Friday, 29 June 2012

The benefits of being president of The Tax Institute

The 45th South Australian Convention was
held at the Novotel Barrossa Valley Resort.
One of the benefits of being president is that you get to go to extremely good Tax Institute conventions at marvellous venues. In May, I attended the Queensland Division’s Private Business Retreat, held on the Gold Coast, and then the South Australian State Convention in the Barossa Valley. Both had excellent programs with great presenters and were thoroughly enjoyed by all delegates.

The Queensland event was focused on changing businesses from trusts to company structures and featured very valuable workshops. The Palazzo Versace venue made just being there highly enjoyable notwithstanding the bucketing rain), but I blanched at the cost of the beautiful Versace cup and saucer desired by my wife.

The South Australian Convention had the wow factor which we can all try to emulate. Something good is going on when three-quarters of the 200-plus delegates attend the "super-Saturday" morning sessions after a fabulous dinner the night before (entertained by the Novacastrian fakir and his seemingly tame snake — thank you Paul Tanti for bearing the brunt of python-wrapped shoulders in my stead). The attendees included your bleary-eyed president. Congratulations to everyone involved in putting the SA Convention together. Now onwards to four more state conventions.

Turning to more prosaic topics, the Pt IVA saga continues, with The Tax Institute playing its part in the Assistant Treasurer’s roundtable discussions about how the new Pt IVA should look. The concern that the Institute has (that proposed amendments will indelibly disturb the sense and balance of the present anti-avoidance provision so that it becomes a matter of even greater uncertainty for taxpayers) is being ably ventilated by our member, Grant Wardell-Johnson, on our behalf. I hope that the trajectory of the proposed amendments can soon be made public so that our wider membership can have its say.

Looking backwards, we now have the retrospective transfer pricing law changes introduced into parliament and which are said, on the one hand, to do no more than confirm the law as it has always stood, but those same amendments are held out now in parliamentary debate as the panacea for failures of the past to combat alleged IT profit-shifting. Sometimes it is hard to know what to think.

Ken Schurgott
Ken
Schurgott
Ken Schurgott is President of the National Council at The Tax Institute.

The Tax Institute is 
Australia’s leading professional association in tax. Its 13,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.

Wednesday, 27 June 2012

Q&A with SMSF Guide author Jemma Sanderson, ATI

SMSF Guide 2012
SMSF Guide 2012
Tell us a little about yourself, how long have you been in practice now?

I have been practicing almost exclusively with respect to SMSF’s for close to 11 years now. A lot has changed over that time. I became a member of The Tax Institute in 2006. I studied at the University of Western Australia, obtaining a Bachelor of Commerce, and once I started working in the industry, completed additional study in the relevant areas.

This is your fifth year of presenting our Superannuation Roadshows, how did you find it this time out?

There are always changes occurring with respect to superannuation that we need to be aware of, with the practicalities of the implementation of strategies being big areas of concern this year. The format change of the Roadshow to include several workshop case studies hopefully provided a more hands-on approach for practitioners. It was also a benefit that my luggage wasn’t lost on my way to Darwin, like it was last year.

What was the general mood amongst practitioners?

Given the consistent changes to superannuation, not to mention those that have been proposed but are yet to be implemented, I get the feeling practitioners are frustrated with the changes and lack of certainty in the superannuation space. This uncertainty makes it very difficult to plan for our clients, but equally makes it so important to be up to date with what the changes are and what has and hasn’t actually been implemented by the Government.

What seemed to be the big themes amongst those you spoke with or areas of concern?

The continuing theme seems to be how we can take advantage of the opportunities available with respect to superannuation, and protecting the assets within superannuation as much as possible for our clients and their beneficiaries.

Tell us a little about how the Roadshow series informs the development of the new edition of SMSF Guide.

