Friday, 20 December 2013

Looking back on 2013 (Part 2)

I read with great interest the Productivity Commission’s research paper, “An ageing Australia; preparing for the future” (issued in November 2013). For some time, I have followed research in respect of our ageing population because to impact on the changing demographics will have a profound effect on our future government spending and the tax revenues to support spending. This, like other published reports, such as the 2010 Intergenerational Report and PwC’s 2013 report, “Protecting prosperity: why we need to talk about tax”, highlights the cost of our ageing population. The Productivity Commission’s research paper is focused on the spending side of the equation, and it confirms that the projected increase spend on items associated with ageing, health care, age pensions, age care and disability costs will grow from an estimated 20.7% of GDP in 2011-12 to 25.1% of GDP in 2059-60. The research paper states (on page 10):

“The principal indicator of future fiscal pressure is the degree to which government spending outpaces revenue when the ratio of government tax revenue to GDP is held constant. This provides a measure of the increase in revenue or reduction in aggregate spending required to provide a balanced budget (table 1). Overall, the Australian Government must find funding sufficient to cover additional expenditure of 4.5 per cent of GDP, and combined state and territory governments must find an additional 1.4 per cent of GDP. It is possible that given the limited tax options available to the states and territories, much of their fiscal pressure could be ‘passed on’ to the Australian Government in the form of greater demands on federally collected taxes.”

The paper comments on the participation rate in our economy, noting that the biggest gap between the working population (those aged between 20 and 59 years) and the population as a whole will occur in the early 2020s. The paper also comments that, should the government attempt to fund the emerging fiscal gap through higher labour income tax rates, this would discourage labour supply. The paper states (on page 85):

“The effects would not be trivial — especially for the supply of labour by married women, who empirically are the most responsive to wages. An international meta study (Bargain and Peichl 2013) found that for every 10 per cent decrease in after-tax wage rates:
  • married women and single mothers withdraw an average of around 5 per cent of their hours supplied
  • married and single men withdraw an average 1 per cent of their hours supplied
  • single childless women withdrawn an average 1.5 per cent of their hours supplied.”

When current revenue collected from salary and wages is estimated at 10.7% of GDP and total tax receipts are estimated at 22.2% of GDP, you can see the need for change.

The examples above highlight one of the issues that the ageing population presents. Decreased participation means reduced revenue unless tax rates rise. Increased tax rates may mean a loss of female participation in the workforce. The research paper, like other similar reports, raises the issue that the gap in funding can only be filled by increased productivity or increases in the rate or breadth of the tax base.

So what can we do? Collectively, we can continue to push for tax reform, push for change that creates efficiency in government and, for those of us in business, look at ways to drive productivity gains through innovation, efficiency and product development. The gains we make today will help us and our future generations.

My term as president is disappearing in what seems to be a blink of an eye. I have met many members of The Tax Institute and thank you all for your kind words.

Being president cannot be done alone.

Thank you to the national and state councils. Thank you to Noel and his team of dedicated, loyal people. You all make The Tax Institute the leading professional body in tax.

I have to say a special thanks to Robert Jeremenko, Stephanie Caredes and Deepti Paton for their help in the numerous submissions and representations that happened in 2013.

To all of you, my best wishes.

Stephen
Westaway
Stephen Westaway 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.

Thursday, 19 December 2013

Speaker Profile: Tax and Financial Reporting

In the latest speaker profile in our series, we sit down with Jason de Boer, FTI from Deloitte who is presenting the Tax and Financial Reporting session at the upcoming 29th National Convention in Hobart.

Tell us about yourself

My name is Jason de Boer and I am an Account Director with Deloitte Tax Services. I have been at Deloitte for just over 13 years specialising in corporate income taxation (with a specific specialisation in IFRS and tax effect accounting).

How long have you been affiliated with The Tax Institute?

I have only become affiliated with The Tax Institute relatively recently (in a formal sense) but have been a regular reader of Taxation in Australia over the course of my career.

What does National Convention mean to you, and more broadly, to the tax industry?

The National Convention to me is an excellent opportunity to exchange ideas and knowledge, and to hear from some of the leading experts in the industry. Building relationships with peers through networking is also a critical part of the convention.

