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Taxation Law – Appeals To The Federal Court

Appeals to the Federal Court require a written application which sets out brief details of the objection decision and must be filed with the relevant Federal Court Registry.

The application must also be accompanied by the prescribed fee applicable to all applications to the Federal Court. This is currently 6.00 for individuals and ,453.00 for corporations for each objection decision.

The taxpayer must also serve a sealed copy of the application on the Commissioner, as Respondent, at the Office of the Australian Government Solicitor in the state or territory in which the application was filed.

Within 28 days of serving a sealed copy of the application on the Commissioner, the Australian Taxation Office will provide the taxpayer with a Notice of Appearance, a copy of the documents filed with the Federal Court, and a statement of the facts, issues and contentions regarded by the Commissioner as relevant to the appeal.

The Federal Court will then call a Directions Hearing which must be called at least five weeks after the taxpayer’s application was filed.

Once the Federal Court is satisfied that the Commissioner has provided all relevant documents, appeals are then set down for hearing. The taxpayer must pay a setting down fee of ,211.00 for individuals and ,422.00 for corporations when a date is fixed for the hearing of the appeal. There is also a daily hearing fee of 3.00 for individuals and 9.00 for corporations.

The Federal Court is able to overturn a decision of the Commissioner of Taxation. However, the Federal Court cannot interfere with any discretion exercised by the Commissioner. It can only refer the matter back to the Commissioner for further assessment.

The Federal Court is able to award costs either against the Commissioner of Taxation if the taxpayer is successful, or against the taxpayer if the Commissioner is successful. In either case, the proportion of costs awarded will generally be between 50% and 60% of the actual costs incurred by the successful party. However, if the Federal Court were to conclude that the behaviour of either the taxpayer or the Commissioner warranted sanction because of the way in which the case had been brought or conducted, a higher proportion of costs (known as solicitor/client costs) may be awarded.

A taxpayer should seek legal advice as to the choice of whether to seek review in the AAT or appeal in the Federal Court may involve taxpayers seeking legal advice. Whilst the Federal Court is the more appropriate forum for objections which are highly technical or which involve complex propositions of taxation law, the court costs are high. Taxpayers generally retain barristers and solicitors to conduct their appeals. The AAT, on the other hand, is cheaper to commence and pursue reviews and places an emphasis upon consensual resolution of disputes. However, AAT members may be less experienced than Federal Court judges in hearing highly complex disputes which involve difficult propositions of taxation law or in managing pre-trial processes to ensure a speedy hearing.

Taxpayers do have further appeals both from the AAT or from the Federal Court.

Whether disputing Private Rulings or taxation assessments, taxpayers maximise their chance of success by utilizing the services of lawyers who are familiar with taxation law and the arguing of objections.

Finally, taxpayers should remember that the Australian Taxation Office will impose a General Interest Charge (GIC) which is currently 13.19% on all outstanding taxation assessments from the date that the assessment was made. The lodging of a review at the AAT or appeal to the Federal Court does not stop this GIC from accumulating. Taxpayers should seek legal advice as to whether to pay either the whole or a part of the disputed taxation notwithstanding commencing the review or appeal. While this will have financial consequences on the taxpayer, the payment will prevent further GIC from accruing. The cost of funding the payment will be less than the GIC. If the taxpayer is successful in the review or appeal, and the amount of the assessment has already been paid, the Commissioner of Taxation is not obliged to refund interest on the refunded taxation payments.

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Taxation Law – Private Rulings

This article sets out the procedures to be followed by taxpayers who wish to challenge Private Rulings for taxation assessments made by the Commissioner of Taxation.

Private Rulings are issued by the Commissioner of Taxation under the Taxation Administration Act (Cth.) 1953. A Private Ruling states the Commissioner’s opinion on the way that the tax law applies to a taxpayer’s arrangement for the particular years that are described in the application for the Private Ruling. Private Rulings are an effective way of determining whether a taxpayer’s arrangements will be successful in legitimately minimising liability to income taxation, capital gains taxation, or goods and services taxation. The taxpayer can assess in advance what the potential taxation liability may be if the arrangement were to proceed. If the Ruling is unfavourable to the taxpayer, then the taxpayer has an opportunity of adopting alternative taxation arrangements without necessarily attracting taxation liabilities.

