Showing posts from 2019

The Federal Budget 2019-20 – a deeper analysis

Written by Professor Bob Deutsch, CTA, Senior Tax Counsel
The Federal Budget delivered by the Treasurer, Hon. Josh Frydenberg on 2 April 2019 did not contain the usual array of tax changes that we are accustomed to in previous budgets.
Nonetheless, there were some important changes, some of which I have already discussed on Budget night and upon which I will now elaborate.
Personal income tax changes
The most significant immediate change is the expansion to the low and middle-income tax offset which will apply with immediate effect, in the sense that it will apply to the 2018-19 tax year. This will deliver $1,080 per annum for each individual single who is eligible and slightly more than double that for a couple. Those on incomes between roughly $45,000 and $95,000 per year will receive the full benefit...
Members, you can access Bob Deutsch’s Federal Budget 2019 analysis on our site. You will need your Username to access. 
Members, we welcome your thoughts via the TaxVineFeedback inb…

Super reporting – What is in and what is out?

The 2017 financial year saw the most significant changes in superannuation law for more than a decade.

The introduction of new concepts including Total Super Balance and Transfer Balance Cap from 1 July 2018 had significant consequences for member superannuation balances in the 2017 financial year and for future periods. Further restrictions contributions were introduced, as well as new reporting obligations for superannuation funds.

In her paper, 'Super Reporting – What is in and What is out?', presented at our National Convention in March, Shirley Schaefer looked at the issues facing advisers.

Speaking to us before the Convention, Shirley told us "With the super goal posts moving at a constant rate, my session provides delegates with a snapshot of current changes and what the obligations of their clients are and how they can help them. It will give delegates the information and tools they need to ensure that their clients keep on the ‘right’ side of the regulators&quo…

IP, goodwill, and protecting the recipe

At the 26th Noosa Intensive, Clint Harding, CTA, (Arnold Bloch Leibler) presented the session ‘Protecting the recipe’, where he looked at how intellectual property is defined, goodwill, and some of the key legal mechanisms that can be used to govern and protect the use of valuable ip.

In the paper he presented, excerpted in this post, he then looked at how structures can be optimised for both ip protection and retaining access to any concessions, grants or incentives that may be available, as well as some of the tax issues associated with ip that you need to be aware of during the lifecycle of a business.

What is Intellectual Property?

Properly identifying and understanding early stage intellectual property is critical when it comes to planning for the future. The creation and development of intellectual property can happen fast and the accounting and taxation treatment associated with it can be complicated. In order to ensure the optimal business structure is in place to protect and …

CTA Dux graduate: “hard work pays off”

Rachel Vijayaraj, CTA, weighs in on the Chartered Tax Adviser (CTA) Program and how it’s supported her career.
We caught up with Rachel Vijayaraj, CTA at the 34th National Convention in Hobart. She is a Senior Associate at Brown Wright Stein Lawyers. She was also awarded Duce in CTA3 Advisory, the final subject in the CTA Program before obtaining the CTA designation.
“I've been practising as a lawyer for the last 10 years,” she says.
“In the early part of my career, I practised in tax disputes (and that still forms a part of my practice) although my interests have led me to specialise in trusts, estates, and not-for-profits with a focus on tax.”
Rachel says the most valuable aspect of the CTA Program was the collaborative approach in learning with peers, and particularly in consolidating her tax knowledge in areas that she might not practice regularly.
“One of the key areas of new confidence for me was studying the elective corporate tax,” she says. “I've practised in the S…

Discretionary trusts: can I vary a trust deed so it is not a "foreign person" for duty and tax purposes?

Sponsored post from our partner, Thomson Reuters

Sometimes leaving open the possibility of foreign resident beneficiaries in discretionary trusts - intended as a vehicle for holding or purchasing land in Australia - can result in unnecessary additional duty and taxes for otherwise compliant trusts.

This video and accompanying article will give you a snapshot of the issue, some practical examples and possible solutions.

Written for Thomson Reuters Cleardocs by Susannah Stanford, Maddocks Lawyers

Exclusive for readers of The Tax Institute blog, you can access the latest Trusts Tax Bulletin for a more in-depth view, including legislative announcements and developments. Click here.
What is the issue? The most common reason for a discretionary trust deed to explicitly exclude foreign beneficiaries is the State-based foreign purchaser duty and land tax regimes.

Foreign duty surcharge rates and rules differ depending on the State in which particular land is situated but surcharge rates of dut…

What happened in tax in March?

Written by TaxCounsel Pty Ltd

The following points highlight important federal tax developments that occurred during March 2019.

Each month, these developments are considered in more detail in the 'Taxing Issues' column of Taxation in Australia, the Institute's member journal.

Phoenixing amendments

An amending Bill introduced into parliament on 13 February 2019 contains a range of amendments directed at combating illegal phoenix activity.

Instant asset write-off

Also introduced into parliament on 13 February 2019 was an amending Bill that contains amendments that will implement the instant asset write-off changes that have been announced.

Company loss amendments

The amendments to the ITAA97 and the ITAA36 which supplement the “same business test” with a “similar business test” for the purposes of (inter alia) working out whether a company’s tax losses and net capital losses from previous income years can be used as a tax deduction in a current income year are now law.


The ATO’s director penalty notice powers

The ATO’s enhanced debt collection powers against directors and other third parties seem to be continually expanding, but the fundamental touchpoint remains the director penalty notification mechanism, which has developed a very substantial body of law.

