Wednesday, 29 August 2012

3 great ways to meet your tax CPD obligations in August

Education

With study period 2 about to commence, early enrolments are now open for study period 3 for our Course in Australian Taxation Law.

The Course in Australian Taxation Law qualification — achieved through the completion of the Certificate in Foundation Tax and Certificate in Applied Tax courses — provides your staff with the practical skills required to quickly pick up and apply Australian tax law concepts in the workplace, making them an asset to your firm sooner.

Early bird enrolments for both courses close on 9 October 2012. Visit our website for more information.

Continuing professional development

All tax professionals need to keep informed about the changing landscape of tax. The listings below are just a small sample of the more than 350 CPD events that the Institute runs each year.


The Tax Institute also offers a range of CPD seminars on DVD, enabling you to bring the event direct to your office or boardroom while earning CPD hours. For a full listing, visit our website.

New titles from The Tax Institute

In addition to the new editions of Discretionary Trust Distributions and Estate & Business Succession Planning, our Publishing team is preparing the 2012-13 editions of the Division 7A Handbook and CGT: Small Business Reliefs for release in the next couple of months.

As always, you’ll find more information on our website. If you’re using the online versions of these or any of our books, you’ll now find them easier to access on our website via “Online Books” in the “Online Resources” main navigation tab. We’ve also redesigned the access portal for each of our titles, making them easier still to use.

We are committed to equipping tax professionals with everything they need to demonstrate the highest level of expertise.

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.

Monday, 27 August 2012

A sorry saga of retrospectivity

Recently, both the Senate and House Parliamentary Economics Committees reported with respect to their inquiries into the Transfer Pricing and Living Away From Home Allowance changes respectively.

Members may recall that The Tax Institute appeared before these Committees in order to express our strongly-held concerns.

With regards to the LAFHA changes, the House Committee recommendations essentially resulted in the legislation being sent back to the drawing board. Our arguments that the tax treatment of LAFHA should be determined either in the context of the income tax laws, or the FBT laws, but not both (as was proposed by the Bill) was accepted by the Committee.

They also recommended clarification around the circumstances in which transitional relief would still be provided as we had suggested.

In recent days the Government has amended the legislation to take account of the Committee's concerns and the Bill has now passed the Lower House.

On Transfer Pricing, the Senate Committee did not support our arguments against the retrospective application of the legislation. The Bill was then debated in the Senate and despite the Coalition moving an amendment to scrap the retrospective application, the Bill passed without any changes.

Unfortunately this is yet another step in the Government's sorry saga of retrospectivity.

Just as we have done with these Bills, The Tax Institute will continue to argue for the best outcome for the tax system as a whole. We look forward to members' ongoing support.

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.

Wednesday, 22 August 2012

The psychology of voluntary compliance

I have mentioned before in this column that one of the privileges and pleasures of being national president is the opportunity to attend national and state conventions. This month, it has been the State Taxes Conference in Perth. The State Revenue Offices give their unstinting support to this conference and The Tax Institute is extremely grateful for that support.

One of the papers this year, presented by Jim Richards from the Northern Territory Revenue Office, was about the psychology of voluntary compliance and how revenue authorities internationally are going about altering the mindset of populations so that compliance is seen as the norm.

It was not about the usual approach of "the carrot and the stick", but a study of approaches that focus on convincing taxpayers that compliance is business as usual. A key message was that revenue authorities should regularly acknowledge that the great majority are doing the right thing. This encourages people to accept that compliance is the norm and the preferred behaviour.

I thought this was a good message but, on reflection, realised that the Australian revenue authorities fall far short of this in the area of trust taxation (whether state or Commonwealth). The messages we receive, both express and implicit, are that trusts are rorts. It is not the right message, as the vast majority of trusts are compliant and used quite appropriately in commercial and family transactions.

This is the message that should be widely conveyed and the revenue authorities (and the press, which will eventually get the message from the authorities’ behaviour) should be encouraged to spread that message.

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.

Sunday, 19 August 2012

To company tax or not to company tax?

