A whole new range of business expenditure has become tax deductable under amendments to the Income Tax Assessment Act 1997 (Cth) (Act). The expenditure is intriguingly called "blackhole expenditure". This article overviews the new blackhole expenditure tax deduction provisions, particularly for expenses relating to intellectual property and its commercialisation.
One Australian Government website defines the phrase this way: "Blackholes occur when business expenses are not recognised under the income tax laws." The formal name of the new law is Tax Laws Amendment (2006 Measures No. 1) Act 2006.
Blackhole expenditure is made up primarily of business start-up costs. For example, for the commercialisation of intellectual property, a spin-off or start-up company might be formed. The new blackhole provisions may provide tax deductions for commercialisation costs incurred by the intellectual property originator, provided they are not claimable elsewhere.
When it comes to selling or buying a business the sale price is the greatest obstacle and point of disagreement in many transactions. If there is a reasonable and easily understandable way of determining the value of the business the parties can quickly progress more than half way through the sale process.
It is becoming increasingly obvious in the current stringent regulatory environment that the responsibility of directors is not merely to ensure that the interests of company shareholders and creditors are protected, but also be vigilant about their own personal liability. In this respect personal liability of directors under tax laws is a creeping menace. A ticking time bomb can be a letter from the Australian Tax Office (ATO) addressed to directors and consigned to the lower levels of an office mail in-tray.
"...[E]xcessive regulation, problematic implementation and unwarranted litigation - particularly when occurring simultaneously - make US capital markets less attractive and, therefore, less competitive with other financial centers around the world." US Committee on Capital Markets Regulation in its Interim Report, Nov. 2006
This quote sums it up - regulators in the US have bitten more than what they can chew.
It could not have been more coincidental. The US Committee on Capital Markets Regulation (US Committee) issues its interim report on "Capital Market Regulation" and several Australian governments issue even more reports on regulation:
Legislation and regulators are increasingly catching up to the evolution of Web-based business practices and businesses involved in financial services connected with the Web. This article briefly overviews the legal context (under financial services law in Australia) for financial services involving non-cash payments.
Consumers and businesses are increasing their use of the Web for financial transactions. Banks and other financial institutions are introducing innovative payment mechanisms. So it is no surprise that more and more businesses seek to act as Web-based payment facilitators.
Last week Google launched Google Maps Australia. This puts the Yellow Pages asset and the revenue stream of Telstra's Sensis right into Google's firing line. This is especially so because with Google Maps you can not only locate product and service retailers and their contact details, but also get driving directions to them and mobile access to that data.
For now Yelllow Pages has a greater depth of data. Business data for Google Maps is supplied by News Ltd’s truelocal.com.au. What's going on?
We all value trust. It makes us buy from the corner store and buy online.
You know when trust is lost. Think of Howard Beale played by Peter Finch in the 1976 film Network. His famous line was to ask people to turn TV off, saying "I'm as mad as Hell, and I'm not going to take this anymore! " [click to watch it on YouTube].
For many businesses it's time for a change to benefit from growing confidence in the online world. Does your business have to do better online? Does your website need a makeover? Begin by asking - how do you win trust from your people, your customers and your suppliers.
Here's my working definition of a "venture capital fund", drawing on a McKaskill book and other sources.
A venture capital fund is a pool of investment money from institutional investors (such as superannuation or pension funds), companies, banks, governments or high net worth individuals (each known as a limited partner).
The fund is placed under the management of a venture capital fund manager (known as a general partner). Funds are generally limited to a 10-year life, so funds need to be returned to the investors before the end of that period. Venture capital funds typically look for a 20%+ cumulative return on funds over the risk free rate. They require a liquidity event (eg trade sale or IPO) within three to five years.
Tub happy (Footnote 1). That's how I'm feeling. It's Friday afternoon, my niece is getting married tonight, and on the weekend I have to make no more work choices (Footnote 2).
It's been a difficult week pondering the registrability of several trade marks for new ventures. Now the week's almost over I'm reflecting.