Santa’s Australian Tax Position under the spotlight of the ATO

21 December 2011

So the Jolly Big Man has made his list and checked it twice, but he didn’t quite factor in the scrutiny of the ATO. So before he sets out on his time-defying sojourn around the world, let’s take a light-hearted look at what the ATO is likely to zero in on. 

GST

Most goods imported into Australia with a value above $1,000 are subject to GST.  With approximately 4,329,000 children in Australia on his list, averaging $40 per gift (depending on whether they have been naughty or nice), we estimate that Santa’s liability for GST will be in excess of $17,317,192.  Santa will need to discuss tax structuring urgently and address other commercial issues from Australian retailers who will perceive Santa’s ‘gift’ giving as a hostile attempt to gain market share (reader suggestion: Google recent comments by Gerry Harvey and GST).

Santa’s little helpers

Superannuation guarantee

A review should be completed of the employment status of any ‘Santa’s little helpers’ based in Australia to determine if they are contractors or employees.  If the helpers are deemed to be employees, Santa may be liable for the 9% superannuation guarantee (for this year and all other years).  It may be hard to argue that they are truly independent given the level of corporate branding involved. 

If the helpers are indeed ‘volunteers’ Santa will need to consult with an employment lawyer regarding potential slave labour issues and discrimination of a minority group.  

Living away from home allowance

If any of the little helpers currently based in Australia are receiving living away from home allowances (LAFHA), Santa will need some help to review and restructure these arrangements early in the New Year.  The Government has recently announced a series of significant changes to the LAFHA rules that will require all employers currently making use of these concessions to review their arrangements.

There is the potential for the ‘gifts’ Santa will receive from children at Christmas to be taxed as non-cash business benefits.  That is, the cookies, milk, scotch and other benefits may be considered income by the tax office and tax applied to the value of those benefits.   

Depreciating the reindeer

In the event that Santa is liable to pay tax under Australian law, there might be an opportunity to depreciate the cost of the reindeer over their effective lives.

There are currently no provisions within Australian tax law to allow the Commissioner the discretion to ignore tax liabilities as a goodwill gesture.

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