Last week saw the release of the much anticipated options paper of the Government's Business Tax Working Group. The paper discusses the benefits of reducing the company tax rate and suggests 23 options to pay for it. These would broaden the business tax base, by reducing or removing various tax concessions; the three categories identified are: interest deductibility (including thin capitalisation), depreciating assets and capital expenditure (including capped effective lives), and the R&D tax incentive for turnovers in excess of $20 million.

So the question in some ways becomes: to company tax or not to company tax?

The Government's ground rules are clear: some business tax breaks will have to go if we are to reduce the company tax rate. This means some hard questions will need to be debated and answered. One of the most important is: how badly do we actually want a company tax cut?

A cut in Australia's company tax rate will deliver economy-wide benefits that are necessarily in the national interest. As a result, The Tax Institute supports reducing the company tax rate in the medium term from its current 30% to the 25% recommended by the Henry tax review. In addition to increasing Australia's attractiveness as a destination for foreign investment, a 25% rate is comparable to rates in similar sized OECD countries. A mooted 28% rate would be a step in the right direction and Australians across the board will stand to share in these benefits.

A wealth of reliable evidence indicates that the incidence of company tax falls on employees. This means that reducing the burden of company tax is expected to result in companies passing on the benefits to their employees either in the form of increased wages or additional recruitment - increasing productivity and employment.

A company tax cut would also reduce taxes on investment, driving an increase in savings and capital as well as innovation and entrepreneurship - all outcomes that are indisputably in the interests of all Australians. Such a cut would also reduce the incentive for profit shifting out of Australia, allowing us to retain a greater share of the profits generated here in Australia.

Herein lies the rub - despite considerable future benefits, the company tax rate cut still has to be paid for today, and out of the business tax system. This will result in one of those inevitabilities of significant tax reform: short term winners and losers.

Negotiating this tricky situation requires significant community input and the maturity to consider the national interest ahead of the specific interest. The Tax Institute encourages vigorous, frank and honest debate about the merits of both the company tax rate cut as well as the various offsetting measures presented by the Working Group. Only through honest conversation can we achieve an outcome.

However, the context of this debate must be to view tax reform through a whole of tax system lens. We need to ask a number of tough questions - does our tax system inappropriately favour particular types of activities by way of tax concessions? As a result are business decisions being inappropriately influenced towards less productive outcomes?

In addition, where Australian tax concessions are currently more generous than comparable overseas jurisdictions, how appropriate are our policy settings in light of the economy-wide benefits to be gained from trading off the level of such concessions for a company tax cut? A broader tax base and a lower rate are positive outcomes.

We cannot allow those who may view the removal of a concession as a short-term loss, to lose sight of the overall benefit to the Australian economy of a company tax cut. After all, we may only get one shot at this in the foreseeable future.

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.

Thursday, 16 August 2012

Social media for tax professionals

Social media is changing how we communicate. Want some hints and tips on how you can use social networks to enhance your business and your professional development? Read on.

What is social media?

Social media is an umbrella term that encompasses any media, generally online, that facilitates social networking – the interaction and sharing of content and user experiences.

You’ve probably heard of things like blogs, Facebook, Twitter and LinkedIn. And chances are you’re like 62% of Australians1 and are using these networks, probably on a daily basis. But did you know that social media can be used to enhance your career and even your professional practice?

How can it benefit my career?

By building an online presence using social media, you can raise your professional profile. Social media, like other forms of networking, is a valuable way to build your connections and reputation within your industry. By expanding your network, you will open yourself up to new career and business opportunities.

Join the conversation, engage with others, build your following and come to be considered an authority in your industry.

How can it benefit my practice?

Giving your practice a presence on social media is becoming more and more important. According to recent Sensis data, 27% of small and 34% of medium businesses have a social media presence and, of these, 71% of businesses indicated that their investment in social media contributes to increased sales.

With the use of websites like LinkedIn and Twitter having doubled in the last 12 months, it’s clear that social media is growing in importance as a marketing and professional development device.

Actively participating in social media on behalf of your business can help you to:
  • build your business’ profile and increase the exposure of your services
  • increase the traffic to your website
  • demonstrate expertise
  • generate leads
  • better understand the needs of your clients and potential clients
  • manage and enhance client relationships and business partnerships.
How will people know where to find me?

