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Hot Issues
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Tax Time Checklists - Individuals; Company; Trust; Partnership; and Super Funds
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ATO zeroes in on work expenses, crypto investments
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Forget the Tim Tams in your WFH claim, say ‘fun police’
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Inflation will force a third of businesses to raise prices
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State and Federal Disaster support --- June 2022
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Year-end tax planning
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World GDP Ranking (1960~2025)
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100A ruling ‘turns tax avoidance logic on its head’
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Be alert for phoenix activity, businesses told
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Equifax signs data agreement with ATO
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E-invoicing will reduce emissions, says PwC
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Largest cities in the world 1500 to 2100
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Last chance to claim the loss carry-back
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Changes to recovery loan scheme for small and medium enterprises
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About the cash flow forecasting template
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Federal budget 2022: Winners and Losers
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ATO puts 50,000 directors on notice.
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FBT Reminder – Odometer Reading
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Data matching program: government payments
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Budget: Big wins for SMEs
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Small businesses show sign of omicron rebound
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Federal Budget 2022 - Overview
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Federal Budget 2022 and YOU - Part 1
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Federal Budget 2022 and YOU - Part 2
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Budget at a Glance - Video
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Quarter 4 October - December 2014
Undisclosed income risks hefty asset betterment assessments

The Federal Court are satisfied with asset betterment principles – a controversial approach the Australian Taxation Office (ATO) takes to determine undisclosed income.

 

The ATO uses this principle to determine undisclosed income. It is most commonly applied

when dealing with businesses that operate in the cash economy – cafes, bars, laundromats,

etc. The net increase in a taxpayer’s financial position each year is tallied up and compared

with their tax return. Significant discrepancies probably arise from undisclosed income and

are investigated further.

 

When no supportable explanations exist, an assessment for the undisclosed amount is issued

– often with penalties and interest. And, it is a huge tax thereafter to have that reversed or

even scaled back. A huge task means a very costly task!

 

An asset betterment calculation is not a concept embodied in the tax law or any rulings.

Despite having no legal basis, the practice has stood up to scrutiny in the courts, even if the

asset betterment calculation is clearly wrong.

 

Where there are scant records, cash businesses and inconsistent information, an asset

betterment calculation may be the closest approximation of taxable income, notwithstanding

those items in the statement cannot necessarily be forensically linked to real transactions.