Monday, 26 November 2012

Part IVA general anti-avoidance rule changes

It was late on a Friday afternoon a couple of weeks ago that the Government decided to demonstrate that it truly believes in a transparent and open policy debate by releasing the exposure draft of the Part IVA general anti-avoidance rule changes.

Foreshadowed by the former Assistant Treasurer in March this year, this is the first opportunity that the community has had to see the draft detail of the changes.

Despite the Government's attempt to minimise any media coverage of the announcement, The Tax Institute issued its media release in response that same afternoon.

The Government's proposed changes to the general anti-avoidance rule are an overreaction to recent court cases. The sweeping changes will increase taxpayer uncertainty and negatively affect already dwindling business sentiment.

The proposed changes extend well beyond the Government's announced intention of correcting minor defects in the law highlighted by recent court cases. By changing laws that have been in place for more than 30 years and have been extensively ruled upon by the courts, there is significant potential for widespread confusion and uncertainty.

The general anti-avoidance rules in the income tax law have always been intended to prevent blatant, artificial and contrived tax avoidance behaviour. However, under the Government’s proposed changes, the current tax benefit test will be significantly diminished, requiring taxpayers to consider the difficult 'dominant purpose' test in almost all cases where tax considerations have been taken into account when making commercial decisions.

The proposed tightening of the rules is an unnecessary overreach by the Government that will take years of costly court proceedings to fully realise. The impact on taxpayers who have limited resources to challenge the views of the Tax Commissioner should not be underestimated.

In a welcome and sensible decision, the Government's proposed changes will now be effective from 16 November 2012 rather than having retrospective effect to March 2012 as was originally intended.
It is worth noting that while the Australian anti-avoidance rules are needlessly tightened, comparable jurisdictions, like the United Kingdom, have opted for more sensible rules in order to encourage and not stifle business activity.

Find out more at our Part IVA - Announcements sesssions being held around Australia in November and December 2012.

Robert Jeremenko
Robert
Jeremenko
Robert Jeremenko CTA 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, 21 November 2012

The benefits of face-to-face CPD

The Tax Institute’s National Council has observed that a shift appears to be taking place from the time-honoured face-to-face professional development events to structured education and remote learning. Perhaps this is inevitable as technology takes hold and a new generation of tax adviser emerges.

However, there is still a lot to be said for the collegiality of the CPD events. They have served us well for nearly 70 years and have assisted many callow tax advisers to grow into the well-rounded experts that they are today. Your president can look back over 30 years or so of time well spent (and a little not so well spent) at national and state conventions. These events are where the generations pass on the ability to master not only tax technical content, but also how to behave with clients and, more importantly, with our peers.

This conveniently segues into my final topic, the privileged position of the president when attending state conventions.

This last month, it has been the Victorian and Tasmanian State Conventions. Both were held in very desirable locations, Lorne and Cradle Mountain, although the weather could have been kinder. Congratulations to the organising committees for putting on events of such high calibre with excellent speakers on topics of continuing importance to our members.

Most memorable was a workshop put together by Graeme White on streaming which I hope will be rolled out nationally as streaming 2013 bites.

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, 19 November 2012

The Tax Institute welcomes Chris Jordan as the next Commissioner of Taxation

With the announcement last week that Mr Chris Jordan AO will be the next Commissioner of Taxation, one of the big questions in tax administration in this country has been answered. From 1 January next year the ATO will have its first private sector Commissioner at the helm in a hundred years.

The Tax Institute has welcomed the appointment of Chris Jordan as the new Commissioner.

We see it as a fresh injection of private sector experience at the helm of the ATO. Given that the ATO is one of the largest and most significant Australian Government agencies, it is important that it continues to strengthen existing ties with the private sector.

Chris' many years of service on the Board of Taxation, most recently as its Chairman, are evidence of his ability to bring significant private sector expertise to bear on tax policy and administration.

With the Government's promised (but not yet delivered) Tax System Advisory Board set to oversight the ATO on its management functions, the new Commissioner will import significant private sector management learnings into the ATO's operations and governance.

The Tax Institute looks forward to continuing our long-standing and productive relationship with Chris in his new role as the Commissioner.