The fastest and most effective way to publicise your business’ social media accounts is to first and foremost connect with other professionals and businesses in the tax profession. Join the conversation and followers will come.

Additionally, you can link to your accounts from your website, email signature and include the web addresses on your business cards.

How do I get started?

Signing up to Twitter, Facebook and LinkedIn is the easy part. What happens once you’ve got your profile set up? Do you need a social media strategy? How do you use each network and how do you make sure you’re using the right network for your business or industry?

In the coming months, we’ll feature articles on getting started with each of these social networks and give you tips on how they can be used to enhance the way you do business.

New to social media?

Connect with The Tax Institute and join the conversation.

Like us on Facebook
Follow us on Twitter
Join us on LinkedIn


Next month: Getting started on Twitter.

Reference 1 Sensis, Yellow Social Media Report, June 2012.

Wednesday, 15 August 2012

Prize winners and what’s on in August

Tax rates table 2012-13

In this month’s journal, you’ll find your free copy of the Institute’s handy desktop tax rates table — an indispensable aid for access to the most commonly used tax rates at your fingertips, including the Medicare levy, tax offsets, superannuation, eligible termination payments, FBT, CPI indexes, and more.

What’s on in August

Also available is our new "what's on" guide. Designed to keep you up to date with what’s happening at The Tax Institute, it will ensure that you don’t miss any key events, enrolment dates or product offers.

Join the conversation

Social media is about connecting people and sharing information, and is quickly changing how The Tax Institute communicates with its members. Keep an eye on our blog over the coming months if you are new to social media or want some hints and tips on how you can use social networks to enhance your business and your professional development.

To get started, and to stay in touch with all the latest tax news, discussion and insight, follow us on Twitter or join our growing fan base on Facebook.

You can also find our Tax Policy and Research Team, including Senior Tax Counsel Robert Jeremenko (@RobertJeremenko), Tax Counsel Deepti Paton (@Deepti_Paton), and Tax Counsel Stephanie Caredes (@StephCaredes), on Twitter and follow the work they are doing to influence federal and state tax policy and administration.

Membership renewal early bird winner

Congratulations to Mr Greg Jowala Singh, ATI, of Anglo American for winning the membership renewal early bird prize draw. Just for renewing his membership online, Greg has won $5,000 in a Day to Day account with HSBC Bank Australia. Thanks to all of our members who entered, and to our business alliance partner HSBC for the generous prize.

Don’t forget that qualifying members of The Tax Institute have until 30 September 2012 to apply for the globally recognised Chartered Tax Adviser (CTA) designation and receive advance standing for the Chartered Tax Adviser exam.

Tax Knowledge eXchange

Another congratulations goes to the two most recent winners in our Tax Knowledge eXchange 10th Anniversary celebrations: Richard Allen, FTI, Principal with Allen & Co Accountants in Unley, South Australia; and Sheila Cabacungan, Financial Planner with Carnegie Financial Planning in Parramatta, NSW.

For your chance to win one of the six remaining free subscriptions, visit our website and register for your free trial.

Finally, welcome back to all the thousands of renewing members of The Tax Institute – Australia’s leading professional association in tax.

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.

Monday, 13 August 2012

Improving access to company losses

On 18 July the Assistant Treasurer released a discussion paper on "Improving access to company losses", which is the loss carry-back measure announced just prior to the Budget this year.

While most of the details in the paper were expected, the inclusion of a proposed integrity measure akin to the current Continuity of Ownership and Same Business Tests was surprising. The Tax Institute advocated strongly in our submissions to the Business Tax Reform Working Group for these tests to be simplified if they are going to continue to be relevant.

Our submission on the 18 July discussion paper was lodged on 6 August. In it we say that we are broadly supportive of the Government's announced policy intention to introduce a limited loss-carry back.

As we have noted previously, in our view a limited loss carry-back is a positive step towards helping substantial numbers of businesses face increasingly uncertain conditions.

Nevertheless, we are concerned by the proposals in relation to the suggested suite of integrity rules that must be satisfied before a loss may be carried-back. Our concern stems from two factors:

  • The current Continuity of Ownership Test and Same Business Test despite being familiar, are nevertheless complex, unwieldy and costly to apply and should therefore be limited in application rather than extended, at least in the longer term; and
  • The integrity risk underpinning the supposed need for integrity rules in this context is overstated. To the extent that integrity rules are considered necessary to curb 'trafficking' in defunct companies laden with prior year income and franking credits (and other such behaviours), an extension of the current Part IVA should in our view provide sufficient protection.

