Showing posts from April, 2019

Parliamentary inquiry into the implications of removing franking credits: Fair game or a misuse of power!

Written by Professor Bob Deutsch, CTA, Senior Tax Counsel

The recently released “Report on the Inquiry into the implications of removing refundable franking credits” is without doubt one of the most peculiar documents ever to be released by the Parliament of Australia.

To put this in context, this report was the culmination of a reference made by the Treasurer, the Hon. Josh Frydenberg MP, to a Committee which was set up to inquire into the removal of refundable franking credits. In particular, and I quote “The Treasurer asked the Committee to inquire into and report on the implications of removing refundable franking credits, and, in particular, the stress and complexity it will cause for Australians, including older Australians who will be impacted in their retirement.” 

I say this is the strangest of reports because it is so fundamentally politically motivated, and to use a Parliamentary Committee to report on a measure which has been suggested by your political opponents is in my vie…

A note from the President: celebrating our unsung heroes

President Tim Neilson, CTA, reflects on the 34th National Convention.
March is apparently often the best time of year in Hobart, and the weather was certainly kind to us. But, as usual at the Institute’s National Convention, there was so much going on indoors that only those lucky enough to have tacked some extra days on to their trip (or to live there year-round) would have got the full benefit of the sun and the ambient temperature.
It’s invidious to select any specific speakers as having been outstanding, especially since I couldn’t be at three places at once during the breakout sessions (much as I would have liked to), and so didn’t see a number of sessions that I’m aware were excellent.
So I’d certainly like to thank all our speakers, panelists, session chairs, and of course unsung heroes who do a lot of the research and writing behind the scenes to make the presentations special.
But I want to note our special thanks to a few people.
Commissioner of Taxation Chris Jordan, CTA…

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…