Monday, 30 June 2014

Failure to abolish the mining tax has implications for taxpayers

The Federal Government continues to pursue its commitment to abolish the mining tax in the face of opposition from the current Senate with the Bill having been reintroduced into the House of Representatives on Monday this week. However, the Senate makeup will change next week when the newly elected Senators from the 2013 election take their positions; this may well allow previously blocked legislation to be passed into law.  

In the interim, the failure to abolish the mining tax has implications for the proposed wind-back of certain other measures that have not been passed into law.  These include:
  • The instant asset write-off amount of $6,500 for small businesses – from 1 January 2014, the instant asset write-off will be reduced back to $1,000;
  • The accelerated deprecation for motor vehicles for small businesses – from 1 January 2014, this will no longer be available; and
  • The loss carry-back measure –will only apply for the 2013 income year.

The ATO has offered the following guidance for taxpayers who have relied on these measures:
  • The instant asset write-off amount of $6,500 for small businesses - Taxpayers, including those who use early balancing substituted accounting periods, who lodge a tax return for the 2013-14 income year can self-assess under the existing law. Once the law is enacted, the taxpayer will need to seek an amendment to apply the new law. No tax shortfall penalties will apply and if the amendment is sought within a reasonable time, we will remit any shortfall interest attributable to the amendment to nil. Otherwise the shortfall interest will run from the date the change becomes law.
  • The accelerated deprecation for motor vehicles for small businesses - as above for the instant asset write-off.
  • The loss carry-back measure - Taxpayers, including those who use early balancing substituted accounting periods, who lodge a company tax return for the 2013-14 income year can self-assess under the existing law. Once the law is enacted, the ATO will amend the company tax return to disallow the claim for the loss carry-back tax offset for the 2013-14 income year. This will result in an increase in the taxpayer's tax liability. No tax shortfall penalties will apply and any interest attributable to the shortfall will be remitted to nil. There is further information on the ATO website.
 
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, 27 June 2014

Broader focus of the committees

The Federal Budget for 2014-15 is heavily focused on cutting government expenditure, and leaves us waiting for the tax reform white paper process to achieve any real progress on revenue. The temporary Budget Repair Levy is just that — a temporary fix which attempts to address the government’s immediate budgetary concern without considering the design of the tax system as a whole.

The Institute’s contribution to the white paper process will be the first real test for our new technical committee structure. The renewed structure will have more of a focus on broad tax reform, and encourages committee members to be proactive in raising and addressing fundamental issues in our tax system. While we will have a committee dedicated to this particular focus, I would encourage all committee members and indeed the wider membership to contribute with suggestions for broad tax reform.
Federal Budget

While I am on the topic of the Federal Budget, one measure that has received little attention in the press is the announcement that the ATO must shed 2,100 workers by 1 October, on top of the 900 job losses that were already underway. This is a dramatic cutback to achieve within a very limited timeframe. There will also be cuts to the ATO’s IT budget. It seems odd that a government so desperate to raise more revenue would reduce the capacity of the one department responsible for collecting revenue.
Although the government and the ATO would never admit it, there is a danger that these cutbacks will reduce the ATO’s ability to respond effectively to enquiries by taxpayers and their advisers. The Tax Institute will do what it can to encourage the ATO to minimise the disruptions to its frontline services.

On a more positive note, the government decided not to adopt the Commission of Audit report recommendation that the ATO watchdog, the Office of the Inspector General of Taxation (IGT), be absorbed into the Office of the Commonwealth Ombudsman. In the Budget, the government has taken the opposite approach, moving the tax complaints function from the Office of the Ombudsman to the IGT.
I support the government’s decision to retain the IGT as an independent agency. The IGT plays an extremely important role in holding the ATO to account in improving the administration of the tax laws for the benefit of all taxpayers. The cutbacks to the ATO’s budget only serve to increase the significance of the IGT’s oversight in monitoring the quality of ATO services.
 
Michael Flynn CTA 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, 26 June 2014

Innovation and the role of technology in tax

Technology has revolutionised many sectors, and tax is no stranger to its disruption. What are the most innovative tax accountants doing to take advantage of technology?

