Showing posts from June, 2019

The biggest changes in estate planning in a generation

In the lead-in to this year's Death... and Taxes Symposium, we take a look back at an article published in the January issue of Taxation in Australia by Matthew Burgess, CTA, that highlighted just how much had changed in estates in the previous 12 months.

Matthew's article points out that we had seen more changes in key estate planning areas in a single year than each of the previous 30 years combined.

At the Symposium, taking place 18-19 July on the Gold Coast, Matthew co-presents the session 'How do you manage companies and trusts that were controlled by the now deceased?', alongside Todd Want, CTA, with facilitator Peter Godber, CTA.

In the session, they will look at whether it is better to maintain, revive or unwind trusts and companies during or after administration, and identify problems with old structures, considering director, trustee and adviser risks. They will also address trust and company taxation issues.

Matthew's original article 'The biggest y…

Review of the “source of income” rules

Whether an item of income or a gain is derived from sources in Australia is often an important question for taxpayers.

The answer can mean that the income or gain is subject to Australian income tax.

In his session at the 12th Annual NSW Tax Forum, King Tan, FTI, provided a refresher on the source of income rules and their interactions with various Australian tax provisions.

His paper is excerpted in this post.

In his paper, King undertakes a review of the source of income rules by considering first, the significance of the term “source” in Australian income tax law, and second, the meaning of “source” in Australian income tax law.

The paper then looks at general source principles relating to five categories of income which are commonly derived by taxpayers, being dividend income, interest income, royalty income, income from real property and business income.

It consider common law principles and statutory rules relating to source and the potential relevance of Australia’s bilateral…

Taxing of super funds: Is it time for a re-think?

Written by Phil Broderick

Phil Broderick is a Principal of Sladen Legal and is the Chair of The Tax Institute’s Superannuation Committee.

Taxing of super funds: Is it time for a re-think?

Regardless of political views, there was a general sigh of relief in the (self-managed) superannuation industry with the recent Coalition victory. This is because the industry will (hopefully) duck another round of superannuation tax changes (AKA tinkering).

Labor proposed a number of changes including reducing the non-concessional contributions cap (again), a reduction of the Division 293 threshold, abolition of the catch-up concessional contribution measure, abolition of limited recourse borrowing arrangements, non-refundable franking credits and reintroduction of the 10% test for personal deductible contributions – just to name a few. 

Not that the Coalition should be able to throw any stones. The former Coalition Government reduced the contribution caps, introduced the complicated transfer b…

The complex world of Family Law & Tax – WA Family Law Intensive

With one in three marriages ending in divorce, it’s inevitable that you will have clients who suffer a breakdown in their marriage or de facto relationship. When this occurs, your clients will turn to you for assistance.
Andrew Davies, O’Sullivan Davies, leading WA family lawyer is presenting at the upcoming Family Law Intensive on 23 July in Perth on ‘Family Law Arbitrations’.
He is an accredited specialist family lawyer, nationally accredited mediator, and arbitrator in family law, current chair of AIFLAM and principal partner at O’Sullivan Davies.
He has been presenting for The Tax Institute since 2004 and is looking forward to the event to learn anything he can about taxes, duty & valuations.
“Family law arbitration has some unique features, an important goal of my sessions is to help accountants, financial advisors and commercial lawyers better understand how they can assist their clients in this area,” says Andrew.
He hopes to show delegates how to ‘value add’ to the services …

Stay prepared when planning for blind spots – 2019 SA Private Business Day

Checking blind spots is crucial when advising clients. Here’s a preview of the 2019 SA Private Business Day.
The operating environment for private companies is increasingly competitive and complex. Many now investigating how to implement effective structuring and growth strategies, in local and global markets.
Julie Van der Velde, CTA, Principal and Founder of VdV Legal will be presenting at the 2019 SA Private Business Day at the Adelaide Convention Centre on Friday, 2 August.
Her session will take a practical look at planning for the risk, if a person in charge loses legal capacity - What if your client doesn’t die? Planning for loss of capacity.
Julie has spent over 20 years working with SME businesses in South Australia and interstate, with a focus on family business and intergeneration transfers. Julie has been affiliated with The Tax Institute since 2002, winning The Tax Institute’s SME Tax Adviser of the Year award in 2017.
“Elder laws and problems that arise around loss of capaci…

The BHP case: What amounts to “sufficient influence”?