Ultimately, the best decisions are made with the most accurate information to hand and Tax Institute members are best placed to play a significant role in ensuring this occurs.

Robert Jeremenko
Robert
Jeremenko
Robert Jeremenko CTA 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, 16 November 2012

New online and offline CPD from The Tax Institute

2012 Annual Business and Professions Study

As mentioned last month, The Tax Institute has once again participated in the 2012 Annual Business and Professions Study conducted by Beaton Consulting. For those of you who completed the survey via email, your responses are very much appreciated. The results, available in 2013, from the survey will assist us in identifying areas where there may be scope to improve member services and add further value to membership.

Tax Knowledge eXchange

Congratulations to the latest winner in our Tax Knowledge eXchange 10th anniversary celebrations. Peter Tsang, Partner with Peter Tsang & Lee in Burwood, NSW, has won a free subscription to Australia’s leading tax knowledge base.

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

New titles from The Tax Institute

Don’t forget, we publish the Division 7A Handbook 2012-13 in October, and if you place your pre-order before 19 October, you’ll save 15%.

TASA 2009 and the Code of Professional Conduct

Did you know that all tax and BAS agents work under the Tax Agent Services Act 2009 (TASA 2009) and the Code of Professional Conduct?

To ensure that you meet the new requirements, you may like to think about completing the TASA 2009 and Professional Code of Conduct online course. Completing the course will give you in-depth practical knowledge of the Code of Professional Conduct, an understanding of how to comply with the regulations, and practical tips on maintaining and protecting your ongoing registration as an agent.

Online tax research sessions

Did you know that the Institute offers online tax research sessions? Learn how to navigate the internet and find the information you need.

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.

Wednesday, 14 November 2012

Social media for tax professionals: getting started with Facebook

Discover how to use Facebook to build your business and generate leads.

What is Facebook?

Facebook is the most popular social networking service on the internet, with over one billion active users. It allows users to create a personal profile, upload images and videos, share their thoughts through status updates, and connect and keep in touch with friends and family.

Unlike other social networking sites like Twitter and LinkedIn, Facebook is more personal and the platform makes it easier to deliver many different types of content, including videos and images.

Why get involved?

Chances are you have a personal account on Facebook. While you may or may not use this for networking related to your business, taking the next step and creating a page (as opposed to a profile) for your business will help gain you visibility, help build relationships and develop new ones, and make your services more accessible for your clients.

According to Facebook for Business, over one billion people “like” and comment an average of 3.2 billion times every day. Having a presence means becoming part of the conversation and functions as free advertising — by the strength of word-of-mouth recommendations.

How to get started

Creating a Facebook page is free, and the only requirement is that you have a personal profile set up. You should use your logo as your profile picture, and your cover photo should clearly represent your brand and the products and services you offer.

Once you’ve set up your profile, you’re ready to create your first post. Upload images or videos, add links to your company website, and use your page to keep your followers in the loop with what’s new or interesting in your field. Users who “like” your page will see these updates in their news feed when they log in to Facebook, so be mindful of keeping things short and sweet.

Build your network

Build your network by inviting people you know to “like” your page. Link to your Facebook page from your company’s website, and include the address on your business cards, in your email signature and in other marketing collateral. And if you’re serious about increasing your following, consider investing in Facebook ads for a short period.

Engage your audience

Uploading content to your Facebook page and interacting with your followers by answering their questions and prompting engagement helps to further build your network, encourage loyalty among your clients, and can help create leads in order to generate sales.

To keep your audience engaged, post on your page regularly. Upload events and post links that would be relevant to your followers. Encourage people to “like” your posts by asking questions.

Don’t forget to keep an eye on Facebook insights — these are metrics for your page that allow you to see what’s working and will give you an overview of who is engaging with your content.

For an in-depth guide on building a successful Facebook page for your business, download Facebook Pages Product Guide for more information.

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

Monday, 12 November 2012

How much do proposals really cost

Last week saw the Government and Opposition trade blows on leaked Treasury costings, bringing into sharp focus the question that has dominated tax policy discussions for years: how much do proposals really cost?

