LinuxSA Mailing list archives

  From: Alan Kennington <akenning@topology.org>
  To  : LinuxSA <linuxsa@linuxsa.org.au>
  Date: Wed, 20 Jun 2001 15:54:53 +0930

Re: tax deductions for non-compulsary software payments

On Wed, Jun 20, 2001 at 03:35:40PM +0930, bmonten wrote:
> Why not send the (100-R)% ? If the author's not sending you a receipt, he's probably not claiming the income. 
> 
> You feel good and The author gets to buy another jar of coffee. 
> 


Brett,

That's an interesting thought.
I think I sort of agree in the case of the author and the
user both being on similar incomes and living in the same
country. But in many cases, this doesn't work out well.

Case A:
The author is very poor and has a very low marginal tax
rate, maybe even zero.
The user is in a high tax bracket, e.g. in Australia.
In this case the author gets no benefit from giving
no invoice/receipt, but the user loses a lot.
After all, the payment is in fact a cost of the user
doing business, and therefore should morally appear
in the accounts. In the case of a company, there would
be questions asked about payments for which there is
no receipt and no tax deduction.
Case A is probably quite common at present.

Case B:
The author is doing quite well, making an entire living
out of writing popular software, for which many people
send generous donations. (A bit far-fetched, I know!)
Now the tax enforcers pay this author a visit and discover
that they have an income of $100,000 per year from gifts.
Well, the tax office is going to get a bit upset at this,
because unless you're an overseas billionaire or something,
your supposed to pay tax.
The same problem arises in the case of some groups of
people in Adelaide who work for each other for free, but
keep track of how many hours each has done. The tax office
sees this as tax evasion.
In fact, if it was worth their bother, I'm sure that the
ATO would work out a "deemed value" for all "free software"
and tax it. (But then that gets into the argument about
neighbours taking it in turn to baby-sit. Are they avoiding
tax by "paying in kind"?) If free software ever takes over
the world, I'm sure that tax offices everywhere will work
out a way of getting a cut of the action!

Okay, getting back to case B, it seems like you would want
to regularise the income somehow.
The problem is that I just can't see how.
Someone must have worked this all out, surely.

Cheers,
Alan Kennington.

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