Government announcements that want to press errant directors to pay a widening field of withheld amounts seem to be happening on a regular basis. When coupled with the parliamentary inertia that happens with minority governments, the passing of such proposed legislation with amendments is both intermittent and usually unannounced. 
This process seems to lead to a state of confusion and an inability to properly interpret the DPN rules. 
In this article, from Taxation in Australia, excerpted here, Arthur Athanasiou, CTA, and Mark Gioskos, FTI, review the DPN rules and consider imminent legislative changes. 
They also look at how individuals other than directors might become liable under the DPN rules, and the ATO’s take on the liability…

Franking credit denial and the Medicare levy - much ado about nothing or a small part of a bigger problem?

Written by Professor Bob Deutsch, CTA, Senior Tax Counsel

The interplay of the denial of excess franking credits with other taxes, levies, and benefits has been largely overlooked in the current debate.

That interplay could be critical whenever a calculation of the tax, levy or benefit depends on a calculation of “taxable income” which includes a franked dividend.

Let me explain by way of a simple example. A single retiree, Anna, has income consisting solely of a franked dividend of $20,000, franked at 30%.

Anna must include in her assessable income an amount of $28,571 (ie $20,000 + $20,000 x 3/7). As she has no deductions, her taxable income is also $28,571.

The gross tax based on 2017/8 marginal rates is $1970. Under Labor’s plan to deny excess franking credits the $8,571 is offset against the gross tax of $1,970 such that the net tax payable is reduced to zero. However, the excess of $6,601 currently refundable, will under Labor’s plan, be no longer refundable.

All that has b…

Tax Partner: no “finite bit of knowledge” in tax

Kaajri Vaughan, Partner at PwC, shares tips for new tax practitioners, thoughts on great leadership, and explains why tax education is crucial for success.
A leader in tax herself, we asked her what traits make for the best leadership.
“A great leader I've known and worked for is someone who really personalised his leadership,” she says. “He always took the time to work out what motivated each person in his team, and he didn't assume that what drove him also drove me.
“He took so much time to make a personal connection with each person, and gave me opportunities, really encouraged me to be myself, be authentic and open, didn’t assume anything about me, and that just brought out the best in me, and in everyone in the team,” she adds.
We also asked her what advice she would give herself when she started in tax.
“The best advice I would give myself is to relax, to take it down a notch,” she laughs.
“To think about this as a marathon and not a sprint. I was so focused when I s…

Recent Developments in the Tax Residence of Individuals, Companies and Trusts

After the Board of Taxation’s Review of the Income Tax Residency Rules for Individuals was released in September 2018, residency remains a linchpin in the modern day tax industry.
We spoke with Tax Barrister & Solicitor, Robert Gordon, CTA, Pointon Partners, about his session, Recent Developments in the Tax Residence of Individuals, Companies and Trustswhich will focus on the Board of Taxation’s consultation guide, legislative developments within residency and the flow-on consequences for the residence of trusts.
Robert, a highly regarded consultant at Pointon Partners in Melbourne, has over 20 years’ experience at the New South Wales and Victorian Bars and was an accountant with the Big Four firms in both Sydney and Melbourne.

When we spoke to Robert, we asked what these proposed changes mean for practitioners and what he believes are the blind spots in relation to individuals, companies and trusts?

Robert explained, for individuals, ‘there is a wide-spread myth that leaving Aust…

Federal Budget 2019 – unveiling our brand new website

The Tax Institute’s CEO Giles Hurst has some big news about the 2019 Federal Budget.

“I am thrilled to announce the launch of the Institute's first dedicated website in support for the Federal Budget,” says Giles.
“We're going to be showcasing the very best talent The Tax Institute has, with some great interviews with members that have played a big part in volunteering for us, some over many years, some more recently.
“We're also going to be allowing people to have deep-dive analysis from our Senior Tax Counsel, Bob Deutsch, CTA on the night of the actual Budget itself.”
“It's a Federal Election year, it's Budget time. The Tax Institute is at the forefront of everything that's going on right now, and so it should be. We're here to represent you, our members.”
You need to be informed
A Federal Election and Federal Budget are big ticket events for tax professionals in Australia. “Because there is so much going on, you're going to need to be informed, you&…

Labor’s negative gearing restrictions – how might they work?

Originally published 16 November 2018

Written by Professor Bob Deutsch, CTA, Senior Tax Counsel The Federal opposition’s plans to introduce restrictions on negative gearing for investors, if elected next year, have received some much-needed clarification.  Last week, I was able to confirm with the Labor Party that their proposed changes to negative gearing would apply across the board to all investments. Previously it was thought that Labor’s negative gearing restrictions might only apply to property investment.  With this knowledge, the Tax Institute issued a media release outlining the good and bad news for investors.  Shortly after the media release was issued, I received feedback from Member 372 (see below) who suggested that “it is not the Institute’s business to act as spokesman or apologist for a political party”.  I thank Member 372 for their comments. However, with all due respect to the member, to suggest that by examining these measures, I am acting as an apologist for the Labor …

5 steps to solving complex client problems

Tax Partner and lecturer Andy Milidoni, CTA, reveals how to solve complex client problems and provide first-class client advice.
Partner at Johnson Winter & Slattery, Andy is also CTA3 Advisory lecturer at The Tax Institute. Why tax? We asked.
“I always wanted to do tax,” he says.
“I didn't sort of fall into it. At university, I picked up all the tax subjects and then went into the graduate program at the ATO”.
“I then worked in tax groups through the firms I was employed in.”
When asked what his greatest achievement has been, Andy says, “Some of my greatest career achievements include the private ruling application outcomes, APA advance pricing agreements and negotiating audit outcomes with the ATO prior to anything going to litigation.
“All of these have been because of the skills that I’ve honed over the last 20 years of my career. “It’s a great achievement for any tax practitioner, indeed lawyer, if we can keep our clients out of court and achieve really mutually acceptable …