With the forecast of a wafer thin Budget surplus this year, the cost of tax measures has played an increasingly central role in policy decision making. The importance of costing measures appropriately cannot be understated - everyone involved in developing tax policy has been forced to deal with the consequences of significant changes in actual versus projected costs of tax measures.

The current Treasury costings process is thorough, but it is understandably limited by the nature and availability of data. In an economy undergoing significant structural changes, data may be significantly out of date by the time it is used to cost a proposed measure. This combined with the use of the four year forward estimates period may not allow the full impact of each measure to be properly considered.

The Tax Institute recently wrote to the Assistant Treasurer, The Hon. David Bradbury MP, advocating greater private sector input into the Treasury costings process to ensure that commercial insight and understanding is taken into account in addition to historical data. We will also continue to engage in ongoing dialogue with Treasury in relation to the same.

Ultimately, the best decisions are made with the most accurate information to hand and Tax Institute members are best placed to play a significant role in ensuring this occurs.

Robert Jeremenko
Robert
Jeremenko
Robert Jeremenko CTA 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, 9 November 2012

Death and taxes – free presentation

Increasing numbers of Australians are disposing of significant wealth through their wills. Accountants and lawyers are therefore frequently encountering large estates, where the executors may incur significant taxation liabilities, depending upon how they administer the estate.

In this presentation Michael Flynn, CTA, outlines strategies for minimising tax liabilities that may arise in administering deceased estates. Download Michael’s presentation free below, and read on for a special offer on Estate & Business Succession Planning 2012-13.

Michael’s presentation covers:

  • when are beneficiaries presently entitled to estate income? 
  • tax consequences of realising assets 
  • varying the terms of a will after death 
  • obtaining endorsement for estates with tax exempt beneficiaries 
  • distributing assets to tax exempt and non-resident beneficiaries 
  • injecting income and capital into testamentary trusts
  • CGT main residence exemption 

Download this presentation free [PDF]. For a more complete picture, you can purchase the accompanying paper on our website.

Providing a thorough overview of succession planning laws in every Australian jurisdiction, including updated coverage of the tax consequences of death; wills and powers of attorney; and family law and death, Estate & Business Succession Planning 2012-13 is available for a limited time at 20% off.

Find out more and place your order by downloading the order form [PDF].

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, 7 November 2012

Introducing The Chartered Tax Adviser Program

28th National Convention – Perth

This month, we launch the Institute’s premier annual taxation event, the 28th National Convention. In 2013, it moves to the Perth Convention and Exhibition Centre from 13 to 15 March. As always, the convention will cover the very latest technical content and will have ample networking opportunities and an expo showcasing exclusive offers from our business alliance partners.

Held over three days, this is your opportunity to choose from over 30 sessions, hear from experts with real practical insight, network with presenters, colleagues and peers, and explore the Western Australia capital.

This is a must-attend event. I look forward to seeing you there!

The future of the tax profession and you

Throughout November, we are holding Chartered Tax Adviser information sessions in most capital cities.
If you want to better understand what it means to be a CTA, I encourage you to attend one of these sessions. I also encourage you to invite colleagues who are not CTAs so that they can make an informed decision about the future of the tax profession and their role in it.

At these sessions, we will also explain the pathways to the designation, and the new Chartered Tax Adviser Program to support all who want to attain the designation.

Introducing the Chartered Tax Adviser Program

Last month, we introduced the exciting new Chartered Tax Adviser Program that has been developed by The Tax Institute to support tax professionals throughout their career.

Suitable for anyone, from new entrants to experienced tax practitioners, this program is the industry’s choice for innovative tax education and training.

By progressing to the pinnacle CTA3 Advisory Exam, and achieving the Chartered Tax Adviser designation, the Institute is committed to propelling tax professionals into the future and onto the global stage.

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, 5 November 2012

A wasted opportunity for tax reform?

This week will see the trifecta of the Melbourne Cup, the Reserve Bank's interest rate decision and the US election, so it seems timely to reflect on the contrasting economic positions of Australia and the US.

With American voters left contemplating emergency tax measures to prevent the country from falling off a fiscal cliff, it appears that Australian policymakers are wasting the opportunity for tax reform presented by our relatively healthy economy.

The US presidential candidates are canvassing an array of tax policies to shore up the nation's financial position. They include broadening the tax base and lowering the tax rate imposed on small business, cutting company tax and changing the individual tax regime.

