ATO warns business owner over loyalty points from cards

[Nutcase]

Come on they wouldn't even have to do that. They are using these cards to pay the ATO - the ATO already has the information on file, a good data geek would be able to run this report on their morning tea break.

The ATO does not hold the credit card payment data on those that have paid. PCI-DSS compliance requires either tokenisation or total masking. The processor of the transaction does this.

 

[theblank]

Not so sure its quite that easy to make this case. Can just imagine the ATO saying this in court and the barrister representing the other side saying "so if you think this, why exactly are you facilitating this by making this option so readily available".

I am not suggesting at all that this is an argument to to take people to court. Its unlikely the ATO would go that far especially since the 1996 TR that was quoted on the first page seems to be enough for the ATO to rest on.

I am only suggesting that it is an indicator of the easy cherries to pick on. The ATO only needs to write to a bunch of people and say they have noticed an abnormal number of FF points earned, and go on from there with a please explain or whatever.

I have received such a letter before about a certain deduction. Rather was just a request that if I wanted to claim again in any future year, then I needed to fill out a highly detailed form to support it.

 

[ermen]

Haha, good idea, never thought about that, its so obvious. Even though I reckons there is heaps more spent on business expenses, and supplies than is been sent to Taxman, but seriously, anyone *regularily* paying GST or Tax instalments by a credit card (or reward pay) is so obviously a massive indicator of chasing the rewards points, its a no brainer.

The AMEX surcharge alone is more than one months typical interest so arguing that its 'borrowing money from the bank for cashflow reasons" is a fairly pathetic excuse. (visa/mc would be about a months interest give or take loose change)

The ATO really only has to hit on the top 10 abusers of this for the media to report it and then put the wind up the sales for the rest. Cheap exercise.

But whether there arises an FBT liability is a question. Doesn't there need to be some relationship where the card points were paid in lieu of wages? Or was a substitute for employment? Or there exists a "material connection" between the loyalty awards and the employment.

 

[theblank]

But whether there arises an FBT liability is a question.

Yep obviously there are questions to ask in each individual case, no different to any other any tax matter.

 

[burmans]

The BWA transaction product casualties may disagree.

He did say a "good" data geek.

 

[burmans]

I am not suggesting at all that this is an argument to to take people to court. Its unlikely the ATO would go that far especially since the 1996 TR that was quoted on the first page seems to be enough for the ATO to rest on.

I am only suggesting that it is an indicator of the easy cherries to pick on. The ATO only needs to write to a bunch of people and say they have noticed an abnormal number of FF points earned, and go on from there with a please explain or whatever.

I have received such a letter before about a certain deduction. Rather was just a request that if I wanted to claim again in any future year, then I needed to fill out a highly detailed form to support it.

Sure I get all that, and agreed that the ATO could do this.

But I do have a fair degree of cynicism bout all this. Google this and you'll find this ATO targets frequent-flyer and credit card rorts - National - www.theage.com.au

This was all generated by the practise statement from 2004 that in certain circumstances FF points "might" be taxable. Fast forward and nothing really seems to have happened beyond another statement that Frequent Flyer points "might" be taxable in certain circumstances. I'd agree they "might" but given people paying by Credit Card and companies reimbursing is actually very common would suggest that the fact that the ATO are still talking and no doing indicates its not quite as easy as suggested to find those supposed "abusers".

 

[lovetravellingoz]

OP is just being an alarmist as he likes posting FF World is ending type posts.

There is actually nothing in his link to suggest it is occurring or is even actively being considered.

The article reads like PR fluff piece for HLB Mann Judd Sydney, to try and gain them some visiblity.

 

[ermen]

Sure I get all that, and agreed that the ATO could do this.

But I do have a fair degree of cynicism bout all this. Google this and you'll find this ATO targets frequent-flyer and credit card rorts - National - www.theage.com.au

This was all generated by the practise statement from 2004 that in certain circumstances FF points "might" be taxable. Fast forward and nothing really seems to have happened beyond another statement that Frequent Flyer points "might" be taxable in certain circumstances. I'd agree they "might" but given people paying by Credit Card and companies reimbursing is actually very common would suggest that the fact that the ATO are still talking and no doing indicates its not quite as easy as suggested to find those supposed "abusers".

My sense is the ATO has been trying to tax FF points for the last 2 decades... But is on tenuous legal grounds...
If it was a slam dunk, you would be hearing of them clamping down on this really swiftly

 

[Dr Ralph]

Well it looks like the party is really over now.

Whilst I am not an accredited expert in taxation law, I'm confident enough of the law and my experiences to say that the party is certainly not over.

 

[trippin_the_rift]

I'll ignore the rubbish argument on FBT for this post, and highlight the most important part of the argument:

Frequent flyer points are worthless until redeemed

 

[Nutcase]

I'll ignore the rubbish argument on FBT for this post, and highlight the most important part of the argument:

Frequent flyer points are worthless until redeemed

Why are you shouting?

 

[Pushka]

Why are you shouting?

Bolding isn't shouting. THIS is shouting.

 

[Nutcase]

Bolding isn't shouting. THIS is shouting.

So what is bolding?

 

[Nutcase]

I'll ignore the rubbish argument on FBT for this post, and highlight the most important part of the argument:

Frequent flyer points are worthless until redeemed

So If they are worthless, why do you chase after them?

 

[lovetravellingoz]

I got my first points earning card about about 29 years ago.

It was a Diners Card issued to me by my then employer and was only used for work expenses. I had to pay a small fee to be eligible to earn the points (ie Company paid the card fee, but I had to pay the fee to be eligible to earn points), and I was warned at the time that the points gained might be taxable.

29 years later and I have still not been taxed on any points earnt and that is now after having been an employee with company cards, having personal cards and now with my own company.

Over the decades there have been various rumours that the ATO would crack down. Still waiting.

 

[theblank]

29 years later and still not been taxed on any points earnt

Its self assessment in australia, the reason you have not been taxed on them is because you did not declare them. In fact there isn't anywhere on the tax return for you to record this

whether the taxman decides to audit you or anyone else is a different matter. I am not an expert on FBT, but it may be that it would be the employer that gets hit with the bill, not the employee.

 

[burmans]

So If they are worthless, why do you chase after them?

Well firstly he is highlighting the ATO's argument (not his) and secondly he probably does redeem them.

 

[Nutcase]

Well firstly he is highlighting the ATO's argument (not his) and secondly he probably does redeem them.

So, they do have value.

This is the whole point of having them and why the ATO are considering the taxable status of them.

Its a bit like saying that money has no value until you spend it.

 

[drron]

So, they do have value.

This is the whole point of having them and why the ATO are considering the taxable status of them.

Its a bit like saying that money has no value until you spend it.

Take a chill pill.
Not everything you read in the paper is true.
At the most a bit of kite flying by the ATO.
I'll have stopped travelling by the time this gets through if ever.

 

[Pushka]

So what is bolding?

The thing you call shouting that isn't.