Land "surprise" tax, moving in helps or not?

[Paul@PFI]

Statutory charges are deductible when incurred. Its a common law principle of tax law. Land tax is a statutory charge.

You can amend UP TO 4 years based on the date of assessment. Be careful with assuming its two years. Thereafter, its a CGT cost base issue. The penalty is non-deductible.

Statutory charges can be ascertained by a taxpayer in the year of income. I have always questioned one aspect of this view and have never seen an appeal. That concerns the valuation. We know land valuations can be objected to and can be excessive. Thus isn't is arguable that estimating the tax is not within the expertise of the taxpayer ?? I wouldn't be confident taking it to appeal however as the valuation at 30 June / 31 Dec is easily ascertained.

 

[pickle pickle]

Under the cash accounting method generally you record the expense when you have paid the expense, not when you became liable for the expense.

I will have another read of the ATO ID and the cases they rely on to support there arguments but I am not convinced that the authorities that they are using to support there argument actually say that expenses like land tax are claimed when the debt is raised or incurred not when paid when using the CASH accounting method.

 

[Paul@PFI]

Under the cash accounting method generally you record the expense when you have paid the expense, not when you became liable for the expense.

I will have another read of the ATO ID and the cases they rely on to support there arguments but I am not convinced that the authorities that they are using to support there argument actually say that expenses like land tax are claimed when the debt is raised or incurred not when paid when using the CASH accounting method.

The Facts of the ID refer to a taxpayer who uses the cash basis in any event. Be careful how you read "cash accounting" (Read TR 97/7)... This ID is about the incurred limb of s8-1 not the accounting method as such. The Commissioner applies the common law decisions in relevant cases such as Layala as precent for his view. Note carefully that the ID considers the cash basis of accounting applies to RECEIPT of income not the outgoings of this type. The principles in Layala are used for statutory outgoings (ie payroll tax, land tax etc)...The deduction principles about incurred costs rather than paid costs are what Layala was all about.