The SMSF Guide is designed to be an up to date publication for advisers in the industry, taking into consideration the latest rulings, cases and legislation, as well as the practical implications of the implementation of some strategies. The Superannuation Roadshow enables the latest issues and areas to be considered in detail, explored via workshops with delegates and then conveyed through the SMSF Guide. The Roadshows also assists in the consideration of the most relevant cases and other appropriate areas to include in the SMSF Guide.

The new edition covers the impact SMSFR 2012/1 has on borrowing within funds, what are the key areas to look for?

Prior to the release of the draft version of SMSFR 2012/1 (being SMSFR 2011/D1), there was much contention in the industry as to what constituted a single acquirable asset or a replacement asset (particularly with respect to property). The final ruling has provided certainty in this area, which now makes it much easier to provide advice to clients with respect to such arrangements. The ATO has taken a practical approach to their interpretation of the legislation, which is very welcome in the industry.

The new edition covers TR 2011/D3, and suggests some strategies to consider for client estate planning objectives, can you tell us a little about some of these?

This draft ruling confirms a long held view of the ATO with respect to the commencement and cessation of an income stream. The most important consideration for our clients is to ensure that where the intention is for an income stream to be in place, the minimum pension payments are made for the income tax exemption to apply.

Additionally, where reversionary income streams are intended, it is important that the designation of existing income streams to reversionary income streams doesn’t jeopardise other estate planning strategies that may be in place. This is particularly the case with respect to the quarantining of taxation components, whereby some strategies were undertaken prior to Better Super being implemented back in 2006/2007.

Following sold-out previous imprints, the SMSF Guide is now in its fourth edition. Find out more, and order your copy today.

Jemma Sanderson
Jemma
Sanderson
Jemma Sanderson, ATI is the author of the SMSF Guide 2012 and Principal / Representative with Cooper Partners Financial Services.

The Tax Institute is Australia’s leading professional association in tax. Its 13,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.

Monday, 25 June 2012

Territory reform sets example for states

Our nation’s Capital city, Canberra, usually only features on the stage of national political debate when used as a synonym to describe the Federal Government. This may be about to change with respect to reforming inefficient taxes.

You would be forgiven for missing it, but the ACT Government recently handed down its Budget for 2012-13. Included in the Budget was a five year reform plan towards a fairer, simpler and more efficient tax system. That’s right, a Territory (let alone a State) Government proposing to reform their own inefficient tax base and what’s more, without any caveats involving financial assistance from the Federal Government.

The States and Territories impose some of the least efficient and worst designed taxes in Australia. Stamp duty is a standout. Why is there a disincentive for people to move homes and locations for work purposes for example, with huge sums being payable as stamp duty on property conveyances? Insurance duties also create a perverse situation where people who are doing the right thing and insuring against risk are penalised with a tax on their insurance contracts.

Well, the ACT Government has now commenced a long-term plan of reform that includes an eventual phase-out of conveyance duties (over 20 years). The revenue to afford this will come from general rates, which the ACT is in a unique position of also levying due to its combined state and local government functions. The reforms also include abolishing duty on insurance policies over the next five years. Acknowledging this is a long-term process, the Government recognises that reform needs to be phased-in to avoid distortions in the market.

If the ACT can do it, why can’t its colleagues in the States do likewise? Perhaps an even bigger question to be answered is when will the Federal Government show leadership on the issue of Commonwealth-State relations? The Federal Government should bring the States on board and seize the opportunity to set a national vision for tax reform that includes the repeal of inefficient State taxes.

Robert Jeremenko
Robert
Jeremenko
Robert Jeremenko is Senior Tax Counsel of The Tax Institute.

The Tax Institute is Australia’s leading professional association in tax. Its 13,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.

Friday, 22 June 2012

Launching Australian tax professionals onto the world stage

By the time you read this month’s President’s Report, the exciting news about the Chartered Tax Adviser designation will have broken. It was my great privilege, together with Anthony Thomas, the immediate past president of the Chartered Institute of Taxation (CIOT), to make the announcement on Tuesday, 29 May 2012. Because the standards of our members match those of the CIOT, all of our members who are presently Fellows of The Tax Institute gain the Chartered Tax Adviser designation.

