Tax News Daily
The latest tax news from around the world, summarised and tagged for tax professionals. Updated twice daily.
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Newsom Floats Federal Wealth Tax After California Deal Fails
California Governor Gavin Newsom is proposing a federal wealth tax following the failure of a state-level wealth tax deal in California. The proposal targets high-net-worth individuals and represents a significant shift in tax policy advocacy, moving from state to federal jurisdiction. Newsom's push highlights ongoing debates around wealth taxation in the United States, including concerns about capital flight from high-tax states like California. The proposal reflects broader progressive efforts to impose additional taxes on accumulated wealth, though federal implementation faces substantial political and constitutional hurdles.
Fiscal Hell or Mirage? What Spain’s Wage Debate Gets Wrong
This article from Tax Justice Network challenges the narrative around Spain's wage and fiscal debate, examining claims about tax burdens on workers and businesses. It critiques arguments that frame Spain as a 'fiscal hell' for employers or high earners, analysing how wage costs, social contributions, and income taxation interact. The piece scrutinises whether tax pressure in Spain genuinely discourages employment or investment, pushing back against rhetoric used to oppose wage increases or progressive taxation. It contextualises Spain's fiscal position within broader European comparisons, arguing the 'fiscal hell' framing misrepresents the data on effective tax rates and labour costs.
Expanded CCH Axcess Expert AI to Deliver AI-Powered Scan and K-1 Automation
Wolters Kluwer has expanded its CCH Axcess Expert AI platform to include AI-powered document scanning and K-1 automation capabilities. The enhancements leverage artificial intelligence to streamline tax return preparation workflows, automating the extraction and processing of K-1 partnership and trust income data. This reduces manual data entry burden for tax professionals, improving accuracy and efficiency in personal and partnership tax compliance. The expansion reflects growing adoption of AI-driven automation tools within tax software platforms, targeting CPA firms seeking to manage increasing workloads with greater speed and fewer errors during tax season.
AICPA Urges Families to Learn the Basics of ‘Trump Accounts’ Before Contributing
The AICPA is advising families to understand the fundamentals of 'Trump Accounts' — tax-advantaged savings accounts established under recent U.S. legislation — before making contributions. These accounts, created as part of the Big Beautiful Bill, are designed to help families build long-term savings for children, with specific tax treatment on contributions and growth. The AICPA urges caution and education around eligibility rules, contribution limits, and tax implications to ensure families maximize benefits while avoiding potential pitfalls associated with this new savings vehicle.
Claim personal allowances and tax refunds if you live abroad (R43)
UK government guidance explaining how non-UK residents can claim personal allowances and tax refunds using form R43. Covers eligibility criteria for individuals living abroad who may still be entitled to UK personal income tax allowances, including those from certain countries with double taxation agreements. Explains the process for reclaiming overpaid UK tax on income such as pensions, savings interest, or other UK-sourced income. Relevant to expatriates and non-residents with UK income sources seeking to reduce their UK tax liability or recover excess withholding.
Khanna Lays Into Gavin Newsom’s Tax Proposal, Setting Up 2028 Battle Lines
Representative Ro Khanna has publicly criticized California Governor Gavin Newsom's tax proposal, creating a significant intra-Democratic rift that observers are framing as early positioning for the 2028 presidential race. Khanna's opposition centers on the fiscal and economic implications of Newsom's proposed tax measures, which have drawn scrutiny over their potential impact on businesses and individuals in California. The public disagreement highlights broader tensions within the Democratic Party over tax-and-spend policy approaches, with both figures appearing to stake out distinct economic platforms ahead of a potential future White House contest.
Georgia Tax Preparer Obtained $30,000 from Fraudulent Claims, Feds Say
A Georgia-based tax return preparer has been charged by federal authorities with fraudulently obtaining approximately $30,000 through false tax claims. The case involves the submission of fabricated or inflated deductions and credits on client returns, allegedly without the knowledge or consent of taxpayers. Federal investigators identified discrepancies that triggered the fraud inquiry. The case underscores ongoing IRS and Department of Justice efforts to prosecute unscrupulous tax preparers who exploit their position of trust to generate fraudulent refunds. Convictions in such cases typically carry penalties including fines, restitution, and imprisonment under federal tax fraud statutes.
The Pros and Cons of Common Exit Options for Construction Owners: ESOPs, PE, Third-Party Sales
This article examines exit strategies for construction business owners, including Employee Stock Ownership Plans (ESOPs), private equity, and third-party sales. ESOPs offer notable tax advantages: sellers to ESOPs can defer or eliminate capital gains taxes under Section 1042 of the IRC, and S-corporation ESOPs may pay no federal income tax on the ESOP-owned portion of profits. These tax benefits make ESOPs particularly attractive compared to other exit options. The article weighs these tax incentives against liquidity, control, and valuation considerations, helping construction owners evaluate which exit path best suits their financial and succession planning goals.
ITAT Restores Unsecured Loan Addition for Fresh Verification by Assessing Officer
India's Income Tax Appellate Tribunal (ITAT) has restored an unsecured loan addition case for fresh verification by the Assessing Officer. The tribunal remanded the matter back to the AO level, requiring a new examination of the unsecured loan transactions that had been added to the taxpayer's income. This decision reflects the ITAT's approach of ensuring proper factual verification rather than adjudicating on incomplete records, allowing the AO to conduct a thorough investigation into the legitimacy and source of the unsecured loans in question.
Pakistanis back 5pc tax on social media influencers, survey finds
A survey conducted in Pakistan finds that a majority of citizens support imposing a 5% tax on income earned by social media influencers. The findings reflect growing public sentiment that digital content creators generating significant revenues should be brought into the formal tax net. The proposal aligns with broader efforts by Pakistani authorities to tax the digital economy and ensure influencers comply with income tax obligations. The survey highlights public appetite for expanding personal income tax coverage to emerging digital professions amid Pakistan's ongoing fiscal consolidation drive.