What is the topic that you are presenting at the 29th National Convention?

I am presenting on Tax and Financial Reporting at the Convention.

What can attendees expect to learn from your session?

Attendees can expect to get a basic understanding of tax effect accounting requirements as well as some insights into areas of contention and debate in the tax effect accounting space. I also plan on exploring the "barrier" that can exist (at an organisational level) in respect of understanding and responding to tax effect accounting challenges.

What new or hot topics will you cover?

The proposed change to introduce accounting for "uncertain tax positions" is something that every organisation needs to be aware of and will need to respond to. While Australia has been quarantined from the change (so far), I think the learning's from the US experience make for interesting analysis and discussion.

How will attending your session help delegates help their clients?

Understanding the impact that tax (and tax decisions) can have on a set of financial statements is an important skill. After attending my session, delegates will hopefully feel more confident engaging in discussions with their clients about how tax decisions, impacts etc. will impact those financial statements.

Which other sessions at the conference are you most interested in attending?

I am looking forward to attending Andrew Sinclair’s session on Restructuring and specifically hearing his insights about the application of the new Part IVA rules on those restructures. Simon Steward’s session on the deductibility of interest will also be fascinating.

What do you like to do when you’re not knee-deep in tax?

Outside of the demands of the tax world, I enjoy spending time with my family (wife and three children) and playing golf. I am also a mad Demons supporter which has arguably provided more stress over the past few years than my work life!

29th National Convention 2014
You’re invited to join us in Hobart for the 29th National Convention 26-28 March 2014. The Tax Institute’s National Convention is widely recognised as the essential annual event for tax professionals.

Find out more about the conference and register now.

Wednesday, 18 December 2013

Wishing you a safe and happy festive season

As the Institute’s 70th year comes to an end, we wish you all the very best for the holiday period and look forward to bringing members more great benefits and opportunities in 2014.

With the year quickly coming to a close, I’d like to take this opportunity to acknowledge those who have volunteered their time and hard work to make The Tax Institute the success it is — both this year and over the last 70 years. In particular, a very big thank you to our committees, volunteers, National Council and particularly Stephen Westaway, 2013 president, for their valuable contributions throughout the year.

2014 education key dates now available

Are you thinking of undertaking a structured education program in 2014?

All of the key dates, including early birds and enrolments, are now available on our website for The Chartered Tax Adviser Program, the Course in Australian Taxation Law, the Course in Commercial Law, and the Course in Basic GST/BAS Taxation Principles.

This is a great opportunity for you and your colleagues to undertake a tax course with Australia’s leading professional association and educator in tax.

Find out more, and enrol, on our website.

2014 monthly updates

If you’re looking for a way to regularly top up your CPD hours in 2014, our series of monthly online tax updates is for you. Each webinar covers the key tax developments arising from the previous month, exploring the most pertinent issues in depth.

Sign up for all 10 webinars before the end of January to save up to 20% off the price of registration and lock in 10 structured CPD hours for the year.

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, 16 December 2013

Report from the latest NTLG meeting

Last week I joined our President, Steve Westaway CTA, and Vice-President, Michael Flynn CTA, at the ATO's National Tax Liaison Group meeting. As the ATO's peak consultative forum, the NTLG discusses matters of strategic importance to the tax and super systems. Treasury also join the meeting, which enables a discussion on tax policy.

The minutes will be published in due course, but in the meantime, I can report that discussion at the meeting included the following topics:

  • The value of further exploring the pros and cons of an extra-statutory discretion for the Commissioner; 
  • ATO's Integrated Tax Design function;
  • Update on the current ATO approach to alternative dispute resolution and settlements, including the appropriateness of the current approach and potential improvements; 
  • Transforming Tax Technical Decision Making project update;
  • ATO's consultation arrangements, including health and status of the current arrangements and significant matters for consultation; 
  • ATO's goals of transforming the customer experience in line with the 2020 vision;
  • Possibility of further moving to pre-populate tax returns for taxpayers with simple tax affairs; and
  • Streamlined returns and a tour of the ATO Co-Design Centre user testing facility.

