Blog
Disclosing business tax debt information to credit agencies

Disclosing business tax debt information to credit agencies

27-Mar-2018

The Federal Government has released draft legislation and a draft legislative instrument that, when passed, will authorise the ATO to disclose a business’s tax debt to registered credit reporting bureaus where the business has not effectively engaged with the ATO to manage the debt. The draft legislation intends to place tax debts on a similar footing as other debts, to encourage timely payment or engagement with the ATO for businesses that want to avoid having their debt information affect their creditworthiness. Disclosure to credit reporting bureaus will only be permitted if the ATO ha..

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Superannuation integrity changes

Superannuation integrity changes

20-Mar-2018

The Government has released a consultation paper and exposure draft legislation to give effect to the following superannuation taxation integrity measures it announced in the 2017–2018 Federal Budget: the non-arm’s length income (NALI) rules in s 295-550 of the Income Tax Assessment Act 1997 for related-party superannuation fund transactions will be expanded from 1 July 2018 to also include expenses not incurred that would normally be expected to apply in a commercial arm’s length transaction (eg reduced interest expenses, brokerage, accountancy fees or legal costs); and a member..

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Corporate tax avoidance: latest ATO targets

Corporate tax avoidance: latest ATO targets

02-Mar-2018

The ATO has provided an update on its latest focus areas and the compliance projects it is undertaking to reduce corporate tax avoidance. These include: investigating possible manipulation of the thin capitalisation rules, including 27 taxpayers’ asset revaluations totalling $78 billion; looking into arrangements that move intellectual property assets and rights offshore to multinational entities’ related parties; focusing on the treatment of oil and gas industry labour costs associated with high-value asset construction; examining the arm’s length conditions operating in phar..

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Fringe benefits tax: employees’ private use of vehicles

Fringe benefits tax: employees’ private use of vehicles

16-Feb-2018

The ATO has issued guidance for employers on determining an employee’s private use of a vehicle. Draft Practical Compliance Guideline PCG 2017/D14 should provide more certainty and transparency about the circumstances where the ATO won’t apply compliance resources to investigating whether private vehicle use meets the car-related FBT exemptions. Eligible employers who rely on this guideline won’t need to keep records to prove that an employee’s private use of a vehicle is minor, infrequent and irregular.     TIP: The guideline includes specific eligibility cond..

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Tax consequences of trust vesting

Tax consequences of trust vesting

12-Feb-2018

The ATO has issued a long-awaited ruling on trust vesting, including changing a trust’s vesting date and the CGT and income tax consequences of vesting. TIP: A trust’s “vesting date” is the day when the beneficiaries’ interests in the trust property become fixed. The trust deed will specify the vesting date and the consequences of that date being reached. Vesting does not, of itself, ordinarily cause the trust to come to an end or cause a new trust to arise. In particular, the underlying trust relationship continues after vesting while the trustee still holds property for the take..

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Superannuation integrity changes

Superannuation integrity changes

06-Feb-2018

The Government has released a consultation paper and exposure draft legislation to give effect to the following superannuation taxation integrity measures it announced in the 2017–2018 Federal Budget: the non-arm’s length income (NALI) rules in s 295-550 of the Income Tax Assessment Act 1997 for related-party superannuation fund transactions will be expanded from 1 July 2018 to also include expenses not incurred that would normally be expected to apply in a commercial arm’s length transaction (eg reduced interest expenses, brokerage, accountancy fees or legal costs); and a member..

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Housing affordability measures now law

Housing affordability measures now law

02-Feb-2018

Legislation has been passed to implement the 2017–2018 Federal Budget housing affordability measures. The following will start on 1 July 2018: The First Home Super Saver (FHSS) Scheme, which allows individuals to use specific amounts from their super to buy or construct a first home; The option for individuals aged 65+ to make “downsizing” contributions of up to $300,000 to their super from selling a home they have owned for at least 10 years.     TIP: An exemption from meeting the FHSS Scheme “first home” requirement will be available for people suffering..

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Superannuation guarantee

Superannuation guarantee

12-Dec-2017

Crackdown on employer non-compliance The Government has announced a package of reforms to give the ATO near-real-time visibility over employers’ superannuation guarantee (SG) compliance. The package includes measures to: require super funds to report contributions at least monthly to the ATO; roll out Single Touch Payroll (STP); and give the ATO the ability to seek court-ordered penalties in severe cases of non-payment. Salary sacrifice integrity Legislation has also been introduced to prevent employersfrom using an employee’s salary sacrifice contributions to reduce the emplo..