ITAT Restores Demonetisation Cash Deposit Case for Fresh Rule 46A Examination
India's ITAT has restored a demonetisation-era cash deposit case for fresh examination under Rule 46A of the Income Tax Rules. The case involves cash deposits made during India's 2016 demonetisation period, with the tribunal directing reconsideration of additional evidence under Rule 46A, which governs the admission of evidence not previously presented before lower tax authorities. The decision requires a fresh review of supporting documentation to determine whether the cash deposits during demonetisation were adequately explained by the taxpayer.
Received Dividend, Loan, or Buyback Proceeds? Decode Deemed Dividend Under Section 2(22) with Practical Examples
This article provides a practical guide to India's deemed dividend provisions under Section 2(22) of the Income Tax Act, covering scenarios involving dividends, loans, and buyback proceeds. It explains how certain payments from closely held companies to shareholders can be treated as deemed dividends, attracting income tax liability. Using practical examples, the article decodes when loans advanced to shareholders, payments on behalf of shareholders, or distributions trigger deemed dividend treatment, helping taxpayers understand their tax obligations and potential exposure under this complex provision.
First Time Buyer ISA consultation
The UK government has launched a consultation on a First Time Buyer ISA, a savings product designed to help individuals purchase their first home. ISAs (Individual Savings Accounts) are tax-advantaged vehicles in the UK where returns and withdrawals are exempt from income tax and capital gains tax. This consultation likely addresses the tax relief structure, eligibility criteria, contribution limits, and government bonus arrangements associated with the new product, making it directly relevant to personal income tax policy and savings incentives for UK taxpayers.
ITAT: Reassessment Beyond Four Years Quashed as AO Reopened Case on Mere Change of Opinion Without Fresh Material
India's ITAT has quashed a reassessment proceeding initiated beyond the four-year limitation period, ruling that the Assessing Officer reopened the case based solely on a change of opinion without any fresh tangible material. The tribunal reaffirmed the established legal principle that reassessment under Section 147 of the Income Tax Act requires new information or material to justify reopening, and that a mere change of opinion by the AO on previously available facts does not constitute valid grounds for reassessment, protecting taxpayers from arbitrary re-examination of settled assessments.
Guidance: List of approved professional organisations and learned societies (List 3)
UK government guidance providing the official List 3 of approved professional organisations and learned societies whose membership fees qualify for income tax relief. Employees and self-employed individuals who pay subscriptions to bodies on this list can claim tax deductions against their earnings. The list is maintained by HMRC and updated periodically to reflect newly approved or removed organisations. Relevant to UK taxpayers seeking to reduce their personal income tax liability through legitimate deductions for professional membership costs.
Can the Income Tax Department Tax You for a Transaction That Never Happened? ITAT Says No
India's Income Tax Appellate Tribunal (ITAT) ruled that the Income Tax Department cannot levy tax on a transaction that never actually occurred. The case highlights a significant taxpayer protection principle: tax liability must be grounded in real, substantiated transactions rather than presumed or fictitious ones. The ITAT's decision reinforces that tax assessments cannot be based on assumptions or fabricated transactions, providing relief to taxpayers facing arbitrary additions to income. This ruling has important implications for how tax authorities conduct assessments and the evidentiary standards required before taxing alleged transactions.
The New Capital Gain Formula: More Choice, More Confusion
India has introduced a revised capital gains tax formula offering taxpayers more choice in how gains are calculated, but the added flexibility is generating confusion among taxpayers and advisors. The new framework appears to provide multiple computation options, potentially allowing individuals to select the method most favorable to their tax position. However, the complexity of choosing between formulas, understanding eligibility conditions, and applying the correct approach is creating significant uncertainty. The article explores the practical challenges arising from this policy change and its implications for taxpayers managing investment portfolios and asset sales.
Section 115BBE Controversy Nearing Closure: Rajasthan High Court Joins the Taxpayer Camp
The Rajasthan High Court has sided with taxpayers in a dispute over Section 115BBE of India's Income Tax Act, which imposes a higher tax rate on unexplained income. The court's ruling adds to a growing body of judicial opinion challenging the retrospective or broad application of this provision, particularly regarding the levy of surcharge and penalty alongside the elevated tax rate. With multiple High Courts now aligning with taxpayers, legal experts suggest the controversy surrounding Section 115BBE is approaching resolution in favor of taxpayers, potentially limiting aggressive tax department assessments under this provision.
ITAT Allows Foreign Tax Credit Despite Delay in Filing Form 67, Calls Requirement Procedural
India's Income Tax Appellate Tribunal (ITAT) ruled in favor of a taxpayer seeking foreign tax credit, holding that the late filing of Form 67 is merely a procedural requirement and should not result in denial of the credit. The tribunal emphasized that substantive rights to claim foreign tax credit under the Income Tax Act and applicable tax treaties cannot be defeated by procedural delays. This decision provides relief to taxpayers who miss filing deadlines for Form 67 while still being entitled to relief from double taxation on foreign income.
ITAT Quashes Reassessment Against Investor Over Kyra Landscapes Shares, Cites Borrowed Satisfaction by AO
India's ITAT quashed a reassessment order against an investor in Kyra Landscapes shares, ruling that the Assessing Officer (AO) had relied on 'borrowed satisfaction' rather than forming an independent opinion. The tribunal held that reassessment proceedings under the Income Tax Act require the AO to independently apply their mind to the information received, rather than mechanically acting on inputs from investigation wings or other authorities. This ruling reinforces procedural safeguards against arbitrary reassessment actions by tax authorities in India.
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