Please feel free to be in touch with the Tax Policy team regarding any of the above.

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, 13 December 2013

Looking back on 2013 (Part 1)

2013 may be remembered more for what didn't happen than what did.

We did get, to name a few things:

  • a new federal government;
  • a new Pt IVA;
  • a new registration requirement for financial planners who give tax advice;
  • a concession to excess superannuation contributions tax;
  • a proposed change to the debt/equity rules; and
  • a change to the way consultation is conducted with the ATO.

We didn’t get:

  • a rewrite of Div 7A;
  • a rewrite of trust taxation; and
  • tax reform.

To be fair, there are some things we didn’t get that maybe we should be grateful for:

  • changes to how FBT will be calculated on motor vehicles;
  • the imposition of a cap on deductible self-education expenses;
  • the soon to be repealed resources rent tax and carbon tax; and
  • changes to the deductibility of interest related to foreign dividends.

Again, to be fair, a tax white paper is now on the government’s agenda, and the government has told us that it will advise us of its strategy to deal with the remaining list of tax measures soon.

Don’t miss my final reflections to be published on the blog next week.

Stephen
Westaway
Stephen Westaway 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, 11 December 2013

Tax Adviser of the Year Awards have closed

It’s very exciting times at The Tax Institute with nominations for our inaugural Tax Adviser of the Year Awards closing on 10 December.

With all our completed applications in, it is now up for our judging panel — made up of industry figures and members of the profession — to select our winners for 2014 in the categories of Emerging Tax Star, Tax Adviser of the Year, and Chartered Tax Adviser of the Year.

All the winners will be announced at next year’s gala dinner at the 29th National Convention in Hobart. Stay tuned.

29th National Convention

Included with your journal this month is a copy of the 29th National Convention program. Only just announced, Hobart is already looking to be one of our most popular conventions yet.

Long recognised as the essential event for anyone working in tax, attending the convention gives you up to 15 structured CPD hours, and the opportunity to grow your business and professional profile by networking with colleagues from around Australia.

The sessions, developed and presented by experts, will share the latest thinking in tax and will help you get the answers you need to help your clients. Don’t forget that you can save up to $400 if you register before 13 December.

Don’t miss out — visit our website and register now.

See you in Hobart in 2014!

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, 10 December 2013

Speaker Profile: Ethical Issues for Tax Practitioners

We sit down with Professor Gino Dal Pont from the University of Tasmania on Ethics in Practice for Tax Advisers to chat about the keynote speaker presentation he'll be presenting at the upcoming 29th National Convention in March 2014 in Hobart.

Tell us about yourself

I am a Professor at the Faculty of Law at the University of Tasmania, with principal interests in equity and trusts, and professional responsibility. I have also taught tax law on and off for years at the Faculty, and retain a continuing interest in the area.

How long have you been affiliated with The Tax Institute?

I was a member in the early 2000s, as well as member of State Council (Tas) and National Education (for one year).

What does National Convention mean to you, and more broadly, to the tax industry?

I cannot comment on the broader industry, but I perceive it as the premier tax conference in Australia.

What is the topic that you are presenting at the 29th National Convention?

I am presenting the Ethical issues for tax practitioners from the perspective of conflicts of interest and conflicts of duty.

What can attendees expect to learn from your session?

Attendees can hopefully secure a heightened perception of the way courts may approach issues of conflicts of interest and conflicts of duty.

What new or hot topics will you cover?

Every year in the main common law jurisdictions there is litigation over conflicts of interest and conflicts of duty for lawyers and accountants, which have on various occasions involved tax practitioners. Attendees can expect to receive a current and contextual presentation to this end.

How will attending your session help delegates help their clients?

It will assist attendees to understand the engagements they may legitimate undertake, as opposed to those that are ethically and legally questionable.

What do you like to do when you’re not knee-deep in tax?

I am only peripherally knee-deep in tax, and spread my work interests around. Outside of work I attempt a holiday overseas each year.

29th National Convention 2014
You’re invited to join us in Hobart for the 29th National Convention 26-28 March 2014. The Tax Institute’s National Convention is widely recognised as the essential annual event for tax professionals. But hurry! Advanced pricing ends this Friday!

