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  • #998672
    Rosemark
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    Hi,

    I have a question that I would like to understand the implications of because it just doesn’t seem right to me on face value.
    My question is. Can my business (which is a pty ltd company) offer discounts on products in return for something that helps me personally? As an example could I offer $50 off a filter (but still be making profit for the business) in return for some bricklaying labour which would benefit me personally but not the business in any way?
    It seems to me to cross a boundary but these kinds of things seem to occur. Is it legitimate if it is claimed appropriately. Would it be a fringe benefit?

    Any help would be greatly appreciated.

    Thanks in advance!
    Mark

    #1215317
    LucasArthur
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    This sort of arrangement is generally off books.. frowned upon… in your scenario you would just ring out at paid price and labourer wouldn’t bill for free component – nothing tax sees…

    Legally, well that sounds harsher – will watch ad I feel it will be interesting when a few accountants add law to it…

    If you want to keep it legal, charge then full price (say an extra $200 eg) and then have the labourer bill you $200 on top of fee to balance out ON THE BOOKS… but really, sounds like a cashie is your ultimate query still ;)

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1215318
    James Millar
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    Rosemark, post: 259477, member: 65798 wrote:
    Hi,

    I have a question that I would like to understand the implications of because it just doesn’t seem right to me on face value.
    My question is. Can my business (which is a pty ltd company) offer discounts on products in return for something that helps me personally? As an example could I offer $50 off a filter (but still be making profit for the business) in return for some bricklaying labour which would benefit me personally but not the business in any way?
    It seems to me to cross a boundary but these kinds of things seem to occur. Is it legitimate if it is claimed appropriately. Would it be a fringe benefit?

    Any help would be greatly appreciated.

    Thanks in advance!
    Mark

    If (for example) it was obvious that a company was selling things well under commercial value or below cost then it may raise a question – why? The activities would need to be regular and significant to effect the overall business COGS and then appear on the ATO benchmark variance radar. An isolated transaction of a low amount would obviously be hard to detect without very detailed forensic analysis.

    Now those comments are about detection and just because something is hard to detect doesn’t mean its acceptable within the law. The short answer is that third party receipt of payment (which is what is proposed) using contrived values is likely to fall within the general anti avoidance (tax schemes) powers of the ATO. In other words the company should declare the full value of the income if a related party is being paid on its behalf for goods provided. But does this go on? Probably yes.

    Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900
    #1215319
    Rosemark
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    Thanks Jason and James for the replies. That does answer the question and is very helpful thanks.

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