This achievement recognises the status and standing of our senior members in their tax advisory skills. Of course, responsibility accompanies status and recognition, and members who take up the new designation will be required to maintain higher levels of professional development activity than other members.

Our younger members often travel and live internationally to gain knowledge and experience. In future, their status as a Chartered Tax Adviser will bring them immediate recognition in the United Kingdom, Ireland and Europe as possessing superior tax skills and will favourably impress employers. It is expected that that recognition will extend to most other desirable employment destinations before too long, so that Chartered Tax Adviser will become a truly global designation and will be recognised as a hallmark of high levels of tax competence.

The advantages of Chartered Tax Adviser status are not limited to youth. Australian employers will soon come to recognise the skills and value that a Chartered Tax Adviser can bring to the role, and members of the public will learn to look to a "CTA" to manage their interface with the tax system. The opportunities presented by the new designation are almost endless.

Achieving the agreement with the CIOT has taken 12 months of hard work on both sides and, for this, we are indebted to our Chief Executive Officer, Noel Rowland, and to the CEO of the CIOT, Peter Fanning. Servicing the ongoing relationship between our Institute and the CIOT and the other tax bodies which join will be a very important job and I know it will be in safe hands with Noel.

It is important for members to recognise that this is an early step in The Tax Institute becoming a more outward-looking body internationally. International tax affairs have become commonplace, not just at the “big end”, but also in the experience of the bulk of our members in SME tax practices. The National Council is establishing an international committee to steer our present and future relationships with international bodies. In my opinion, the role of this committee will grow enormously in the future.

Ken Schurgott
Ken
Schurgott
Ken Schurgott is President of the National Council at The Tax Institute.

The Tax Institute is 
Australia’s leading professional association in tax. Its 13,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.

Wednesday, 20 June 2012

A mixed bag of tax announcements

The last quarter has been filled with movements on the tax front, largely owing to changes announced in the Budget, ongoing developments in relation to previously announced changes (such as Part IVA and transfer pricing reform) and more recently announced Board of Taxation reviews into problematic areas, such as a review of Division 7A and separate entity treatment for permanent establishments.

These announcements represent a mixed bag for our members. The Budget announcements winding back many of the previously announced tax reforms following the release of the Henry review such as the introduction of the standard deduction and a cut in the company tax rate represented a disappointing step away from important tax reform measures. Conversely, the Government’s announcement of the introduction of a limited carry-back of revenue losses is broadly a step in the right direction that will assist thousands of small to medium enterprises in tough economic circumstances.

More recently, at The Tax Institute's 5th Annual Tax Forum in May, we were very pleased to have the Assistant Treasurer, the Hon David Bradbury MP announce a post-implementation review by the Board of Taxation into the impact of tax laws on deemed dividend payments by private companies (i.e. Division 7A) in his keynote address.

This announcement represented a welcome and overdue recognition of the many ongoing problems with the application of Division 7A that our members have dealt with since the introduction of the Division. In addition to the myriad other issues with the application of Division 7A provisions, the ongoing problems caused by the ATO’s ruling on unpaid present entitlements make this area of the tax law ripe for reform.

The Tax Institute congratulated the Government on this announcement. The experience that the tax profession has had with these provisions will form invaluable input to this review. We will ensure that the scope of the review will be appropriately wide ranging and will allow extensive, open, public consultation on all aspects of Division 7A.

Deepti Paton is Tax Counsel at The Tax Institute

The Tax Institute is Australia’s leading professional association in tax. Its 13,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.

Monday, 18 June 2012

It’s time for trust tax reform

Last week The Tax Institute called on the Federal Government to recommit to the fundamentally important area of trust tax reform, given the recent months of apparent inaction.

