Tax on FF Points

No never!!!

What a horrible thought but an interesting question.

Make one reach for a BEX!!!

 

The tax office issued a practice statement this year (I'm an accountant) that they would be looking at people who accumulate more than 200,000 points a year, and it would only affect people who got them primarily from business.

I don't think that there would be a large number of people who accumulate more than that a year on a regular basis, and if you do, then it would probably be prudent to spread the love around between a few programs thus avoiding the gaze of the Commissioner altogether.

 

I forgot to add. I wouldn't be too worried about it though. they've already had a test case in teh Federal court which they lost a few years back. The fact that they're planning to "look at" people with large points earned just means that it isn't worth their while for the rats and mice, but the judge might look on it more favourably if a "substantial" tax free benefit is being obtained. Pfft - its not even enough for J class return to Europe!

 

Karen, just a quick query here.

Whilst I am currently employed by the NSW government, I am also involved with the taxi industry in a country area, being the owner of the taxi plates. Once you get outside of Sydney you have an entirely different taxi industry compared to capital city areas.

An example of this is that there are regular calls made to the taxi company asking for a case of grog to be delivered, or a packet of fags, or the local chinese or pizza places wanting something delivered. The situation is that the driver will pay for the goods, and collect the cash back at the other end, plus the delivery fee (of course).

Now what a LOT of drivers will do is pay for those goods on their credit cards. I know on the one shift per week that I do in the cab, I can easily put around $600 or so on the card, thereby getting me 600 QF FF points. Not an issue for me, but if I was to work 6 shifts per week it might become an issue.

Can you see any tax implications here?

Dave

 

As things stand ATM, there would be no tax implications. This is because it is a third party that is providing the benefit NOT the employer themselves. this is why the test case was lost. HOWEVER, the ATO definitely thinks that they should have a bite out of everything that people get for nix, and it is MY belief that they are going to have another run at it, but only concentrate on people accruing "excessive" benefits.

3600 points a week as per your example would still not be above their intended threshhold. Its is specifically credit card points they are looking at. Most small business owners (myself included) put all their business expenses through their cards and are then reimbursed by the business, whilst retaining the benefit for themselves and their family. The ATO thinks that this is therefore de Facto income, and should be assessed. Personally I don't think there is enough nexus between the employment relationship and the benefit being provided for it to ever be seen as taxable under our present legislation. It would need to be specifically enacted for this to be so. Which is not to say that the Commissioner wont go ahead and issue a TR which does not comply with the law as it is written (wouldn't be the first time), thus creating law as it suits himself.

As I said earlier - if you're that worried just spread the "love" around. Much more difficult to then be identified as a potential audit or test case. Months in the AAT is no fun, even for a public servant!

 

I would have thought that the ATO would have bigger fish to fry than this. Just how much does the ATO think it is losing? And if you put personal and business items on the credit card, won't the record keeping requirements become a bit ridiculous.