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Foreign equity distributions to corporate entities

Foreign equity distributions to corporate entities

06-Dec-2017

Two recent taxation determinations from the ATO deal with how the foreign equity distribution rules in the Income Tax Assessment Act 1997 apply where the distribution recipient is a corporate partner in a partnership or a corporate beneficiary of a trust. Under the rules, a foreign equity distribution is treated as non-assessable, non-exempt income if the recipient is an Australian corporate tax entity that holds a participation interest of at least 10% in the foreign company making the distribution. The ATO’s view is that a partnership or trust can hold a direct control interest in a ..

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Total superannuation balances and pension transfer balance account reports

Total superannuation balances and pension transfer balance account reports

05-Dec-2017

The concept of a person’s “total superannuation balance” is now being used to determine whether you are eligible for various super concessions, including the $1.6 million balance limit for non-concessional contributions, Federal Government co-contributions, the spouse contributions tax offset, carrying forward unused concessional contributions and self managed superannuation fund (SMSF) segregation. The ATO has recently agreed to modify the reporting obligation for total superannuation balances, recognising that some funds are not in a position to correctly report their correct accum..

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New passive income test for lower corporate tax rate

New passive income test for lower corporate tax rate

05-Dec-2017

The Federal Government has recently introduced a Bill into Parliament to ensure that companies with more than 80% passive income will not qualify for the reduced company tax rate. Under the Bill’s changes to the Income Tax Rates Act 1986, calculations of a business’s “passive income” would include:         Distributions by corporate tax entities (other than non-portfolio dividends); Franking credits attached to such distributions; Non-share dividends; Interest; Royalties; Rent; Gain on qualifying securities; Net capital gains; and ..

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Consultation paper: combating phoenix activities

Consultation paper: combating phoenix activities

22-Nov-2017

The Federal Government has released a consultation paper proposing company and tax law reforms to combat phoenix activities. Phoenix activities involve stripping assets from a company that’s in debt and transferring them to another company to avoid paying the first company’s liabilities – that is, the new company “rises from the ashes” of the old one. The government is considering a range of ways to combat this type of activity, including setting up a hotline for phoenix reporting, adding phoenixing to the offences specifically prohibited under the Corporations Act 2001, making..

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ATO guidance: what is “carrying on a business”?

ATO guidance: what is “carrying on a business”?

22-Nov-2017

The ATO has issued a draft taxation ruling to explain the factors it will consider when deciding whether a company (incorporated under the Corporations Act 2001) is “carrying on a business”. This is one of the tests companies and small businesses must pass to be eligible for the lower corporate tax rate. It’s not possible to definitively state whether a company carries on a business, but the draft ruling says that ATO will consider a range of indicating factors. Specifically, a company is likely to be carrying on a business if it: is established and maintained to make a profit for..

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Tax treatment of long-term construction contracts

Tax treatment of long-term construction contracts

17-Nov-2017

In new Draft Taxation Ruling TR 2017/D8, the ATO explains the methods that taxpayers can use to return income derived and recognise expenses incurred in long-term construction projects. A construction project is considered long-term if it straddles two or more income years. Two methods of accounting are available: the basic approach (essentially the accruals method) and the estimated profits approach. Once a particular method is chosen, the ATO expects the taxpayer to apply it consistently for the entire contract. The same method should also be applied to all of the taxpayer’s similar ..

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Fringe benefits tax: should an Uber be treated as a taxi?

Fringe benefits tax: should an Uber be treated as a taxi?

15-Nov-2017

Earlier in 2017, the Federal Court ruled that UberX drivers must be registered for GST, because they supply “taxi travel”. There has been much discussion of this finding since, and the ATO is now examining whether Uber trips should be eligible for the “taxi travel” FBT exemption. The FBT exemption, introduced in 1995, currently only applies to travel in a vehicle that is state or territory licensed to operate as a taxi. However, with the Federal Court’s decision on GST for Uber, and some recent state and territory moves towards licensing changes, the ATO has decided to review its ..

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