The advance of technology – from new software programs to the use of the web for business – has changed the way clients perform tax-related activities and, in turn, has shifted the way tax accountants do business. Here are three trends to watch.
 
1. Cloud accounting
 
Cloud computing is where data is stored off-site and accessed via the internet. Cloud accounting enables end users to transact and share information while mobile. Not only can clients undertake accounting activities while out of office, it also gives them access to real-time financial-status reports.
 
What this means: Cloud accounting means mobility, so clients will soon expect tax professionals to be more widely available to help them. To offer extended hours and more flexibility, progressive organisations currently structure their employees’ time in two or more shifts to cover 16-hour days, and some even offer weekend assistance.
 
2. DIY accounting
 
Accounting software is getting easier to use and more accessible to clients. Most platforms connect to government portals, bank accounts and other sources of income, including e-commerce websites, helping clients log, sort and automate transactions. Although this looks like less low-value data entry work for tax accountants, it also spells the end of many ‘bread and butter’ tax-preparation services.
 
What this means: Clients with less-complex needs may turn to DIY and simply require an accountant to oversee compulsory submissions. However, of those who remain, expect better-prepared clients who are looking for more sophisticated tax advice; engaging a tax accountant will be for service rather than compliance reasons. Innovative organisations are already packaging their talent to appeal to this emerging market, for example through specialisation or a focus on advisory services.
 
3. Data analytics
 
The increasing use of cloud accounting and software will allow real-time data to be compiled and will help individuals and businesses to understand their financial position and support their decision making. Tools and techniques for collecting and analysing data are constantly being refined, and it won’t be long before analytics becomes a standard part of any tax consultation.
 
What this means: Tax accountants can use data analytics in two ways: to attain a better picture of a client’s financial status to provide better advice, and to understand their own businesses better in order to leverage opportunities including where to focus. Agencies that have conducted analysis on themselves have a direction to steer their business for lucrative and/or specialist areas of tax.
 
In short, get ready for a hybrid future, one where you’ll be expected to understand and support digital tools with good old-fashioned service. You’ll be valued for your expertise rather than your number-crunching ability, so keep your eyes open for opportunities to specialise in an area you love.
  
 
The Tax InstituteThe 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, 25 June 2014

Upcoming events and program intakes

Following on from one of our most successful NSW Annual Tax Forums ever, we’re very excited about our program of events for the latter half of 2014. We’ve still got a very full schedule of events coming up in the latter half of 2014, including the following.

47th WA State Convention
Returning to picturesque Bunker Bay on 28 to 29 August, this year’s program has a distinct SME focus, with a strong emphasis on trusts and estate planning, and sessions on CGT small business concessions, the objection process, Pt IVA and consolidation for SMEs. It will provide you with 11.75 hours of structured CPD, with our gala dinner capping off two days of technical toil.

Click here to learn more about this event.

2014 National GST Intensive

This year’s intensive, in Sydney on 4 to 5 September, will update you on the latest GST issues and build on your knowledge in key areas. We are fortunate to have the Hon. Garry Downes, AM, QC, former judge of the Federal Court of Australia and former president of the Administrative Appeals Tribunal, as our opening keynote speaker. The two days will continue with a thought-provoking mix of plenary and workshop sessions presented by a host of GST experts.

Click here to learn more about this event.
National Resources Tax Conference

The biennial National Resources Tax Conference is on again from 15 to 17 October in Perth. Register your interest now for this conference which will deliver a top quality technical program, with high-profile presenters and a range of interesting and topical sessions that is certain to be informative and practical to tax specialists in the resources sector.

Click here to learn more about this event.
The CTA Program

Enrolments for all of our Chartered Tax Adviser Program courses close next month.
The program provides different levels of dedicated tax education to meet the needs of all tax professionals. The courses — CTA1Foundations, CTA2 Advanced, and CTA3 Advisory Exam — build on each other to ultimately produce tax advisers with the professional tax skills required to join our growing international network of CTAs.
To find out more, and enrol, go to taxinstitute.com.au/education.

