


Is your family home really tax free?

The main residence exemption exempts your family home from capital gains tax (CGT) when you dispose of it.


City-Siders Heading For Regional Australia

Cost of living pressures is seeing an increasing number of Australians headed for an easier life in regional suburbs.


Episode 13: Beyond the Surface: A Deep Dive into Mental Health at Work

In this podcast, we talk with Mick Simmons, founder of Mental Health Safety Net, a grass-roots organisation that provides suicide awareness training to workplaces and schools. Trigger Warning: This episode has content related to suicide and mental health issues.


What you need to know about equipment loans

Equipment loans are an important financial tool that allows businesses to acquire the necessary machinery and tools without straining their cash flow.


Earned an income from the sharing economy?

It’s essential that any income earned from sharing economy platforms such as Airbnb, Stayz, Uber, etc., is declared in your tax return.


$20k instant asset write-off passes Parliament

Legislation increasing the instant asset write-off threshold from $1,000 to $20,000 for the 2024 income year.

Related News

4 Nov

Navigating Australia’s Bracket Creep: Strategies for Managing Rising Tax Liabilities

As Australia's highest marginal tax bracket impacts more individuals, a growing number of Australians face rising tax obligations due to "bracket creep," where wage growth outpaces tax rate adjustments. This trend is expected to persist, with tax-efficient strategies the backbone for financial advice to help individuals secure long-term wealth.


READ MORE READ MORE
14 Oct

Smart Financial Planning for New Parents: 9 Essential Tips to Manage Parenthood Costs

Discover 9 essential financial planning tips to help new and expecting parents manage the costs of parenthood with confidence and ease.


READ MORE READ MORE
19 Sep

Understanding the Taxable Payments Annual Report (TPAR): A Guide for Australian Businesses

The Taxable Payments Annual Report (TPAR) is a mandatory report for Australian businesses in certain industries to disclose contractor payments to the ATO by August 28 each year, ensuring accurate tax reporting.


READ MORE READ MORE