A Private Ruling should be distinguished from an assessment made by the Commissioner of Taxation pursuant to an income tax return. An assessment of a taxpayer’s taxation liability is made by the Commissioner of Taxation after a review of the information provided by the taxpayer in the taxation return for the particular financial year together with any additional information obtained by the Australian Taxation Office pursuant to an audit or investigation of the taxpayer’s affairs pursuant to the Income Tax Assessment Act (Cth.) 1936.

In layman’s terms, a Private Ruling enables a “dry-run” without necessarily attracting a taxation liability in the form of an assessment.

A taxpayer may, however, apply for a Private Ruling either before or after the taxpayer lodges the return for the year in which the taxpayer’s arrangement took place. It is preferable to apply for the Private Ruling prior to the lodgment of the return for the year in which the arrangement is to take place in order to obtain the full benefit of the process. However, Private Ruling applications are still possible after a return is lodged, provided they are issued before the Commissioner determines an assessment based on the relevant return. A Private Ruling cannot be obtained after this time. The relevant arrangements disclosed in the return are binding on the taxpayer as and from the date of the assessment.

A Private Ruling is binding on the Commissioner of Taxation so that even if the tax law is ultimately found to apply to the arrangement in a different way to that set out in the Ruling, the taxpayer will not be liable for any more tax than that which would have been payable under the Private Ruling. However, Private Rulings are not binding on the Commissioner of Taxation if the law is changed or if the arrangement actually carried out by the taxpayer was materially different from that which was described in the application. Furthermore, the Private Ruling is only binding on the Commissioner in respect of the particular taxpayer (the Rulee) as named in the Private Ruling.

How To Keep Accurate Corporation Tax Records

All companies are required by law to maintain records of those company transactions in a manner that must be adequate to enable the company to produce an accurate Company Tax Return. Company tax records must be kept for a minimum of six years from the end of the accounting period and longer if the accounts are submitted late or being enquired into by the Inland Revenue.

Company tax records must include all original sales receipts and purchase expenses. Under the Companies Act legislation registered companies must also keep accounting records.

Companies are responsible for calculating their own corporation tax liability and paying the corporation tax without prior assessment by the Inland Revenue. Companies which fail to deliver their tax return by the statutory fling date which is normally 12 months after the accounting period are liable to penalties.

An accounting period normally being 12 months – can be shorter but never longer. Should a company submit the CT600 Corporation Tax return form without the accounts then it is treated as not having submitted a tax return form.

Current Company Tax Return Forms

The latest version of the CT600 form for 2007 has been available for download from the Inland Revenue website since 31 August 2007. The Corporation Tax Return Form CT600 Version 2 contains two small changes from the previous 2006 version.

CT600 (short) for small companies has an additional box on Page 1 so that a company which is a member of a group other than a small group can identify itself. The same additional box is on CT600 plus a new box on page 3 of the 8-page form so that a company with ring fence profits can show the ring fence profits included in its figure of total profits.

There are no changes to other forms in the CT600 series at present and all the CT600 Supplementary Pages published in 2006 remain valid and will probably remain so until at least after the 2008 Chancellor Budget.

Corporation Tax Rates

While the main rate of Corporation Tax remained at 30% in 2006 and 2007 which will be reducing to 28% in 2008. The small company corporation tax rate applicable to companies with annual profits less than 300,000 pounds was increased from 19% in 2006 to 20% effective on profits earned after 1 April 2007 and is set to increase further on 1 April 2008 to 21% and to 22% from 1 April 2009.

Corporation Tax on ring fenced profits being income and gains from oil extraction activities or oil rights in the UK and UK Continental Shelf remain at 19% for small companies and 30% for larger companies. Interest is charged on late payments and at a lower rate on installment repayments of Corporation Tax as is the practice on all late tax payments.

