Business succession – The current state of play

It is important for all businesses to have a succession plan or exit strategy for its owners.

There are a number of factors that need to be considered in determining the best exit strategy for business owners including: what industry does the business operate in? is there more than one principal? can the business operate independently of the principals? what type of purchaser would offer the principals maximum value for the business? and so on.

In his paper, ‘Business succession – The current state of play’, presented at the recent South Australia Succession Planning Day, Michael Chrisohoou, CTA, looked at the key elements of a Buy-Sell Agreement, common structures for such agreements, and many of the issues and considerations involved.

Michael’s paper, excerpted in this post, noted that some of the possible options for exit include:
engaging in a competitive sale process through the assistance of a corporate advisor or business broker. This may ultimately result in: - offering t…

Research and development – A sleeping giant should be woken!

Written by Bob Deutsch, CTA, Senior Tax Counsel
I have previously written about the Research and Development (R&D) tax offset contained in Division 355of the ITAA 1997 (TaxVine No. 27 - 28 September 2018).
That preamble was written specifically in the context of an AAT decision in Moreton Resources Ltd and Innovation and Science Australia [2018] AATA 3378.
Today, I take the opportunity to address more generally the R&D tax offset, particularly in the context of where we currently stand on all this in Australia.
As mentioned in my previous piece, the legislation in this area is complex and convoluted, running as it does to 21 pages of detailed technical content and includes a fairly complex definition of core R&D activities and supporting R&D activities. Whether it is consistent with what was originally intended or with what most might think of as “research and development” is open to argument.
My real concern is that the current legislation and its administration h…

Tax Director on what makes a great leader

What makes a great leader? Is there a formula? Is it about influence or power?
Amy Hockey, Tax Director at Deloitte, says there are a few things that make a great leader. She cites an example in her career.

“A great leader that I've worked with has been confident, keeps it real, has been a great mentor, always makes time for the team, grabs a hold of opportunities, a great teacher, but most importantly, makes tax fun,” she says.

Great leadership has never been more important in the face of change.

“Tax is constantly changing,” says Amy.

“So, it's definitely very important to keep on top of your education and to continue learning in tax.

“After university, I did my CA and then my Masters of Taxation.

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“I think you need to do it to stay relevant,” she adds.

Her advice to tax practitioners for keeping up with change is to be open, be flexible, and to be a d…

Interest Withholding Tax – Common Issues

Australia imposes interest withholding tax (IWT) of 10% on interest paid by Australian resident borrowers not acting at or through a permanent establishment outside Australia; or non-resident borrowers carrying on business in Australia at or through a permanent establishment in Australia (together, Australian Borrowers).

It is imposed on the interest paid by these Australian Borrowers to either non-resident lenders not deriving interest in carrying on business at or through a permanent establishment in Australia; or Australian resident lenders deriving interest in carrying on business at or through a permanent establishment outside Australia (together, Offshore Lenders).
IWT can also apply to interest paid in relation to other relationships, for example, interest paid by an Australian guarantor to an Offshore Lender or interest paid by an Australian debtor to an offshore supplier.
Education:Give your clients the best tax advice - become a CTA. Enrol into education developed and delive…

Division 7A and UPEs – The Road Ahead

The tax and regulatory environment for small and medium sized businesses continues to evolve at a rapid pace with Treasury releasing a consultation paper proposing changes to Div 7A in October 2018.  
Scheduled to commence on 1 July 2019, we spoke with Chris Wookey, CTA, about the proposed Div 7A changes.
In recent times, Chris has participated in confidential consultation sessions with representatives from Treasury, the Board of Taxation and the ATO about the upcoming changes to Div 7A as well as being a member of the Board of Taxation’s reference group for its review of small business tax concessions.
When asked what he believed the blind spots where in this area, Chris explained that ‘at a technical level, they include the interposed entity rules (s109T) as well as those involving trusts with UPEs owed directly or indirectly to corporate beneficiaries’. 
At a practical level, he believed ‘the biggest blind spot would have to be the cash flow crunch in a couple of years’ time if the ch…

How mentoring could be key to your career success

Trying to do great things is difficult. Trying to do them alone is, often, impossible. That’s why all great leaders have mentors. 
Most people who are successful end up that way because they’ve sought out mentors who share knowledge, skills and provide the networks to reach the top. In this post, we look at why finding the right mentor can be so valuable to your career progression, and provide some tips for getting the most out of a mentoring relationship. The benefits in working with a mentor Some people view a mentor as a kind of workplace guardian – someone who can not only warn you against making short-sighted moves that could damage your career and instead encourage you to do those things that may be uncomfortable at first but will reap great rewards in the future.

Experience is a valuable thing. And while there’s no substitute for earning it the hard way, there’s also no rule against leveraging the wisdom of others.

A good mentor will provide honest feedback on how you’re performing…

Labor’s tax changes - don’t jump the gun!

Written by Bob Deutsch, CTA, Senior Tax Counsel

Recently, I have heard many people advocate for either purchasing or selling property or shares based on various theories about what might happen as a result of the upcoming Federal election. I find such talk both troubling and dangerous on a number of fronts. 

In my view, doing anything as drastic as buying or selling assets based on tax and tax alone, is generally something that is ill-advised. This applies all the more so when it is about taking steps to buy and sell, merely in the context of what might happen as the result of an election.

Apart from anything else, we don’t know, and will not for some time know the detail of any of Labor’s proposed changes, even if one assumes that they win the election at the very least in the House of Representatives. Thus, even though we know that they propose to restrict the use of negative gearing to newly built residential accommodation, the exact detail of how this will operate remains unclear…