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, 23 June 2014

ATO's National Tax Liaison Group meeting

On 19 June our President, Michael Flynn CTA, and National Council member, Prof Graeme Cooper CTA, joined me at the ATO's National Tax Liaison Group meeting. 
The NTLG is the ATO's peak consultative group on tax matters.  Recognising the importance of an efficient, well-designed and administered tax system to Australia's economic and social well-being, the NTLG drives improvements to:
  • tax law interpretation, administration, design and policy;
  • confidence in and compliance with the tax system;
  • and ATO service delivery. 
At this meeting, numerous matters were discussed, including:
  • Progress of Treasury's tax and superannuation measures work program, including 2014-15 Budget announcements; 
  • Recent Treasury and ATO activities in relation to Australia's 2014 Presidency of the G20;
  • The ATO's plan to ‘reinvent', including focus on the strategic intent, vision and mission statement; 
  • Project DO-IT (the current offshore voluntary disclosure initiative);
  • Tax System ‘Systemic Drivers of Change';
  • Concerns in relation to ATO's compliance action on dividend washing;ATO use of external auditors for compliance assurance;  
  • Consultation on statutory remedial powers for the Commissioner; 
  • Red-tape reduction initiatives;
  • Capacity for increased use of safe harbours to decrease compliance costs in low risk areas; Identifying opportunities to streamline the ATO's information collection activities;
  • External input into the ATO's contribution to tax policy and law design;
  • and ATO approach to test case litigation. 
The minutes from this meeting should be available on the ATO website in the coming weeks. I would be happy to discuss any of the above with interested members; please be in touch via taxpolicy@taxinstitute.com.au.

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, 20 June 2014

Meet a member: Bill Keays, Hales Keays Chartered Accountants

“With knowledge comes confidence. If you get a reputation for knowing what you are talking about, you are on your way.”

Name: Bill Keays, CTA
Company: Hales Keays Chartered Accountants
State: WA
Member since: 2004
Areas of specialty

We work in SME taxation so I tend to focus on SME-related issues such as business structures, trusts, Div 7A and small business CGT concessions. I have also done quite a bit of work over the past few years supporting legal practitioners in disputes, including unravelling complex structures to assist in determining asset pools for family law purposes.

Why are you a member of The Tax Institute?
Initially, I joined because I felt the education offered was the best available. I joined the Western Australia Education Committee in 2008, and since then have met and dealt with some of the pre-eminent people in tax in WA. It has been a great way to make a contribution while keeping up with the latest developments in tax. I have always liked that the training is largely presented by local practitioners who are themselves operating in a similar environment to their audience.
How did you end up in tax?

I fell into it really. I completed two years of a physics degree at university before deciding that I didn’t really want to be a career academic, which was probably the most likely outcome at the end of my studies. I then enrolled in a couple of part-time business units and got interested in accounting and tax. From there, I joined Price Waterhouse and spent seven years there before leaving to set up Hales Keays. During my time at Price Waterhouse, I did SME accounting and tax work, but since setting up in practice, I have focused more and more on tax.
What are the challenges for tax practitioners this year?
 
The reform of Div 7A and the taxation of trusts are on the horizon, which will be interesting. Tax practitioners in public practice are also going to feel the squeeze from the ATO in relation to on-time lodgement.
There will likely be some broader discussion about the structure of the tax system given recent comments by the government about the structural deficit in the Budget, and the Commission of Audit report.
In our own practice, we are seeing quite a few family businesses transitioning from one generation to the next, which is probably a broader trend with an ageing population. So tax issues around succession and estate planning will continue to be very important.
Most memorable career moment to date

Probably the decision to jump from the safety of a Big 4 position into public practice with my colleague, Matthew Hales, in 1998. We started out with no staff and very few clients. I have learned a lot since then and I think being in business for yourself makes you a better adviser to your clients.
How do you relax?

I have three children in primary school who keep me fairly busy. I like to spend time doing whatever they are doing when I get the chance, whether it be sport, catching a movie or helping them with their homework. I play golf once a week and enjoy pretty much all sports (more as a spectator these days!). Being office-based during the week, I like to spend time outdoors on the weekends.
Advice to those entering the profession

My advice is to go the extra yard to understand and do things properly. With knowledge comes confidence. If you get a reputation for knowing what you are talking about, you are on your way.