Accounting Periods straddling 1 April

The effective date for changes in the Corporation Tax rate applicable in recent years has been 1 April each year as opposed to the 5 April for unincorporated businesses. For companies with accounting periods that straddle the 1 April separate calculations are required for the period before 1 April and after 1 April based upon the number of days in each accounting period. As a proportion of 365 (366 in leap years such as 2008)

No Corporation Tax Due

Companies are required to advise HMCE by either submitting a company tax return or informing them by completing the HMCE form for this purpose or at the very least returning the payment slip marked with no payment to be made. All communications should state the corporation tax payment reference which can be found on the payment slip. This reference number is specific to each accounting period and must be quoted accurately.

Filing Corporation Tax Return Online

Most companies and their agents can file company tax returns online. The computations, financial accounts and other supporting documentation must be sent in PDF format with some approved software products being sent in XBRL format. Filing the company tax return online has the advantages of speed, can be done 24 hours a day and the software calculates the tax liability.

Using the CT Online service also allows the company tax position to be viewed including any interest or penalties that have been charged. Company details such as telephone, fax, addresses and email addresses can be changed and agent details can be added or changed. Authorised agents can also view client company corporation tax positions and liabilities.

Inland Revenue enquiries into Company Tax Returns

Enquiries into Company Tax returns are governed by rules and codes of practice. HMCE have at least 12 months from the statutory filing date to commence an enquiry when the company tax return has been submitted on time and longer if the return is submitted late.

Companies are advised in writing when an enquiry starts and ends. If no adjustments are required HMCE advise the enquiry has finished. Any adjustments are also advised in writing and the company then has 30 days to file an amended Company Tax Return failing which HMCE will amend the return.

At any time during an enquiry a company can apply to the Inland Revenue Commissioners for an enquiry to be closed. Separate codes of practice exist for local offices and specialist compliance offices

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Taxation Of Import Of Services In India And Levy Of Service Tax

N. Vijia Kumar

This article deals with the taxation of import of services in India and evaluation of levy of service tax in the light of some relevant circulars and notifications. The author has also referred to a decision of the Bombay High Court in Indian National Shipowners Association v. Union of India [2009] 18 STT 212.

1. ‘Service tax’ evolution is not only informative but also interesting. This levy was imposed by the Finance Act, 1994 and the subsequent Finance Acts amended this Act to expand the base and increase the levy. This can be stated to be the only instance in the Indian Legislative history where a later Finance Act amends an earlier one.

Further, it would be astonishing to note that the Finance Act, 1994 is the only statute on the statute book which has no ‘Statement of Objects and Reasons’, and one of the few statutes that has not been considered either by a Parliamentary Committee or a Select Committee of the Parliament.

Yet another distinguishing feature is that this levy is imposed on the ‘service sector’ but enforced by the Central Excise Authorities who are constituted under the Central Excise Act, 1944.

2. ‘Service tax’ was introduced for the first time under Chapter V of the Finance Act, 1994. Section 66 of the Act was the charging section and provided for a levy of service tax at the rate of 5 per cent of the value of the ‘taxable service’. ‘Taxable service’ was defined in section 65 to include only three services viz., any service provided to an investor by a stock broker, to a subscriber by the telegraph authority, and to a policy holder by an insurer carrying on general insurance business. Section 68 required every person providing the ‘taxable service’ to collect ‘service tax’ at the specified rate. Section 69 provided for the registration of a person responsible for collecting service tax. Sub-section (2) of section 5 indicated that it was the provider of the service who was responsible for collecting the tax and obliged to get registered. Sections 65, 66, 68 and 69 were subsequently amended, though the remaining sections continued as originally enacted with minor changes. Under section 70, every person responsible for collecting service tax is required to furnish to the Central Excise Officer in the prescribed form and verified in the prescribed manner, a clear return. Sections 71, 72 and 74 deal with filing of the returns, provision for assessment, reopening of assessment and rectification of mistake in the assessment order. Section 75 provides for payment of interest by the person responsible for collecting service tax if there is delay in paying the tax to the credit of the Central Government. Section 76 deals with exemption of penalty for failure to collect service tax. Section 77 deals with penalty for failure to furnish the prescribed return. Section 78 deals with penalty for suppression of the value of the taxable service. Section 79 deals with penalty for failure to comply with notice. Section 94 empowered the Central Government to make Rules for carrying out the provisions of Chapter V of the Finance Act, 1994. The Service Tax Rules, 1994 were framed pursuant to such power.

