Showing posts from 2018

Shaping our tax profession of tomorrow

written by Tracey Rens *

In 2018, The Tax Institute celebrates its 75th anniversary.

Since the Institute’s establishment in 1943, Australia’s tax system has changed dramatically and we have evolved to meet the growing needs of the profession.

For 75 years, we have advocated for a better tax system, helped people connect, shared knowledge, educated young tax professionals and built a vibrant membership.

We are now Australia’s leading educator and professional association in tax, with over 12,000 members. The Institute’s Chartered Tax Adviser (CTA) designation has also become the tax profession’s premier credential.

This, however, doesn’t mean we can be complacent. The Tax Institute and the tax profession need to prepare for the future by embracing change, disruption, innovation and a broader perspective. We need to actively shape the tax profession of tomorrow.

Our vision Towards the end of 2017, the Institute undertook a strategic review, which established the following vision statemen…

Company tax cuts – where might the money go?

written by Robert Deutsch CTA *

The continuing saga regarding corporate tax reductions in Australia seems to have boiled down, at least in a political sense, to just one fundamental question – will a corporate tax reduction give rise to increased wages for workers?

In responding to this question, it is worth remembering that a company either distributes its after-tax profits to its shareholders or uses it in its business. There is nowhere else for the money to go. Distributed income goes to either resident or foreign shareholders and the rest is applied by the directors of the company in what is thought to be the best use of the available funds.

Thus, if we take the case of a company which earns taxable income of a $100m and pays corporate tax of $30m on that taxable income, the remaining $70m could be:

distributed to its resident shareholdersdistributed to its foreign shareholdersreinvested in hard assets, orpaid to employees in the form of wages. 
In relation to the distributed profi…

Andrew Noolan CTA on 'The future of Division 7A'

In a paper presented at last November’s SME Symposium in Sydney, Andrew Noolan CTA looked at some of the issues he and many other practitioners have experienced over the years in relation to Division 7A.

He also covered the developments for 2017.

Andrew is a partner in the Sydney law firm, Brown Wright Stein Lawyers. His clients are accountants and lawyers in public practice who require advice on tax issues that impact their clients. He specialises in tax issues common to the SME and high-wealth-individual sectors.
In the paper, excerpted below, Andrew speculates on what action advisers might need to take in anticipation of the July 2018 changes.
The future of Division 7A In the 2016 Federal Budget papers, Government set out that there would be changes to Division 7A that will apply from 1 July 2018. The purpose of discussing them here is to speculate on how the changes might alter the way that Division 7A needs to be dealt with, and, in one case, to identify what action might need to be t…

The old chestnut – principle-based drafting vs detailed black letter law

written by Robert Deutsch CTA *

I often ponder whatever happened to principle-based drafting, a concept we heard about some 15 years ago and which was meant to be the prevailing mantra in the development of tax legislation.

However, reality has turned out to be much different, such that the legislation these days is developed with often very little said about the principles that underpin the legislation, but instead an elaboration of detailed rules essentially covering the minutiae of almost every aspect of the law.

Two classic examples of this modern trend are the current formulation of the capital gains tax (CGT) rules and the fringe benefits tax (FBT) rules. Capital gains tax covers some 400 plus pages of detailed legislation while the FBT has a more modest, but still formidable, 250-plus pages of detailed legislation (excluding the Regulations).

One cannot help but wonder if all this is necessary. The views of our members in this context are very much welcomed.

Would it not be mor…

HSBC extends preferential banking offers to Institute members

HSBC, a Principal Sponsor of The Tax Institute’s 2018 National Convention, is proud to reach its 12th consecutive year of partnering with the Institute. To celebrate, HSBC has enhanced its wide range of preferential banking offers and benefits to Institute members.
Over the past dozen years, The Tax Institute has participated in HSBC’s Corporate Partner Program, which includes more than 100 major companies and affiliate organisations, including KPMG, Deloitte, Optus, IBM and Telstra, to name just a few.

In fact, the Institute ranks seventh in HSBC’s overall Corporate Partner portfolio, which demonstrates the strength of the alliance, our history of working together, and the popularity of the program’s offers among our members.

The partnership has meant that HSBC works closely with the Institute to support our professional development events and enhance our ability to deliver products and services, as well as provide tangible benefits to members.

Institute member benefits  You, as a m…

Wine equalisation tax reforms – 2018 SA Agribusiness Day

The recent reforms to the wine equalisation tax (WET) system, are ‘root and branch’ reforms that will have a significant impact on most businesses in the wine industry, even going so far as to impact on the way certain wines are made.
These rules, now in effect for the 2018 vintage, are complex, with a number of retrospective issues to consider as well as transitional provisions to be aware of.

Here we speak with Mathew Brittingham CTA, who will present the session ‘Wine equalisation tax – understanding the impact to wine businesses of the new WET reforms’ at the upcoming SA Agribusiness Day, about some of the issues facing South Australian producers and their advisers.