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, 10 August 2012

Two minutes with Gil Levy, CTA (Life)

Gil, can you give us a quick career snapshot?

After leaving school in 1964 I spent two and a half years as an audit clerk/delivery boy at the then Wilson Bishop Bowes and Craig. A potential doubling in salary plus five hours a week off to study induced me to the Taxation Office for six and a half years where I finished my Commerce Degree at UNSW.

A desire to travel followed and as the ATO had cancelled leave of absence I resigned to rejoin my old firm to head note Tax Cases for Butterworth’s under Ted Mannix and Don Harris.

Following a merger of the Sydney office of the firm with PWC I was offered a partnership to stay and help re-start the firm in 1976. In 1980 the firm merged with GT Hartigan to become PKF and in 1992 the Sydney office of PKF merged with Arthur Andersen.

Arthur Andersen encouraged me to become more involved with The Tax Institute, affording me the opportunity and privilege to become president in 2003. Through my involvement with The Tax Institute I became involved with the Asia Oceania Tax Consultants Association (AOTCA) and am in my final year as president.

Andersen collapsed in 2002 and along with Vince Hourigan we started the Sydney office of MGI firstly as a branch of the Melbourne firm and as an independent member from 1st July 2008.

I have been fortunate to be able to continue an uninterrupted career as a tax adviser for some 48 years and have no plans to stop anytime soon.

You will be presenting on "Structuring and Restructuring of the Growing Business" at the upcoming 20th National Tax Intensive Retreat. What are some of the things delegates can expect to take away from your presentation?

In one iteration or another over the years, this has been a recurring subject at Tax Institute seminars.

My paper will attempt to introduce the delegates to some of the issues and opportunities I have encountered in practice along with a reintroduction of some older concepts e.g. the ability to assign an interest in a partnership using a CGT roll-over provision.

The potential re-emergence of a company as a preferred vehicle will be looked at in the context of the operation of Division 7A of the 1936 Act. The benefits and constraints of various CGT roll–over provisions and the issues with consolidation after a roll-over will also be a focus.

What brings you back to Noosa year after year?

I was very much involved in the planning and participated as a discussion group leader in the first National Intensive in Port Douglas in 1994.

This was driven by a desire to provide a high level forum based on plenary papers playing a "scene setting" roll followed by in-depth discussion in small groups to further explore the topic. That basic format continues today and is to my mind the preferred format at this level which brings me back every year.

Which other sessions are you looking forward to attending?

I am looking forward to attending all the sessions. I see my paper as somewhat setting the scene and raising the issues which will be examined in more detail in the following presentations.

And finally, what do you get up to in your non-tax time?

Apart from my dear wife Christine and our two now adult children Alexandra and Mark I have four passionate interests: travel, golf, alpine skiing and sports cars. I always have a book on the go (a recent Kindle convert) and have just finished Peter Fitzsimons' Those Magnificent Men.

20th National Tax Intensive Retreat
20th National Tax
Intensive Retreat
Gil Levy, CTA (Life) is Principal at MGI Sydney and will be presenting at the 20th National Tax Intensive Retreat.

Renowned for its exemplary technical content, interactive workshops and the unbeatable Noosa location, the annual Tax Intensive Retreat is one of The Tax Institute's most popular events.

Wednesday, 8 August 2012

Evasion – who should bear the “burden of proof”?

Evasion is a matter of great concern in our tax system and the Commissioner of Taxation is given exceptional powers to detect and deal with those who choose to evade their social responsibilities. In the main, the Commissioner uses his great powers wisely. However, in my long experience as a legal practitioner working in the SME area, recently, there has been a growing tendency to conduct audits spanning many years. The most egregious example I have experienced is 23 years.

Beyond the four-year period (or two-year period for small business taxpayers), an amendment is only possible if the Commissioner forms the opinion that there has been fraud or evasion. Recently, the Commissioner seems more ready to form that opinion based on suspicion rather than fact. The burden of demonstrating that the assessments are incorrect and what is the correct assessment is then cast on the taxpayer.