3. Service Tax Circular No. 36/4/2001, dated 8-2-2001 of the Government of India, Ministry of Finance clarified that services provided beyond the territorial waters of India are not liable to service tax, as provisions of service tax had not been extended to such areas. On March 1, 2002, Notification No. 1/2002-ST, dated 1-3-2002 was issued by which the provisions of Chapter V of the Finance Act, 1994 were extended to the Continental Shelf and Exclusive Economic Zone of India.

Notification No. 36/2004-ST, dated 31-12-2004 notified the following taxable services for the purposes of section 68(2) of the Finance Act, 1994, viz., services in relation to telephone connections as pager; general insurance business, insurance auxiliary service by an insurance agent; and transport of goods by road in a goods carriage. It was further provided that any taxable service by a person who is a non-resident or is from outside India, or does not have any office in India, is exigible to tax.

The Service Tax Rules, 1994 were amended on June 16, 2000, and a provision was added in rule 2, viz., rule 2(iv). By this provision while defining the term ‘person liable to pay service tax’, a person, who has received services outside India was made liable for the levy of service tax.

On June 16, 2005, an amendment was made in the Finance Act, 1994 by which an Explanation was added below section 65(105), to provide that if a service is provided by a person who does not have permanent residence in India, to a person having permanent residence in India it is deemed to be a ‘taxable service’. Section 66A was inserted in the Finance Act, 1994 with effect from April 18, 2006 to provide for ‘Charge of service tax on services received from outside India’.

4. Indian National Shipowners Association v. Union of India [2009] 18 STT 212 (Bom.).

The Indian National Shipowners Association, which was engaged in the operation of ships, challenged the constitutional validity of (i) section 66A of the Finance Act, 1994 introduced with effect from April 18, 2006 (ii) Explanation to section 65(105) which was in force between June 16, 2005 and April 17, 2006 and (iii) rule 2(1)(d)(iv) of the Service Tax Rules, 1994 inserted with effect from August 16, 2002, submitting that the service tax authorities on the basis of the above provisions were seeking to levy and recover service tax from persons resident in India on the services which were rendered and/or performed outside India by non-residents service providers. It was highlighted that the Indian Shipping Industry was obliged by statute and the provisions of the Merchant Shipping Act, 1958 and in terms of the normal conditions of trade, to obtain and consume out of India services such as Custom House Agents Services, Steamer Agents Services, Clearing and Forwarding Agents Services, Port Services, Cargo Handling Services, Storage and Warehouse Services, Maintenance or Repair Services, etc.

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Certain Issues On Taxation Of Charitable And Religious Institutions

Devendra Jain

In a vastly populated developing nation, the parallel role of NGOs in public welfare is indispensable. The Income-tax Act, 1961 has recognized the importance of the very concept of ‘charity’ in the Indian society. The income derived by charitable institutions is exempt under section 10 or section 11. This article discusses certain issues arising out of section 11, which provides exemp­tion to income derived from property held under trust for char­itable or religious purposes. The author opines that the law relating to taxation of charitable institutions ought to be simple looking at the noble cause behind the existence of such institutions. He hopes that with the new Income-tax Code likely to be put in place, we will find a simple and non-controversial taxa­tion system for charitable institutions.