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
 

 

Wednesday, 18 June 2014

Membership renewals and product offers

Save on all of our books, subscriptions and DVDs.

This month, our mid-year sale opens with great discounts on our range of tax books and resources.
Mid-year sale – on now

Our mid-year sale is on now and offers you the chance to take advantage of some great discounts across our wide range of books, online subscriptions and CPD on DVD titles. Leading the sale is the sixth edition of the SMSF Guide, available at 20% off. You’ll also find a wide range of CPD on DVD titles in our sale at 50% off. Take a look at the sale brochure enclosed with this month’s Taxation in Australia, or visit our website to find out more.
Click here to see what products are on offer as part of our sale.
SMSF Guide

Jemma Sanderson, CTA, has been putting the finishing touches on the new, sixth edition of the leading title for funds advisers. Place your order for the updated and revised SMSF Guide this month and you’ll save 20%.
Visit our website to place your order.

Tax Knowledge eXchange online books package
If you’re looking for a convenient way to meet your CPD requirements before the 30 June deadline, consider a subscription to the Tax Knowledge eXchange. With up to 20 CPD hours included, you’ll also be ensuring you have access to continually updated information vital to your role.

Already a subscriber? Add the online books package which now includes seven titles. What’s more, from August, you’ll also receive access to the new edition of Trusts & Estates: Taxation and Practice, giving you access to a total of eight practical guides and handbooks.

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 June 2014

The 2% income tax ‘levy'

On Monday 16 June 2014, the Senate Economics Legislation Committee will report to the Senate on the Tax Laws Amendment (Temporary Budget Repair Levy) Bill 2014 and 14 related Bills. 

As we have previously noted in TaxVine, the 2% income tax ‘levy' is the wrong direction to be taking Australia's tax system and highlights the need for structural reform. It shows that the current tax system is not raising sufficient revenue to meet the spending decisions of Government.

On close inspection, the Bills introducing the ‘levy' also suffer from a range of technical deficiencies. The Bills, if passed by the Senate without amendment, will add complexity, inefficiency and inequity to the tax system. These deficiencies highlight the dangers of tinkering with the tax system without carefully considering the system as a whole.

The impact of the ‘levy' will be felt not just by taxpayers earning taxable income over $180,000 but by many below that threshold. This is due to the increases in rates of tax applicable to FBT and Superannuation which are based on the highest marginal tax rate but apply broadly. The changes to rates applicable to Superannuation funds in particular do not seem to have a basis in maintaining the integrity of the ‘levy'.

While we support the use of consistent rates throughout the Tax Act, a 2% increase impacting on taxpayers who are not on the highest marginal rate of tax is at odds with the rationale in the Explanatory Memorandum that the ‘levy' and associated changes “will ensure that those with a greater capacity to pay make a larger contribution to reducing the budget deficit.”

Our full submission to the Senate Economics Legislation Committee can be found on our website here.

Thilini Wickramasuriya ATI, 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.

Sunday, 15 June 2014

Technical committees revamped

This month, the Institute’s President, Michael Flynn, discusses recent changes to the Institute’s committee structure and the impact of the federal Budget on tax advisers.

The Institute takes pride in the expertise of its members. Our technical committees have long been the mechanism by which we draw on the collective strength and depth of our membership base to advocate for tax reform.
While our dedicated Tax Policy and Advocacy team, led by Senior Tax Counsel Robert Jeremenko, CTA, carries out the policy and advocacy activities of The Tax Institute, their work is greatly supported by our technical committees which are comprised of Tax Institute members, and the quality of our contributions to various consultations is largely due to this external member input. Their contributions also ensure that member concerns with tax law and administration resulting from day-to-day practice are represented at the highest levels.

Changes in the committee structure
Last year, we decided to revamp our technical committee structure. The revamp coincided with the ATO implementing a new consultative model, but the main object of the changes is to ensure that as many Tax Institute members as possible are given the opportunity to participate in our policy and advocacy activities. The new technical committee structure comprises:
  • large business (large business and international issues);
  • FBT;
  • GST;
  • dispute resolution;
  • superannuation;
  • not-for-profit; and
  • technical resource (SME and tax practitioner issues, as well as all issues not covered by one of the above committees).
The new committee structure aligns with the ATO consultative model.