Find out more about the conference and register now.

Monday, 9 December 2013

Consultation Steering Group

Effective consultation is integral to ensuring the best outcome in tax law design, implementation and interpretation. This underscores the importance of the ATO getting its new consultation model right. The new arrangements were unveiled earlier this year, but they are only now starting to bed down.

The ATO now has eight key stewardship committees representing key relationships and systems, incorporating four liaison groups and four advisory groups covering major market segments and products. There are also 14 stakeholder relationship and management groups and 11 technical and special purpose groups focusing on specific issues for resolution. I won’t reproduce all of the committees/groups here, but please refer to the ATO consultation framework for further detail.

The Tax Institute’s members have a long history of engaging in consultation to develop and apply tax laws in the national interest. Our consultation efforts have spanned across technical issues, industry focused issues and ATO systems-related issues, as well as policy design.

With this is mind, on 29 November 2013 I attended the inaugural meeting of the Consultation Steering Group. The group comprises ATO, Treasury and professional bodies and is designed to keep a watchful eye overall tax consultation. The Steering Group will have a role in deciding how best to handle issues that emerge, including potential areas of reform that traditionally have been a Treasury domain.

At the meeting, we discussed the appropriate scope of the work for the Steering Group, such that it operates effectively and identifies significant matters for consultation and resolution.

The ATO website now contains a list of matters currently being consulted upon and this will be regularly updated to ensure visibility over the resolution of issues raised. Issues raised by The Tax Institute and other bodies as well as individuals will appear on this list, with details of the issue status and a contact officer.

The Tax Institute remains broadly supportive of the new consultation model, as it has the potential to increase the effectiveness of consultation and ensure that both the ATO and Treasury are dealing with the right issues by engaging with the right people at the right time.

I look forward to regular meetings of the Steering Group to ensure that this is the case.

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, 4 December 2013

November’s free member tax presentations

Here’s a selection of presentations from our leading events series.

Members of The Tax Institute can access these presentations for free by clicking the links below (make sure you’re logged in to our website first). Non-members can purchase the presentations for only $12 each.

Many presentations have a related technical paper, which can also be found on the presentation’s page. Don’t forget, a Tax Knowledge eXchange subscription gives you unlimited access to these papers, presentations, articles from our journals, and much more.


Tax Knowledge eXchange
The Tax Institute runs over 300 CPD seminars a year, and all papers and PowerPoint presentations provided by the speakers from our seminars are available through the website individually or through a Tax Knowledge eXchange subscription.

Monday, 2 December 2013

New ATO Taxpayer Alert

Late on Friday the 22nd the ATO announced that it is reviewing arrangements involving accountants, lawyers and other professionals operating through partnerships of discretionary trusts. It did so by issuing Taxpayer Alert TA 2013/3: Purported alienation of income through discretionary trust partners.

As members would be aware, Taxpayer Alerts are the ATO’s early warning of significant new and emerging higher risk tax planning issues.

Importantly, the ATO acknowledges that professional practices may legitimately operate as a partnership of discretionary trusts, however, the focus is on the misuse of these structures to avoid tax.

The ATO is concerned that the structures may result in an individual purporting to alienate income attributable to their professional services to a trustee partner.
In some cases the arrangement may:

  • be ineffective in alienating the individual's income,
  • have CGT consequences for the individual which have not been correctly recognised, or
  • involve a scheme to which the income tax general anti-avoidance rules apply.

Further detail about the arrangements that are concerning the ATO can be accessed.

The Tax Institute, as a member of the ATO’s Professional Practice Structures Working Group, is actively involved in working with the ATO on this issue. Our president, Steve Westaway CTA, met with the Working Group this week to discuss the many matters arising. The nature and extent of the ATO’s concerns as expressed in the Taxpayer Alert are still being worked through.

In conjunction with the Working Group, the ATO is developing further guidance and reviewing relevant Rulings and Determinations, including IT 2540, which addresses the CGT consequences of disposing of an interest in a partnership.  This includes the preparation of a publication to help professionals understand the risks and how to address them in practice.

We will keep members informed of developments.

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.