1. In a vastly populated developing nation, the parallel role of NGOs in public welfare is indispensable. Public charity has reached numerous areas which were untouched by the Government due to bureaucracy or otherwise. In fact, the theory of ‘dan’ or ‘chari­ty’ is found even in our mythology where we find instances of ‘Karna’ or ‘Raja Harishchandra’.

The Income-tax Act, 1961, has recognized the importance of the very concept of charity in indian society and, hence, it finds place in sections 10(23AA), 10(23AAA), 10(23B), 10(23BBA), 10(23C), section 11, section 35, section 35AC, 35CCA, 35CCB, sections 80G, 80GGA, etc. The income derived by charitable institutes is exempt under section 10 or section 11 and the donors get deduction under section 35, 35AC, 35CCA, 35CCB, 80G or 80GGA.

2. Certain issues arising out of section 11 which provides exemption to income derived from property held under trust for charitable or religious purposes are :

(i) Section 11(1)(a) provides exemption to income derived by charitable or religious institutions/trusts (‘the trust’) to the extent it is applied for charitable or religious purposes, i.e., for the objects of the trust. Further, 15 per cent of the income can be set apart for future application. In other words, at least 85 per cent of the income is to be applied on the ob­jects of the trust to claim 100 per cent exemption. It is well-settled by various judicial pronouncements that the words ‘income derived’ should be interpreted as income in commercial sense and not the ‘total income’ as per the Income-tax Act. Further, the words ‘applied to such purposes’ are to be interpreted in a wide sense so as to include all outlays on the objects of the institu­tion – be they capital or revenue in nature. Thus, for instance, purchase or construction of a school building by an educational institution is an application of income. [CIT v. Kannika Devas­thanam & Charities [1982] 133 ITR 779 (Mad.); S.RM.M.Ct.M. Tirup­pani Trust v. CIT [1998] 230 ITR 636/96 Taxman 635 (SC)]

(ii)- Barring the dogmatic approach of certain departmental authorities in not considering administration expenses as appli­cation of income but as an expense against earning the income; the law under section 11(1)(a) is well-settled that all spendings or outlays by such institutions are application of income. In fact, judiciary has even upheld that expenses incurred for maintaining the establishments like legal expenses, audit fees, etc., are to be considered as application of income. However, there is another issue which is often less discussed about and that is section 11(1A).

(iii)- As per section 11(1A), where a charitable or religious institute/trust transfers a capital asset, the capital gains shall be deemed to have been applied towards charitable or religious purposes to the following extent :

(a)- Where entire net consideration is utilized for acquir­ing a new asset, the whole of the capital gain;

(b)- Where only a part of the net consideration is utilized in acquiring a new asset, the excess of the cost of the new asset over the cost of the old asset.

An example may clarify the above position.

A capital asset was acquired by a trust during 1985-86 for Rs. 10 lakhs and it is transferred during 2007-08 for Rs. 25 lakhs resulting into a surplus of Rs. 15 lakhs.

Situation 1 : Cost of the new asset is Rs. 25 lakhs or more.

In such a case, the entire surplus of Rs. 15 lakhs shall be deemed to have been applied towards charitable purpose.

Situation 2 : Cost of the new asset is Rs. 22 lakhs.

In such a case, Rs. 12 lakhs (22 lakhs-10 lakhs) shall be deemed to have been applied towards charitable purpose. The balance surplus of Rs. 3,00,000 (15,00,000 – 12,00,000) shall be taxable subject to application under section 11(1)(a) and 11(2).

2.1 Some controversies - The following controversies arise in the above scenerios:—

(i)- Section 11(1A) uses the words ‘capital assets’, ‘trans­fer’ and ‘capital gains arising from the transfer’. Though the words ‘capital assets’ and ‘transfer’ are defined in section 2(14) and 2(47), yet the expression ‘capital gains’ is nowhere defined in the Act. A controversy therefore arises as to whether capital gains should be interpreted as profits arising on trans­fer in commercial sense or capital gains calculated under section 48, i.e., after indexation. The Amritsar Tribunal has held that the capital gains need to be calculated as per sections 45 to 55. It implies that the benefit of indexation can be claimed by charita­ble trusts also. [Akhara Ghamanda Dass v. CIT [2000] 68 TTJ (Asr.) 244/[2001] 114 Taxman 27 (Asr.)(Mag.)] Whereas there are a series of judgments favouring the commercial income theory. [CIT v. Rao Bahadur Calwala Cunnas Chetty Charities [1982] 135 ITR 485 (Mad.) & CIT v. Trustees of H.E.H. Nizam’s Supplemental Religious Endowment Trust [1981] 127 ITR 378 (A.P.)]

