think_too_mut Posted July 26, 2004 Report Share Posted July 26, 2004 Tax attack could end frequent-flyer boom By Alex Mitchell July 25, 2004 The Sun-Herald Tax Commissioner Michael Carmody has ordered a crackdown on business executives using their credit cards to accumulate vast numbers of frequent flyer points. Anyone who collects more than 250,000 frequent flying points in a year will be subject to a special tax inquiry by "a senior technical leader", Mr Carmody said. The ruling will alarm the growing number of executives who use their credit cards to pay for business expenses - fares, hotel accommodation, meals, telephones, stationery and office equipment - and earn hundreds of thousands of frequent flyer points. This legal practice is the main selling point of the many customer loyalty programs linked to free air travel. If the rewards become subject to tax, experts say it will be the beginning of the end for frequent flyer programs. Those executives who accrue 250,000 frequent flyer points would be able to use them for a return business-class seat from Sydney to London (220,000 points), two return first-class seats from Sydney to Bangkok (250,000) or a return first-class seat to Los Angeles (200,000). Mr Carmody has urged inspectors and auditors to watch out for "contrived and artificial" arrangements where business people put everything on their credit cards solely to raise as many frequent flyer points as possible. He emphasised that income tax should be paid where frequent flying points are "assessable income", forming part of an employee's salary package and fringe benefits tax where the points are a non-cash benefit to an employee. ATO staff should also check salary package arrangements that suggest "the [frequent flyer] rewards are being received in substitution for income which would otherwise be earned". National Tax and Accountants' Association acting president Robert Warnock said the ATO's guidelines would cause "great concern" in the business community. "It sends a message that the ATO is going to attack this practice," he said. Another tax specialist said the ATO would "kill" the frequent flyer points system if it went after taxpayers who used credit cards to pay for their business overheads. "If the ATO is going to tax the reward of frequent flyer points, then people are going to ask what's the benefit of belonging to loyalty programs," he said. Link to comment Share on other sites More sharing options...
limbo Posted July 26, 2004 Report Share Posted July 26, 2004 Wow, that's a load of crap. That guy, Mr. Carmody, will make himself very popular. Link to comment Share on other sites More sharing options...
think_too_mut Posted July 26, 2004 Author Report Share Posted July 26, 2004 limbo said:Wow, that's a load of crap. That guy, Mr. Carmody, will make himself very popular. People in his position are hardly ever popular, anywhere. Some tax on claimed FF points is already in place: for SYD-BKK free ticket, I was paying 160A$ (4500B) tax. What this Carmody man wants will bring it up to almost 50% of the price of the ticket. For First class to London (only that or biz are usually left available for FF) it may be 4K US$ or more (normal price of economy is 1500US$). For Economy SYD-BKK it would be 400US$ or so. Even if travelling public finds it still attractive, why would the airlines fly and feed people around while government is cashing up on their tickets? Link to comment Share on other sites More sharing options...
BadaBing Posted July 26, 2004 Report Share Posted July 26, 2004 The USA version of " OBL the tax collector " the Internal Revenue Service has been for years trying to get their lizard toes into our wallets for FF miles , only time will tell... :onfire: Link to comment Share on other sites More sharing options...
Khun_Kong Posted July 26, 2004 Report Share Posted July 26, 2004 Deadwood_Al, the former ??? Link to comment Share on other sites More sharing options...
BelgianBoy Posted July 26, 2004 Report Share Posted July 26, 2004 .... BadaBing Link to comment Share on other sites More sharing options...
BadaBing Posted July 26, 2004 Report Share Posted July 26, 2004 Khun_Kong said:Deadwood_Al, the former ??? The $5,000.00 baht reward answer of the day ! err , let's stay on topic here son... Link to comment Share on other sites More sharing options...
Guest Posted July 26, 2004 Report Share Posted July 26, 2004 Ok guys a question: how do I manage to gain points on a star alliance frequent flyer program when I purchase goods or services using a Premier or a Gold card AP, feeling he missed something Link to comment Share on other sites More sharing options...
BadaBing Posted July 26, 2004 Report Share Posted July 26, 2004 BelgianBoy said:.... BadaBing Shit , you beat me to the punch , 5K when I see you for New Years... :: Link to comment Share on other sites More sharing options...
Khun_Kong Posted July 26, 2004 Report Share Posted July 26, 2004 TTM- The Sun-Herald is published where? Link to comment Share on other sites More sharing options...
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