Thursday, 21 April 2016

The Tax Institute President says a lack of reform would be a national shame


We urge the Federal Government not to miss the boat on tax reform ahead of the 3 May Budget.

President Arthur Athanasiou, CTA, said it would be a national shame if the government didn’t unveil significant plans to reform the tax system.

We would like to a see a tax system which is fair, simple, efficient and sustainable. Currently, the debate around the system has stagnated despite the government committing to a holistic tax reform.

Though not optimistic about any significant structural tax initiatives in the Budget, we believe that the government should shift the country’s dependence on income tax to a more simple and efficient consumption tax.

“The government must determine the appropriate tax mix for Australia to provide sustainable revenue to meet future government spending promises” Mr Athanasiou said.

We believe the 2016 Budget priorities should include:
  • reducing company tax to 25%;
  • abolishing the ‘10% rule’ limiting superannuation contributions to self-employed Australians;
  • reforming superannuation laws that benefit the small wealthy minority that see superannuation as a wealth and estate planning vehicle rather than providing reasonable benefits for retirees;
  • continuing deregulation initiatives and publishing regulation impact statements for each reform;
  • concentrating on internationally co-ordinated efforts to address base erosion and profit shifting (BEPS) rather than introducing new Budget measures on multinational taxation; and
  • increasing digital resources at the Australian Taxation Office to improve inefficient systems.

Mr Athanasiou also suggests that the government must commit to reviewing issues surrounding individual tax, superannuation, general business and small business tax, not-for-profit sector tax, GST, state taxes, and the complexity, administration and governance of the tax system.

“Shifting from the current heavy dependence on individual and corporate income tax towards more efficient consumption taxes will create a simpler tax system to implement and regulate while providing the government with more sustainable revenue collections.”

Whatever the Budget does contain in terms of tax measures, members of The Tax Institute will be the first to hear what they mean for practitioners and for their clients in our Federal Budget edition of TaxVine, delivered direct to members’ inboxes on Budget night.

Monday, 18 April 2016

"It's not personal. It's strictly business" But is it? 2016's Private Business Tax Retreat

The issues that private businesses bring to the family dinner table are complex and unique. Matters of the heart and head are both at play, requiring a skilful tax adviser to understand the art of balancing vested interests and varying needs with commercial realities. This year's Private Business Tax Retreat has been designed to tackle this balance, as well as the issues that tax advisers face when managing the affairs of a family-owned business. Join us at the Palazzo Versace Hotel on the Gold Coast this May to learn more...

"Don’t mix business with pleasure", goes the age-old saying. "It’s not personal. It's strictly business", says the Godfather. According to these adages, marrying commercial goals with personal ones is apparently a big mistake.

But is it?

With all due respect to the great (and fictional) Michael Corleone, business is personal, at least in Australia. Recent statistics have shown that privately-owned family businesses make a huge contribution to the Australian economy. In fact, they represent approximately two-thirds of the business community*, with scope to grow.

Private business is big business

With these statistics in place, how do tax advisers of privately-owned family businesses manage the vast challenges that this hybrid mix of emotional needs and commercial objectives bring? One thing is clear – that there is a real need for tax advisers to stay on top of their game to better understand the evolving challenges that they will continue to face.

Private businesses owned and run by families draw out the distinctions between 'business owners', 'business operators' and 'family members'. Advisers to these businesses need to be aware of, design and implement strategies that take into account the individuals that are in one, two or all three of these positions. That adds up to an adviser being able to think strategically and implement a plan that 'speaks' to all three, while understanding that they have very different drivers and interests.



The heart of the matter…

Now in its sixth year, the Private Business Tax Retreat does just that. The sessions are designed to explore these interactions as well as the tax issues that arise as a result of them. Key issues are highlighted, along with practical workshops and interactive case studies. An impressive line-up of keynote speakers will be providing their insights into the art (and science) of dealing with the intricacies of the family dynamic, the key stages of growth and evolution, Div 7A requirements and governance issues.

And that’s just the tax technical aspect of the sessions. But as a tax advisers to privately-owned family businesses know, there is also a very important non-technical aspect that needs to be carefully managed.

'We are family. I got all my business partners with me.'

You love them, you hate them. Can’t live with them, can’t live without them.

These are the stark dichotomies that you face as a tax adviser of a family-run business. You’re a tax gun across tax technical issues. Tick. You probably have degrees to boot. Another tick. But are you across the non-technical challenges? Can you anticipate and mitigate the warning signals of internal conflict and divergence? Are you equipped to tackle the overlap of family and business dynamics?

Keynote speaker Emeritus Professor Ken Moores, AM (Moores Family Enterprise) will draw on his diverse and extensive experience in dealing with private family firms to present insights into these dichotomies. His insights are informed by both art and science and how, in this regard, psychology and tax need to intermingle.