(ii)- Section 11(1A) starts with the expression  ‘For the purpose of sub-section (1)’. It implies that sub-section (1A) is merely an enabling provision quantifying the ‘application of income’. The main provision granting exemption is sub-section (1), which uses the expression ‘income’ and not ‘total income’. It can, thus, be inferred that a trust has to apply 85 per cent of its income (in commercial sense). If that is the case, the benefit of index­ation which is a special mechanism for the purpose of the Income-tax Act may not apply and entire profit on sale of capital asset may be regarded as capital gain. Another remote view could also be possible that the surplus on transfer of capital assets is not at all an income (being a capital receipt) and, hence, outside the purview of 85 per cent application.

Debt Relief Taxations – How Government Tax Breaks For Creditors Can Help You With Debt

Debt relief taxation is the newest law that makes debt settlement even more appealing. Not that it needed to become more user friendly with the great number of consumers that cleared debt just by hiring a debt settlement company and saving a bit of loss change, but know you don’t even have to pay taxes for the settled amount.

Debt settlement is the option that takes advantage of this new law the best. The main purpose of debt settlement is to reduce the total amount of debt that you need to pay back to the creditors. This is usually done by a settlement company that takes on the job of negotiating with the creditors. They explain that you can’t afford to pay back your debt and ask for a reduction and also tell them that if they don’t agree with this deal, you will have no other choice than to file for bankruptcy.

Here is where things get interesting because you have all the cards; you just have to know how to use them. The creditors consider it a loss if you file for bankruptcy because they will get nothing back from the debt you had. By settling your debt, at least they get half of that money back. And of course the government hasn’t forgotten about the creditors and will give them stimulus money if they accept the negotiations laid down by the settlement company.

Now the amount that will simply disappear from your debt after the negotiations are done still counts as an income and so it should be taxed like any other income you have. The IRS puts this income under tax relief to encourage consumers even more to use this option and so not be forced to file for bankruptcy. This is the government shoots two birds with one stone; if you file for bankruptcy you damage the economy but if you stay with a big amount of debt you have no purchase power and so you can’t improve the economy. But by suing debt settlement you avoid bankruptcy and you also clear your debt fast and you can start purchasing things and go back to your normal life style.

For more information on Debt Consolidation you can visit: Debt Consolidation Headquarters

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A UK Employee Can Claim Tax Relief Using Their Vehicle For Work

It is common practise for a UK employer to pay an employee expenses when that employee uses his own vehicle for business journeys. Often the amount paid is based upon a standard rate per mile which varies from employer to employer. There are tax issues every employee should be aware of to maximise tax free expenses and minimise income tax payments.

The nature of the business journeys must adhere to certain rules in order for these expense payments to be tax free. Not usually an issue when an employee is paid expenses but nevertheless something each employee should be aware of.

In order that the payments are free of tax are three general rules. First the payments must be made to yourself and not to a third party, for example another company receiving the money on your behalf. The use of the vehicle must be a work journey and excludes travel to work where it is considered that work place is a permanent place of work. And finally the amount paid must be within the mileage allowances fixed by the government and part of the Inland Revenue rules on the limits for mileage payments.

Any other payments relating to the use of your own vehicle which do not fall within the above rules are regarded as additional income and subject to income tax and national insurance deductions as would be other forms of payment. Also any payments made in respect of non work journeys fall outside the rules and would be taxed as additional income.