Mathew told us: “There are a number of key issues advisers need to be aware of in relation to these reforms and how they impact wine businesses. In particular, some clients may need to restructure their arrangements to ensure they remain eligible to claim producer rebates, and for those clients who are eligible, how t…

Inbound foreign investment in Queensland – FIRB & duties issues

Australia’s foreign investment framework requires would-be purchasers of residential real estate to apply for foreign investment approval. Applications are considered by the Foreign Investment Review Board (FIRB) in line with the general principle that the proposed investment should add to Australia’s housing stock.

In recent years, tax issues have become a major focus of the FIRB’s review of potential investment into the property sector. At the same time, at a local level, the Queensland Government has introduced a number of new policies related to taxes affecting property and investment.

In March, McCullough Robertson's Duncan Bedford ATI will present the session, ‘All things inbound foreign investment’, at the Property and Construction Intensive in Brisbane.

Here we speak with Duncan about some of the current issues facing advisers.

He told us: “The Foreign Investment Review Board is changing, and much of the administration is now being undertaken by the ATO. It is no longer a…

International tax practice – is it about to become a whole lot more complicated?

written by Robert Deutsch CTA *

The practice of international tax has always been complex and challenging. In part, this has been the result of adjustments which must be made to conclusions reached as a result of the application of the domestic law because of the overlay of Australia's 44 Double Taxation Agreements (DTAs). Each DTA seeks to modify the operation of Australia's non-DTA law in various different ways.

Let's work with an example – an unfranked dividend paid by an Australian company to its Russian parent would, under Australian non-DTA law, be subject to a withholding tax rate of 30% (see Taxation Administration Regulations 1976 Reg 40(1) esp (c)). However, under the relevant Australia/Russia DTA that rate is limited to 5% if certain conditions are met, including that there is at least a 10% shareholding: Article 10(2)(a). Otherwise, under the DTA, the DTA rate will be 15%: Article 10(2)(b).

If that was not complicated enough, on 7 July 2017 Australia was one of…

Defensive planning: being proactive & also prepared to defend – 2018 Private Business Tax Retreat

While we have not seen substantive legislative change across areas that impact private business (aside from superannuation), there is a clear change of thinking around policies that generations of private client advisers have, more or less, taken for granted.
Although these changes are, for the most part, still evolving, they nevertheless must be taken into account when advising clients, particularly as decisions taken today in the context of existing laws may have long-term consequences in a new legislative environment.
In this post, we discuss the concept of defensive planning, previewing three sessions from the upcoming Private Business Tax Retreat to illustrate how modern advisers need to be both proactive and prepared to go on the defensive at the same time.
We highlight three key areas that embody this approach of being proactive while ready to defend:

Looking at that old cliché, that proper preparation prevents poor performance Outlining how keeping an eye on the horizon can pa…

A year for us to make a difference

written by Tracey Rens *

I am incredibly honoured to serve as president for 2018 and I extend my thanks to the National Council, the dedicated Institute team, and our members for your support.

This year, we continue to focus on providing our best education programs, events and information to support all tax professionals in their day-to-day activities, as well as our advocacy work in improving the tax system now and in the future.

The National Councillors for 2018 are:
Tim Neilson (vice president)David EarlStuart GlasgowPeter GodberLen HertzmanMarg MarshallTim Sandow;Jerome TseTodd Want. I joined the Institute in 1995 at the beginning of my tax career because it was “the thing to do”, and I was encouraged to volunteer and become a more active member by senior members and my mentors. My involvement in volunteering began with participating on the NSW Education Committee, which I ultimately chaired. I then served on the NSW State Council and eventually National Council.

The experience ope…

Super and the expiry of the CGT relief – 2018 WA Superannuation Intensive

Trustees of superannuation funds, including self-managed funds, who adjust their asset allocations to comply with the transfer balance cap and transition-to-retirement income stream reforms that commenced on 1 July 2017 can claim the temporary transitional capital gains tax (CGT) relief. For many, this relief expires 15 May 2018.
Guidance from the Australian Taxation Office indicates that applying the CGT relief resets the cost base of an asset to its market value (as determined under the Valuation guidelines for SMSFs on the date the relief applies) and allows you to defer a capital gain that arises when resetting the cost base for assets where you use the proportionate method.
This rapidly encroaching May deadline means that any advisers who haven’t yet considered the issues facing their clients should be doing so now. 

Here we speak with self-professed 'superannuation nerd' Jemma Sanderson CTA about the ‘CGT relief seminar’session she will present at the WA Superannuation Inte…

The tax professional of the future – 2018 Barossa Convention

At a time in which traditional knowledge boundaries are rapidly eroding, the tax profession faces more serious challenges than in any other historical period.
Recent years have seen significant developments that are already affecting how we engage with clients and deliver services to them. Clients' expectations have also shifted.
At the 2018 Barossa Convention, Grant Thornton's Steve Healey CTA (Life) will deliver the keynote address, which will examine in detail the impact of these changes and how professionals can seize the opportunities they bring.
The following quotes are excerpted from the paper that Steve will present – 'The future tax professional'.

“Traditionally, we, as advisers, have been custodians of a body of knowledge that has within it enormous complexity. Today, we are witnessing a fundamental shift in the way we interact with each other in our personal and professional lives, in how we solve problems and generate new ideas. In future, the work profess…