Reversionary pension nominations and BDBNs

A member who has made a Binding Death Benefit Nomination (BDBN) who subsequently commences a pension with a reversionary nomination has effectively varied their BDBN, and the BDBN may be undermined.
Under the ATO’s view, set out in TR 2013/5, a member’s pension ceases for tax law purposes on their death unless an eligible dependant is automatically entitled to receive the pension as a reversionary beneficiary.

A nomination will broadly fail to satisfy the ATO’s strict standard of reversion if any element of discretion arises under the governing rules of the fund in relation to the death benefit.

This means, among other things, that the 12-month deferral in the timing of the credit to the recipient’s transfer balance account will not be available.

Naturally, a binding direction in relation to a member’s death benefits can be recorded in various ways.

For instance, nominations in relation to death benefit pensions are commonly recorded in pension commencement documents, reversionary p…

Protecting your clients’ rights to Legal Professional Privilege

Written by Sue Williamson

Sue Williamson is a legal partner with EY, specialising in tax controversy. She chairs the Tax Institute’s Dispute Resolution Committee.

Legal Professional Privilege (LPP) is a cornerstone legal right that is fundamental to the effective operation of the Australian legal system and the administration of justice (refer to Baker v Campbell (1983) 153 CLR 63, 60 (Gibbs CJ)). It is a right that is owned by the client, not the lawyer. As with all client rights, our role as the lawyer is to protect the right unless instructed otherwise. No adverse inference should be taken because a person refuses to hand over a document that is subject to LPP. No person should refuse to hand over a document claiming that it is subject to LPP unless they have positively determined that the document is subject to LPP.

The ATO has expressed concern that ‘reckless and false’ claims of LPP have been made by some tax professionals to avoid disclosure of documents during tax audits (refer t…

Eddy Moussa defines “critical” skills for success in tax

Eddy Moussa, CTA, on which skills are key for success and how membership has impacted on his career.

We caught up with Eddy at the 34th National Convention in Hobart. He is a Partner at PwC and is currently a member of our National Council.

“What I really like about tax and being a tax adviser is it involves problem solving, and it's a way of problem solving which is applying the law to business transactions,” he says.

“And in the place that I work, you need to do that in a team environment.

“So I get to work with great people solving interesting problems for clients.”

Tax as a body of law is massive

Eddy says that building technical knowledge and structured education is imperative for new practitioners.

“Ultimately, we're assisting clients manage their tax affairs and ensuring they're complying with the rules.

“And it's very hard to do that if you don't understand the rules yourself.

“Tax as a body of law is massive. Then, you can overlay ATO guidelines, tre…

Announced but un-enacted measures – everything old is new again

Written by Mark Molesworth

Mark Molesworth is a Partner in BDO’s Tax Division and Chair of the Tax Institute’s SME & Tax Practitioner Technical Committee. He also represents The Tax Institute at the ATO’s Private Groups Stewardship Group.

Announced but un-enacted measures – everything old is new again 

In last week’s TaxVine Tax Counsel Report, Tax Counsel Stephanie Caredes discussed the tax policies that the Coalition Government took to the recent election. This week I thought I would take a quick look at the measures that have been announced, but not enacted at the time that Parliament rose for the election.

Depending upon whether you lump together related measures or split them out, there are up to 107 announced measures that have not yet made it into law. Some were the subject of legislation that lapsed when the election was called, others haven’t been opened for consultation yet. The earliest proposed application date is 1 July 2001 (for a debt-equity integrity measure first anno…

Small Business CGT Concessions – The Good, The Bad and The Ugly

Much like the 1966 Clint Eastwood film, small business CGT concessions can often be Good, Bad or just damn right Ugly.

For clients selling their businesses, the small business CGT concessions can reduce their tax significantly or, in some cases, eliminate it altogether. Recently enacted integrity measures and increased ATO review activity make these concessions an area where extreme caution should be exercised.

Have you wrapped your head around the latest legislation?

Hoping to shed some light on the complex changes to the small business CGT concessions, which came into legislation in September 2018, we interviewed experts Neil Brydges, CTA, Sladen Legal, Adrian Zuccarini, Australian Taxation Office and Matthew Meng, Victorian Bar.

Navigating the Wild West of Small Business CGTs can be a difficult task - “this is a highly technical area” says Matthew, “practitioners really need to track through the detailed requirements in every case”.

Matthew, a practising Barrister, specialisin…

Tax Partner: invest early in your career

Geoff Stein, CTA, Partner at Brown Wright Stein Lawyers, shares why he values professional development events – including the recent Women in Tax Special Budget Edition Lunch in Sydney – why practitioners need to get on top of change and advice he’s followed from the early stages of his career. Geoff has worked as a lawyer in Sydney for over 20 years, specialising in commercial and tax law. He advises clients on tax, commercial, trust, estate planning, wealth management and ancillary legal issues. “Today was a great lunch for Women in Tax,” he says. “We really got down to some hard tax issues, and it was great to see that from not just a female perspective, but to talk about the general issues and to have female voices promoted.” Investing in your own community “The Tax Institute CPD events are fantastic, and I encourage all of our staff to attend as many as we can,” he says. “They are pitched at various different levels, and it means that there's usually something for everybody. “I'…

Five SMSF estate matters you must talk to your client about

This post is an excerpt from the paper 'Five SMSF estate matters you must talk to your client about', this month's free technical paper for members.

ATO data confirms there are over 597,000 of SMSFs in Australia. We see many instances where SMSFs hold the greatest pool of assets for clients. 
Unfortunately we are also seeing many instances where the SMSF has been the forgotten part of the succession planning puzzle, or where there has been little thought on key issues such as succession of control or passing of death benefits.

It has been very easy for clients to complete a standard death benefit nomination (DBN) form to deal with the assets of the SMSF. While that often works for situations where there are happy families and simple scenarios, increasingly the SMSF is becoming the new battleground.

Shifting the mindset of clients from only considering a DBN, to thinking more broadly about their SMSF and their succession planning goals can be a tricky discussion. This needs …