A work journey is one which you must carry out as part of doing that job including when requested by the employer to conduct a specific business journey on its behalf. Visiting suppliers, clients, delivering goods and attending meetings outside the normal workplace would all be considered work journeys.

A journey to a normal place of business would not be considered a work journey and that rule also excludes detours during the journey for example to visit a client or drop off goods. However if the detour on the way to work is significant then the excess mileage covered would be allowable and the expenses paid not subject to tax.

The approved mileage allowance for cars and vans in the UK is 40p per mile for the first 10,000 business miles and 25p per mile for each business mile over 10,000 miles in each tax year. The approved mileage allowance for motor cycles is 24p per mile for the first 10,000 business miles and 24p per mile for each business mile over 10,000 miles in each tax year. The approved mileage allowance for bicycles is 20p per mile for the first 10,000 business miles and 20p per mile for each business mile over 10,000 miles in each tax year.

These rates are the maximum levels of expenses an employee can receive tax free during a tax year, were set in the financial year 2002-03 and still fixed at that level in the financial year 2007-08. Employees are not due any tax free payments on any other vehicle running costs. For example if you break down on a journey and your employer assists with the financial cost of repairing that vehicle any amounts paid over and above the maximum mileage rates quoted above would be taxable.

The bad news is if your employer pays you more than the above mileage allowances then the excess amount paid is taxable as additional income. If for example your employer pays 45p per mile for the first 10,000 miles then it would be normal for that employer to include the different between 45p and 40p in your wage slip and deduct income tax from the 5p.

The good news is if your employer pays you less than the mileage allowances then you are entitled to claim mileage allowance relief on the shortfall. If for example your employer pays 35p per mile then less than 10,000 miles you are entitled to claim the mileage allowance relief on the number of miles at 35p multiplied by the 5p shortfall.

To claim the mileage allowance tax relief employees must maintain a record of the work journeys and the amounts paid. Those records should state the date, mileage covered, a brief note of the journey and the amount paid by the employer, records which may be required to substantiate the mileage allowance relief. To actually make the claim for relief this can be done by sending a letter with the details to the Inland Revenue at the end of the financial year or alternatively request and complete the Inland Revenue form provided for this purpose.

Using different vehicles during the tax year is not relevant. The total mileage of all vehicles used is the relevant figure. However being paid a mileage allowance by more than one employer is relevant.

If during the financial year an employee has been paid a mileage allowance by more than one employer then the total paid from all employers must be added together to produce the total amount paid. For example if one employer paid 30p per mile for 1,000 miles and a second employer paid 35p per mile for a further 2,000 miles then the total payment would be 1,000 pounds (300 + 700) and the mileage allowance would be 1,200 pounds (400 + 800). The mileage allowance tax relief in this example would be 200 pounds at the employees maximum tax rate.

If an employee has not claimed mileage allowance relief in past years then application can be made to the Inland Revenue to reclaim the relief for a period up to six years after the year the claim was not made. When making a claim for unclaimed tax relief in previous years the Inland Revenue are likely to request some evidence of the claim which your previous employer may be able to provide.

Good luck with your claim for mileage allowance relief. If you found this article useful please copy and submit the article to forums and blogs across the internet to make as many people as possible of the money out there waiting to be claimed. If posting this article then the author signature and links must also be included in the posting.

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Tax and National Insurance Obligations for Freelance Writers in the United Kingdom

As a freelance writer in the UK, you’ll usually be a self employed person which means that you deal with your own tax affairs.

In the United Kingdom, you’ll need to register as self employed with the Inland Revenue.

This means:

You must tell your local Inland Revenue office if you haven’t already done so, that you are in business as a self employed writer
You must tell your local Inland Revenue office about all your income that you make from being a self employed writer – from any company you work for

Once you have told the Inland Revenue that you are in business, they will normally send you a “Self Assessment tax return” each year to enable you to declare your income. However, you have an obligation to inform the Inland Revenue about income you have made in any tax year, even if they fail to send you a tax return for that year.