Head of Family Office at the Myer Family Company Ltd, Maria Lui will also share her insights into what capabilities and skills a tax adviser needs. Taking a holistic approach, her session asks the question: ‘What is the approach to tax risk management for the client – is it the same or different if you are on the inside or outside?’

Value + values = success

What does success look like for privately-owned family businesses? How do they measure it?

Where other businesses focus on value, family businesses have an added factor that defines value: values. For these family businesses, value + values = success.

This equation capitalises on growth, strategy, governance, achieving long-term goals and leaving legacies for the future. It also hones in on building and maintaining healthy relationships and fostering open communication between family members.

With that equation in mind, other keynote speakers will take you through what success means for private businesses and unpack the issues that typically arise, arming you with the ability to skilfully advise a private business at every stage of a business’ evolution.

Key sessions will look into:
  • Expansion and attracting third party investors or preparing for an IPO: what are the various forms of financing?
  • How do you effectively restructure existing groups to remove non-core assets and ensure a structure that will attract tax-effective exits for existing investors?
  • Division 7A: private entity loans and unforeseen issues that can arise on UPE payout.
  • Family trust distributions: what is the best way about it?
  • Family business governance: what constituent documents does a family business need – and not need?
  • What are the debt/equity considerations?

What attracts the ATO’s attention in all of this?

Leading SME tax specialist - and winner of The Tax Institute’s Tax Adviser of the Year (SME) - Paul Banister, CTA (Grant Thornton) will cover the ATO's engagement strategies and governance of Private Groups and the High Wealth market segment. Questions such as ‘How is the ATO moving from controversy to engagement-based interactions?’ and ‘What attracts the ATO’s attention?’ will be unpacked here.

Join us 

The issues that private businesses bring to the family dinner table are complex and unique. Join us and leading tax advisers at this year’s Private Business Tax Retreat to really drill down on the challenges that advisers face and how to better tackle them. These sessions have a bit of everything – just like a good family dinner.

Details

26 – 27 May 2016 | The Palazzo Versace Hotel, Gold Coast.

12.5 structured CPD hours | Key note address | 7 plenaries | 2 workshops | Panel session.

Find out more about 2016's Private Business Tax Retreat here.


*KPMG and Family Business Australia ‘Family Business Survey 2015’ (in conjunction with The University of Adelaide)

Wednesday, 6 April 2016

WA Tax Intensive – Meet The Presenter: David Marschke, CTA

On 28 April, David Marschke, CTA, a Chartered Accountant and specialist tax law adviser at Mills Oakley’s Private Advisory Team in Brisbane will discuss restructuring opportunities at The Tax Institute’s WA Tax Intensive. We spoke to David about what to expect from his session.

‘A business structure that was put-in place to meet a prior commercial need in the past, may not be suitable for the client today,’ David remarked, ‘During my session and case-study workshop I'll be examining some of the options available to restructure a client’s affairs to achieve their current or future commercial objectives without triggering a capital gain, revenue gain or transfer duty liability’.

With his combined qualifications as a Chartered Accountant and admitted lawyer, David brings a unique focus to the workshop, as he is a specialist adviser to the private enterprise, SME and high-wealth individuals sector. 

‘I work a lot with these types of clients on structuring and transactions with a focus on tax-effective outcomes, ensuring that we understand the potential application of the tax integrity measures, including Part IVA. Critically my philosophy is to ensure that what is done complements the clients objectives rather than dealing with tax in a vacuum’, David says. 

With particular experience assisting taxpayers and their advisers in dispute matters including tax reviews, audits, complex tax negotiations and audits, David’s expertise means he is focused on the appropriately documenting a transaction to ensure  any future review by the ATO he is able to be positively managed. 

During his session, David will look at the use of CGT rollovers to “corporatize” a trust and also put a new holding company in place including the use of tax consolidations as necessary to achieve the desired commercial outcomes.  It will also consider what are the opportunities and restrictions related to the use of the new small business restructure roll-overs.   Finally it will consider the duty rules and what concessions are available for restructuring. 

These issues and more will then be discussed in a case-study led workshop by facilitators from PKF Lawler including Leigh Dyson, FTI, Phil Golding, CTA, Malav Oza, CTA and Mark Radosevich, FTI.

The second annual WA Tax Intensive also features Ron Jorgensen, CTA, of Rigby CookeLawyers, looking at Managing Trust Deed Amendments and Prof. Graeme Cooper, CTA,The University of Sydney examining Part IVA, along with our Keynote Address, Disruptive Ethics, by Prof Derek Parkin OAM, University of Notre Dame Australia.