Written by Ellen Thomas

Ellen Thomas is a corporate tax partner at PwC. She advises on a range of M&A transactions, infrastructure investments and financial arrangements. She is co-Chair of The Tax Institute’s Large Business and International Technical Committee.

The BHP case: What amounts to “sufficient influence”?

There is one particular tax case currently on appeal to the High Court, BHP Billiton Limited (now named BHP Group Limited) v Commissioner of Taxation, that will be significant for all tax practitioners.

The case concerns the definition of “associate” – one of the most widely used terms in the Tax Acts. In particular, the High Court will consider what types of acts amount to “sufficient influence” of a company. 

This is a complex definition that frequently needs to be examined in practice, including in the application of the thin capitalisation regime set out in Division 820 of the Income Tax Assessment Act 1997 (ITAA97), and the application of the debt-equity rules in Divis…

5 things to bear in mind when choosing your learning provider

You’re looking for a learning program. Here are 5 things to consider before making the choice.
1. Does the program support you to meet your goals?
Consider your key personal learning goals. Are they academic, professional or both?

For example:

Academic: Do you want to gain an academic, qualification or are you looking to learn more about specific topics in Australian tax law?

Professional: Is your learning goal around advancing your career or being recognised in your profession with a designation or status? Do you want to build your network by learning with fellow professionals? Do you want to learn from experts in your field? Do you want to develop skills beyond technical elements of the tax law e.g. improving your tax research, advisory communication and business writing skills?

2. What knowledge and skills are you looking to develop?
Success in a professional career these days, requires significant subject matter knowledge But this expertise needs to be complemented by effectivene…

Tax Practitioner’s Board: Maintaining your CPD obligations

Tax is always evolving. It’s important to keep up. In fact, it’s part of your obligations as a tax professional.

This year, the Tax Practitioners Board began reviewing practitioners to ensure compliance with continuing professional education. The Tax Institute will be supporting them with random audits of members.

As a Fellow or Associate, you must complete 15 hours of structured Continuing Professional Development (CPD) a year. For Chartered Tax Advisors, it’s 30 hours.

The TPB has stated that: “In 2018-19 we will undertake reviews of practitioners continuing professional education (CPE) records to ensure compliance with our CPE policy and their renewal requirement. These reviews will provide insights into how tax practitioners are maintaining their knowledge and skills relevant to the services they provide that help us develop targeted guidance and support.”

The Tax Institute requires members to undertake continuing professional development (CPD)

Up-to-date knowledge and skills are …

Why tax technical expertise is just a “ticket to the game”

Queensland State Chair and Partner at Deloitte Private, John Ioannou, CTA says that while tax technical expertise is crucial for success in tax, it doesn’t guarantee a “seat” at the game.
John was admitted as a solicitor in 2002 and is a Partner at Deloitte Private. He has experience in the areas of taxation, structuring, trusts and estate, succession and asset protection planning. He is currently Queensland’s representative on the Institute’s National Professional Development Committee, a member of Queensland’s State Council, and elected 2019 State Council Chair.
We caught up with him at the 34th National Convention in Hobart.
“Some of the insights I've taken away from the Convention, as always, is really the opportunity to see other people’s perspectives on issues that you come across in practice,” he says.
“When you've been in practice for a little while it's not often the case that something takes you by surprise, unless you're dealing with new law.
But I always enjo…

Recent developments in the tax residence of individuals, companies and trusts

Residency has been a hot topic with the Board of Taxation Consultation Guide on the review of the rules for the tax residence of individuals released in September 2018.

In addition, we have seen the full Federal Court decision in Harding’s case in February 2019 (the ATO are seeking leave to appeal to the High Court); as well as the issue of TR2018/5 and PCG 2018/9, concerning the tax residence of companies following the High Court decision in Bywater.

The guidance on the residence of companies also flows over into the residence of trusts.

In his recent paper, 'Recent developments in the tax residence of individuals, companies and trusts', Robert Gordon CTA, looked at:
The legislative provisions The cases interpreting those provisions over time, bearing in mind globalisation and the changes in work / travel patterns in more recent times The proposed changes to the legislation for residency of individuals The change in interpretation of the legislation for residency of companies…

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…