As members are only too aware, the ongoing uncertainty around trust taxation is one of the top reform issues and the lack of a clear reform timeline is unacceptable.

The Government had originally committed to release its policy design paper last month. This hasn't happened, so with the reforms obviously requiring more time, the lack of an announced revised timeline is creating greater uncertainty over a complex, cumbersome and critically out-of-date area of the tax system.

In light of Treasury’s resource-constraints, it is disappointing to see the apparent lack of focus on a reform that will assist taxpayers by reducing their compliance burden.

We have called on the Federal Government to end the radio silence on the time schedule for reform and show renewed commitment to this project by immediately releasing a revised timeline. This would provide greater certainty to tax professionals and bring this critical area of taxation into the 21st Century.

The findings in the recent Greenhatch case serve to again remind us of the overly-complex nature of the taxation on trusts. Such decisions have highlighted the ongoing compliance difficulties faced by the 600,000 trusts in Australia, many of which are used by charities, individuals and small to medium businesses. These compliance difficulties often have far-reaching and adverse implications for many Australians, clearly illustrating the urgent need for reform in this area.

Robert Jeremenko
Robert
Jeremenko
Robert Jeremenko is Senior Tax Counsel of The Tax Institute.

The Tax Institute is Australia’s leading professional association in tax. Its 13,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.

Friday, 15 June 2012

Media release: Delay of overdue trust tax reform unacceptable

The Tax Institute has called on the Federal Government to recommit to the fundamentally important area of trust tax reform after months of eerie silence and further delays.

According to Robert Jeremenko, Senior Tax Counsel at The Tax Institute, ongoing uncertainty around trust taxation is one of the top reform issues for tax professionals in Australia and the delay in implementing reforms is unacceptable.

"According to their own timeline, the Government had committed to release its policy design paper by May this year.

"Instead the process is already behind schedule creating greater uncertainty over a complex, cumbersome and critically out-of-date area of the tax system.

"Since the release of the initial Consultation Paper in November 2011, the reform has largely stalled to the detriment of a significant number of taxpayers dealing with ongoing complexity and uncertainty."

"In light of Treasury’s resource-constraints, it is disappointing to see the lack of focus on a reform that will assist taxpayers by reducing their compliance burden."

"The Tax Institute calls on the Federal Government to end the radio silence and show renewed commitment to this reform project by immediately releasing a revised timeline, thereby providing greater certainty to Australian tax professionals and bringing this critical area of taxation into the 21st Century," he said.

The findings in the recent Greenhatch case serve to again remind us of the overly-complex nature of the taxation on trusts.

"Such recent Court decisions have highlighted the ongoing compliance difficulties faced by the 600,000 trusts in Australia, many of which are used by charities, individuals and small to medium businesses. These compliance difficulties often have far-reaching and adverse implications for many Australians, clearly illustrating the urgent need for reform in this area."

The Tax Institute is Australia’s leading professional association in tax. Its 13,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.

Please visit our website for media enquiries.

Thursday, 14 June 2012

CTA – a new global tax designation

A global designation for members of The Tax Institute

In recognition of the standards of excellence in our programs and the reputation of our members for their tax expertise, on 29 May 2012, The Tax Institute launched the global tax designation Chartered Tax Adviser (CTA) in Australia.

Exclusive to members of The Tax Institute, this initiative is the result of the signing of a licensing agreement between The Tax Institute and the Chartered Institute of Taxation (CIOT) in the UK.

Until this year, the Chartered Tax Adviser designation was held only by members of the CIOT, but it has been extended in a bid to recognise and promote the highest standards of tax advice internationally. The Tax Institute is only the third tax body to be granted the ability to designate its members as Chartered Tax Advisers.

For more information on the launch and how the new designation affects you, visit our dedicated web page.

The mark of expertise

The Tax Institute and its members are known for delivering the very highest standards in tax. To emphasise this, in addition to the launch of the new designation, The Tax Institute has adopted the tagline, "The Mark of Expertise".