My main complaint here is that often the problem of discharging this burden depends on the production of receipts, documents and records which have been legitimately discarded in accordance with the statutory retention period. For income tax purposes, the usual retention period is five years for a taxpayer carrying on a business. Records relating to transactions subject to capital gains tax must be kept from the date of acquisition to the date of the CGT event and five years beyond. My concern here is with normal trading and not capital gains.

Often, a tax audit for a period beyond the four-year period will require a taxpayer to demonstrate that some amount received (as shown in bank statements, which never seem these days to be discarded by the banks) is not income or some expenditure is not sourced from income (for example, identified in the bank’s records of credit card transactions) and the records become critical. If the personal records have been discarded by the taxpayer consistently with the statutory retention period, it then becomes near impossible for the taxpayer to demonstrate that there had been no evasion.

It is time that the Commissioner’s ability to rely on a lack of information, where that information has been discarded consistently with the retention requirements, to succeed in out of time amendment cases, is critically examined. The right to amend out of time should be brought into line with the retention period. This might be done in a number of ways. One approach, and the one I prefer, is to reverse the burden of proof when the amendment relates to a period after the statutory retention period.

This would curtail the Commissioner’s enthusiasm for issuing out of time amendments based on mere suspicion of evasion. It is time that the legislature focused on this issue and brought fairness and certainty to taxpayers potentially beset with the crippling costs and emotionally distressing conduct of an audit where records are no longer kept and not required to be kept in accordance with the law.

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.

Monday, 6 August 2012

Trust tax reform…from 2014

After months of silence from the Government on a revised timeline for the trust tax reform project, last week tax practitioners received confirmation that indeed the project is on track, albeit with a July 2014 proposed commencement date for the new law.

Members will recall that The Tax Institute has been very active in ensuring the Government's commitment to reform the trust tax laws remains. It is a fundamentally important area of the law and one that consistently rates as a top reform priority for tax professionals. The reform must transform this critical area of taxation into a 21st Century version of the law.

We will continue to consult widely on the proposed reforms throughout the life of the project and welcome members' input.

Please feel free to contact us at Tax Policy.

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.

Wednesday, 1 August 2012

Two minutes with Moira Merrick, CTA

Moira, can you give us a quick career snapshot?

I began my career in tax in 1998 when I joined a second tier firm’s tax division. I moved to Deloitte in September 2007, spent 12 months in corporate tax and then transferred to the National Tax Technical Group in 2008.

You will be presenting on "Extracting Value" at the upcoming 20th National Tax Intensive Retreat. What are some of the things delegates can expect to take away from your presentation?

I hope that delegates will come away from my session with:

  • an understanding of how they should navigate their way around the current landscape for earn-out arrangements
  • a practical insight into the typical tax issues that should be considered when using a share buyback as part of a restructure and
  • a good grasp on what has been happening around company dividends over the last 12 months.

What brings you back to Noosa year after year?

Noosa is simply beautiful. The tax intensive has a workshop focus (where numbers are limited), so the forum is perfect for catching up with the regulars as well as meeting newcomers. It has a certain "vibe".

Which other sessions are you looking forward to attending?

All of the sessions look great, but I am looking forward to seeing Gil Levy present because it seems years since I last saw a Gil presentation. I don’t advise about superannuation, but from a personal perspective I am very interested to hear Suzanne MacKenzie’s presentation as I believe she has some interesting strategies.

And finally, what do you get up to in your non-tax time?

I actually like going to Noosa for holidays as well as for tax intensives. My husband and I follow Geelong in the AFL, so we like watching finals footy. Otherwise, I enjoy doing yoga, walking and cycling.

20th National Tax Intensive Retreat
20th National Tax
Intensive Retreat
Moira Merrick, CTA is Account Director in the National Tax Technical Division of Deloitte Touche Tohmatsu and will be presenting at the 20th National Tax Intensive Retreat.

Renowned for its exemplary technical content, interactive workshops and the unbeatable Noosa location, the annual Tax Intensive Retreat is one of The Tax Institute's most popular events.