The refreshed committee structure has given members who were not previously on these committees an opportunity to become involved and contribute. We have been overwhelmed by the response of the membership to our call for expressions of interest for each of the committees, and the calibre of the nominees has been outstanding. Members of the specific committees have been chosen based on their relevant expertise and ability to contribute.
We will also convene special-purpose subcommittees and working groups covering key issues as the need arises. One such committee will be a tax reform committee which will contribute to a submission on the government’s proposed white paper on tax reform.
 
Michael Flynn CTA 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, 12 June 2014

May’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 $15 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.

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.

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

Tax and Superannuation Laws Amendment

Last week saw the introduction into Parliament of the Tax and Superannuation Laws Amendment (2014 Measures No. 2) Bill 2014.
 
  
The Bill contains two noteworthy measures, being the integrity measure targeted at arrangements where taxpayers obtain additional franking credits through ‘dividend washing’ arrangements and the ‘taxpayer protection’ measure promised by the Government to protect taxpayers who complied with certain announced un-enacted measures in anticipation of their enactment which the current Government has decided not to proceed with.
  
The purpose of the integrity measure is to limit the ability of taxpayers to obtain a tax benefit, in the form of multiple franking credits, from arrangements involving ‘dividend washing’. We also remind members of the compliance action the ATO is taking in this space concurrently focused on these types of arrangements. Please refer to TaxVine No. 10 for further information. 
 
The ‘taxpayer protection’ measure is a one-off measure and only covers certain announced measures that are not proceeding which are listed within the provision itself. Measures included relate to certain changes to CGT, simplifying the imputation system and certain proposed changes to the consolidation regime which are not going ahead. Members are advised to check which measures are covered by this protection mechanism that might impact their clients.
   
In other news, the States and Territories are releasing their 2014-15 Budgets throughout May and June. This week saw the release of the 2014-15 ACT Budget which sees the ACT once again showing initiative in taking independent steps to reform inefficient State taxes in its own tax base, such as cutting the conveyance duty rate by a quarter of a per cent for land transfers over the highest threshold amount and removing insurance taxes.
 
We have also put our submissions up to the Board of Taxation in relation to the post-implementation review of Division 7A, tax system impediments facing small business and the review of the debt/equity rules. We look forward to seeing the results of these reviews, particularly in relation to the review impacting small businesses as we are keen to see what improvements the Board of Taxation recommends be made to assist small businesses. Our submissions can be found on our website at these links:
Please see below for other activities. As always, members are welcome to contact us at Tax Policy.
 
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.

Monday, 2 June 2014

Continuing our relationship with the Standing Committee on Tax

Last week I appeared before the House of Representatives Standing Committee on Tax and Revenue in Canberra.

The Committee may inquire into and report on any matter referred to it by either the House or a Minister, including any pre-legislation proposal, bill, motion, report or document. For this Parliament the Committee comprises ten Members of the House of Representatives, with six Members nominated by the Government and four nominated by the non-Government parties. It is Chaired by John Alexander OAM, MP.

The purpose of my appearance was to provide a private briefing to the Committee to further enhance the Tax Institute’s relationship with the Committee and its members and for me to provide Tax Institute members’ perspectives on the tax system and its administration.

The Committee will regularly hear public evidence from the Tax Commissioner and his senior management team on issues in the tax system and the ATO’s performance. In February 2014, the public hearing addressed issues including:

  • measuring the tax gap and the role of random audits in this process;
  • the ATO’s reporting of performance information and how performance information is integrated into ATO management decisions;
  • ATO benchmarking against revenue agencies overseas;the internal reforms of the ATO following the recent capability review by the Australian Public Service Commission;developments with foreign non-assessable non-exempt income (section 25-90);
  • impacts of budget and staffing reductions at the ATO, including their effect on revenue and service standards;whether the ATO’s litigation function should be transferred to a different agency;
  • and tax disputes more generally, including the new independent internal reviews.
  • read The Committee’s report.

I look forward to continuing our constructive relationship with the Committee in the months to come.

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.