Join us at the Novotel Vines Swan Valley Resort, 28 - 29 April 2016. Find out more

Friday, 1 April 2016

WA Tax Intensive – Meet The Presenter: Ron Jorgensen, CTA

Melbourne-based tax lawyer Ron Jorgensen, CTA, will be discussing the practical problems faced in dealing with trust amendments at the second WA Tax Intensive, on 28-29 April. We spoke to him about what delegates can expect from his session.

‘Clarke’s case and the subsequent ATO withdrawal of the ATO Statement of Principles has opened the door for restructures’, Ron has commented, ‘I'll be discussing this as well as how recent decisions such as Mercanti’s case and Oswal’s case show the continued complexities and risks when undertaking trust deed amendments’.

A partner in Rigby Cooke Lawyers, Ron has more than 20 years of legal and tax experience in this area, where he has specialised in consulting on Commonwealth and State Taxation laws and disputes, trusts administration and disputes, business and investment structuring as well as tax sensitive commercial and property transactions.

Ron believes that while varying a trust appears and often is simple and routine, ‘However, a trustee has no inherent power to vary a trust and the variation power in the trust instrument is construed strictly’, he says.  ‘An invalid amendment may result in inadvertent administration breaches of trust and ineffective trust distributions with unintended tax and commercial consequences.  A sufficient declaration or change to the continuity of the trust constitution, trust property or trust beneficiaries will create a new trust with adverse income tax, capital gains tax and stamp duty consequences,’ he warns.

During his session Ron will examine issues such as common amendments to modernise a trust, drafting a trust deed to include the power of amendment, ATO and OSR attitudes to common amendments and managing court ordered amendments and limitations.   These issues and more will then be discussed in a case-study led workshop by facilitators including Norton & Smailes lawyers Daniel Fry CTA, Alan Krawitz CTA, Amy Mathieson ATI and Daniel Velthiuis CTA; as well as Daniel Smedley CTA, Sladen Legal.

The second annual WA Tax Intensive also features David Marschke, CTA, of Mills OakleyLawyers, looking at Restructuring Opportunities and Prof. Graeme Cooper CTA,The University of Sydney examining Part IVA, and our Keynote Address, Disruptive Ethics, by Prof Derek Parkin OAM, University of Notre Dame Australia.

Join us at the Novotel Vines Swan Valley Resort, 28 - 29 April 2016. Find out more.


Tuesday, 29 March 2016

WA Tax Intensive – Meet The Presenter: Professor Graeme Cooper, CTA

The second WA Tax Intensive, on 28-29 April, brings some of the country’s leading tax experts to deliver practical, workshop-led sessions to discuss real-world solutions to common client tax issues. 

One of Australia’s leading commentators on tax law and policy, Professor Graeme Cooper, CTA, will present an informative workshop on Part IVA on day two of the Intensive. We spoke to Graeme about what to expect from his session. 

‘Part IVA might look incomprehensible,’ Graeme told us, ‘but there are a few critical points in the regime where the courts have told us what the rules mean and what they allow the ATO to do and not to do. People need to know that if they are trying to advise clients up front, or if the ATO unexpectedly comes knocking’ he said.

During the three hour workshop, Graeme will discuss when and how Part IVA can interfere with restructuring a client’s business affairs, and how to redeem the situation if a Part IVA line has been crossed. 

Graeme will bring his insight as a Professor of Taxation Law at the University of Sydney and from 20 years in practice with Greenwoods & Herbert Smith Freehills, not to mention his work on projects for the Board of Taxation, ATO, Treasury, National Audit Office, and the OECD in France, the IMF and the World Bank.

Graeme feels ‘It is especially important to have a good grasp because the text of Part IVA is easy to misunderstand. I see this a lot; people take the text at face value when the courts have told us repeatedly the text means something else entirely.’

In Graeme’s session and workshop, restructuring issues and significant transactions are examined in a practical format, with case studies and a panel synopsis to further illuminate the issues. 

The workshop facilitators are Dale Pinto, CTA-Life, of Curtin University, Nick Heggart, CTA, Greenwoods & Herbert Smith Freehills, Helen Hodgson, CTA, Curtin University and Richard Norton, CTA, Norton & Smailes.

The second annual WA Tax Intensive also features David Marschke, CTA, of Mills OakleyLawyers, looking at Restructuring Opportunities and Ron Jorgensen, CTA, RigbyCooke Lawyers, on Managing Trust Deed Amendments, as well as our Keynote Address; Disruptive Ethics, by Professor Derek Parkin, OAM, University of Notre Dame Australia.

Join us at the Novotel Vines Swan Valley Resort, 28 - 29 April 2016. Find out more.