You will also have to pay Class 2 National Insurance contributions. You will usually get a bill every 13 weeks in arrears, unless you choose to pay monthly by direct debit.

As a self employed person, you also have the option of paying other classes of national insurance contributions to preserve your rights to claim benefits in the future.

This is very general guidance as to your tax obligations – we cannot advise you specifically or individually on your tax affairs. However, as it is your sole responsibility as a self employed person to declare the income you receive from working for your research company as a self-employed freelancer, you should ensure that you contact the tax office and take advice as early as possible.

For more information on this subject, I recommend the Academic Knowledge website, through which you can apply here: http://www.academicknowledge.com/writer-apply.php

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Singapore – Russian avoidance of double taxation agreement ratified

Singapore’s agreement with the Russian Federation for the avoidance of double taxation comes into force on 16 January 2009 following the completion of ratification formalities.  The provisions of the Agreement shall apply to income derived on or after 1 January 2010.

The Agreement, which is Singapore’s 60th agreement for the avoidance of double taxation, encourages and facilitates cross-border trade and investment between Singapore and Russia through the lowering of tax barriers and the better definition of taxing rights between the two nations.  The main provisions under the Agreement include the following:

a) Lower withholding tax rates are imposed on dividends, interest and royalties.  The tax rate for interest and royalties is 7.5% while the following rates apply to dividends:   
i) 5% (for corporate shareholders holding at least 15% of the share capital and has invested at least US0,000 or its equivalent in other currencies);
ii)  5% for the Government; and
iii) 10% (for other shareholders)

b) Tax credit would be available for residents earning foreign-sourced income.  In the case of dividends received from Russia, Singapore also allows tax credit on the underlying tax paid for the dividends (i.e. tax credit on the corporate tax on the profits out of which the dividends are paid) if there is at least 10% shareholding.

c) A building site, a construction, installation or assembly project, or supervisory activities connected therewith constitute a permanent establishment only if it lasts more than 6 months. The period threshold for furnishing of services is more than 3 months in any 12-month period.

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The Economic Paradox of Taxation and Quantity of Collection Considered

There are many things in economics which can be proved mathematically, and at the same time – in practice which go against the basic assumptions one might have. Generally, most theories in economics are quite obvious, and easily explainable. However, at other times they often go against basic common sense, and this creates a paradox of sorts in the minds of decision makers, economists, business owners, investors, and consumers and citizens.

Indeed, I’d like to discuss an economic Paradox with you, one which has to do with taxation and the quantity of collection for the bureaucracy – government services. This paradox has been proven time and time again;

If you lower taxes, then the tax receipts go up, due to the increased economic activity and economies of scale.”

Unfortunately, I fear we may end up learning that lesson again the hard way. Speaking of economics another thing that disturbs me very much is one of “confidence, trust, fear, and uncertainty” with regards to regulation, congress, business, investors, and consumers. It seems there is so little trust that while everyone has their hair in a tizzy, the corporations are collecting all the money, without competition from the smaller businesses, meaning small businesses are not going to be hiring soon.

And really when we give money to the poor the rich have it in about 3-transactions anyway. If we give the money to the corporations through government spending they buy lobbyists and put up barriers to competition and find ways to suck more out of the government. However if we reduce regulations for small business, they hire more people, and buy more stuff, like vehicles, computers, etc.

Thus, corporations sell more stuff, the government has a bigger tax base, and the citizens all have jobs. It really gets back to that whole; “give a man (corporate legal entity – created person) a fish thing!” See that point? It’s too bad more Americans do not take economics classes, or understand a thing about economics before they go to the polls and vote for their favorite politician who sits behind a podium claiming they will solve all the problems, using what they call common sense, which is merely rhetoric, and the opposite of what really needs to be done.

For if a politician does not understand his economics, or the paradox of taxation and the quantity of collection, they are bound to make terrible decisions and put your city, county, state, province, or nation into a world of financial hurt. Indeed as the founder of a think tank, I hope you will please consider all this, and think on it.