As an expression of what the Institute and members stand for, the tagline describes to clients, employers and newcomers to the profession that they are dealing with the best and brightest in tax.

The Tax Institute – a top performer

As in previous years, the Institute has participated in the Annual Business and Professionals Study (ABPS), conducted by Beaton Consulting, to assist us in identifying areas where there may be scope to improve member services and add value to membership.

The key findings confirmed that we were basically "getting things right". In the previous year, the Institute was a top performer in member engagement, in providing access to information and in supporting the development of knowledge. This year, there was further significant improvement in the Institute’s score in almost all attributes measured (including a positive shift in building the standing of members).

We are pleased to see from this year’s results that the actions taken by the Institute as a result of feedback from members has paid off. We thank all members who participated in the survey for their feedback to help us continually improve our services.

Noel Rowland
Noel
Rowland
Noel Rowland is Chief Executive Officer of The Tax Institute.

The Tax Institute is Australia’s leading professional association in tax. Its 13,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.

Tuesday, 12 June 2012

Leading the fight against retrospective tax law

Early last week the House of Representatives Standing Committee on Economics inquired into the Bill containing the retrospective changes to TOFA and the consolidation rights to future income rules.

The Tax Institute was the only professional association to take the fight against retrospectivity to the Committee in the form of a detailed submission. We were also the only witnesses (with Treasury) called to present evidence in person to the Committee.

A big thank you to both Peter Murray FTI (Life) (KPMG) and Andrew Hirst FTI (Greenwoods & Freehills) who joined me at the Committee hearing and lent their expert knowledge. Please refer to Hansard for the draft transcript of the hearing. The Committee will table its report including recommendations concerning the future of the Bill on 18 June and I will keep members updated.

Last week I also attended the bi-annual Treasury stakeholder consultation meeting. I led discussion on the topic of "tax policy and legislation consultation processes". I took the opportunity to raise members' concerns with various extremely short consultation periods on proposed tax law changes.

I also discussed the issue of stalled tax reforms and suggested areas of improvement for Treasury when consulting on policy changes, such as with the next round of the Business Tax Working Group. In addition, I spoke on the prevalence of retrospective legislative change and its abhorrence to tax professionals and the wider taxpaying community.

Robert Jeremenko
Robert
Jeremenko
Robert Jeremenko is Senior Tax Counsel of The Tax Institute.

The Tax Institute is Australia’s leading professional association in tax. Its 13,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.

Monday, 4 June 2012

Discouraging retrospective legislative changes

There was a lot of "running around" in Federal Parliament last week, including with respect to tax legislation. As I mentioned previously, the Government introduced a significant amount of tax legislation into the House of Representatives. With respect to the Bill to enact the previously announced changes to the consolidation rights to future income rules and TOFA changes, last week saw the The Tax Institute's continuing advocacy against such retrospectivity result in that legislation being referred to the House of Representatives Standing Committee on Economics for further inquiry.

Peter Murray FTI (Life) (KPMG) and Andrew Hirst FTI (Director) (Greenwoods & Freehills) will join me in presenting evidence to the Committee today in Canberra. Members are welcome to watch or listen to the web stream of the proceedings.

The importance of tax laws to taxpayer decision making and behaviour cannot be underestimated. As such, The Tax Institute strongly supports working within a framework of guiding principles when introducing tax laws in order to provide taxpayers with greater certainty in relation to their tax liabilities and affairs. Of these principles, among the most fundamental is that legislative changes should not apply retrospectively except in very specific circumstances and after thorough public consultation.

We will be elaborating on this and other matters in the context of the consolidation and TOFA changes at the Committee hearing.

Robert Jeremenko
Robert
Jeremenko
Robert Jeremenko is Senior Tax Counsel of The Tax Institute.

The Tax Institute is Australia’s leading professional association in tax. Its 13,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.