With a rising budget deficit and government debt, the new US administration will need to raise a mountain of revenue to start paying down its $US5 trillion deficit. This significant budgetary challenge has led to the serious contemplation of tax policies that would in better times have been considered against the grain.

President Barack Obama's advocacy of the Warren Buffett rule designed to ensure a minimum tax rate for taxpayer's earnings over $US1 million is one striking example - even more so in a country founded on rewarding individual efforts.

In Australia, we have the opportunity to debate serious and long-term tax reform options in the context of relatively healthy financial circumstances. We can still create a sustainable tax system that supports growth while meeting current and future spending needs.

We hit our own tax reform roadblock last week, when the Business Tax Working Group, hamstrung by narrow terms of reference, failed to come to a consensus on how to fund a much-needed company tax cut. Instead of narrowly defined separate reform projects, what we should be having is an intelligent debate about company tax reform, the need to consider a flatter individual marginal tax rate scale, creating a more efficient state tax regime, and putting on the negotiating table the rate and base of the GST.

Real tax reform requires not mere tinkering but a true commitment to achieving that vision. The best time for Australia to make this commitment is now, while we still can afford responsible tax savings and avoid the sorts of rash, ill-advised cash grabs to which governments in more dire situations are resorting.

Robert Jeremenko
Robert
Jeremenko
Robert Jeremenko CTA 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, 2 November 2012

Small business and its new Commissioner

Small business taxpayers, in particular those described by the Australian Taxation Office as micro-businesses, struggle with red tape and the over-weening requirements of tax administration. As a complete aside, I have never liked the term “micro-business” because it appears to be pejorative; for those who run the business, there is nothing bigger in their lives and for those who depend on the business for employment, it is of crucial importance. Perhaps we could call them “very important businesses” (VIP businesses) to capture the essence of their significance for the Australian economy.

Members may recall that, way back in May 2012, The Tax Institute hosted a roundtable discussion on the definition of small business as it appears in a plethora of legislation, both state and federal. Just as examples, the definition is relevant in Fair Work, WorkCover and social security. The meeting  was attended by senior representatives of governments, including the Assistant Treasurer, Mr David Bradbury, and the Shadow Minister for Small Business, Mr Bruce Billson, and Mr Rob Oakeshott. The roundtable puzzled about the problems associated with defining small business over such a broad range of measures. There was some early support for a unique small business entity for tax purposes.

In discussions at a later meeting with Mr Bradbury, it became clear that the then proposed Small Business Commissioner, to be appointed by the federal government, would be a critical pathway to sorting out the miasma of legislative definitions.

Mr Mark Brennan was nominated as the Commonwealth’s Small Business Commissioner on 17 October 2012 by Mr Brendan O’Connor, the Minister for Small Business. By all accounts, Mr Brennan is very experienced in the role as he held a similar position with the Victorian Government for some seven years. Mr O’Connor put it this way:

“Not only does Mr Brennan have a vast amount of experience and knowledge, he also understands that government needs frank and objective advice and the small business community needs strong advocates.”

The tax and small business interface will be very challenging for Mr Brennan. Small business operators often think that the tax policy debate is driven by the “big end of town” and that their concerns are unheard. It is thought that Treasury and the ATO have had the policy ground to themselves and that, while there have been moves to make life easier for small business, there is much to be done. The ATO is also perceived of by many small business people, as recounted in their discussions with our members, as being ruthless in pursuing tax debts of small business operators who are struggling with changing economic conditions.

The role that Mr Brennan will commence in January 2013 is principally to engage in advocacy for the small business sector, rather than dispute mediation. This is where his office may be able to wreak change to the tax system, thus benefiting our VIP businesses. It will be very interesting to see how his office opens up as a third force to promote changes which will benefit not only the small business community, but also the broader economy. In addition, it will be of great interest to see how those government departments which have had a perceived monopoly in the field react to the newcomer.

For our members, the Small Business Commissioner should be kept in mind, not to intrude on legal disputes with the ATO, but to help fix the nightmarish administration problems that arise when dealing with the present system and to steer towards a simpler tax system for all.

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.