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21st National Convention: Beyond the Sea

05 Apr 2006
Gold Coast Convention and Exhibition Centre, Broadbeach, Qld
National

After the waves of tax reform over the past two decades it is time to go beyond the seas of change and reflect on key fundamental issues consolidating our knowledge.

Three streams and over 25 technical sessions were offered at the convention. Topics catered for many areas and levels of knowledge.

The SME Hot Topics stream focussed on topics that affect SME clients, and included sessions on discretionary trusts, non-resident beneficiaries of trusts, superannuation, going forward with or from service trusts, the key changes in the last 12 months impacting on structuring for SME clients and loans.

The corporate issues stream focussed on a number of issues of specific interest to corporates including the ATO's areas of issue in consolidation, international tax reform, employee share plans and offshore expansion among others.

The dealing with assets and property stream covered areas which are of interest to many practitioners including GST and CGT issues associated with assets/property and transactions affecting them, market value and why it is so important, the provisions that the proposed Division 250 is not replacing intangible property and lastly capital allowances.

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Individual sessions from this event:

Section 8-1: Making certain that you receive what you are entitled to

Author(s):  Allan W BLAIKIE

Section 51 has been one of the most litigated provisions of our tax legislation. In 1997 it was replaced by section 8-1. This paper covers how these provisions have been interpreted and applied by the ATO and by the Courts since 1997 including consideration of:

  • general deductibility - what has happened since 1997?
  • demarcation or boundary issues with the remainder of the legislation
  • timing of deductibility issues
  • purpose and when it becomes relevant
  • how does all this fit with the Consolidation Regime?

Material from this session:

A new relationship with the tax profession

Author(s):  Michael D'ASCENZO

In this paper the Commissioner discusses significant issues for Tax Practitioners.

Material from this session:

Understanding your trust deed

Author(s):  John CIARDULLI,  Rob JEREMIAH

This paper is a practical guide for working with trust deeds, focussing on what words in the trust deed mean, some useful tips, issues to consider and traps to avoid. Including:

  • difficulties with working out who are the beneficiaries
  • trust to trust distributions
  • problems with distribution powers and beneficiary entitlements
  • problems with appointors and guardians
  • trust deed variations: how? what can they cure? what are the side effects?

Material from this session:

Effective implementation of a tax plan

Author(s):  AH (Tony) SLATER

In many cases the taxpayer has critical problems in succeeding in their dealings with the ATO (or subsequently on appeal) because of aspects concerning the transaction that have been overlooked when implementing the arrangement. This paper covers:

  • ensuring that the documentation is correct
  • addressing procedural issues (doing things in the wrong order or leaving something critical out)
  • getting the parties right
  • getting the requirements right.

Material from this session:

Debt equity rules: emerging issues

Author(s):  Ernie CHANG

This paper covers those issues currently causing concern including:

  • solvency and priority clauses
  • related schemes
  • convertible interests
  • when are shares, etc., excluded from being a financial benefit
  • interaction with other provisions of the Act.

Material from this session:

Capital allowances

Author(s):  Michael HENNESSEY

Has Division 40 thrown up additional issues compared to the depreciation/amortisation regimes previously applying? This paper covers the following topics:

  • an overview of the post-Ralph changes
  • assessing and reassessing effective life
  • are the 'Plant' concepts relevant under Division 40
  • interaction with CGT, Div 43 and tax consolidation
  • addressing black holes through Division 40 - a missed opportunity.

Material from this session:

Non-resident beneficiaries - income tax

Author(s):  Terry MURPHY

What are the implications of a non-resident becoming entitled to income, capital or control of a closely held trust especially in the context of generational change? This paper includes:

  • non-residency
  • income entitlements (including capital gains, streaming withholding tax and other trustee obligations)
  • capital entitlements
  • thin capitalisation
  • the implications of generational change.

Material from this session:

International tax reform - three years on

Author(s):  Richard SHADDICK

This paper is a progress report on the 2003 reform announcements including:

  • foreign dividend exemption - not so dumb
  • participation exemption - choose your method carefully
  • foreign losses - coming out of quarantine
  • we could live without the FIF regime
  • Australian CGT and non-residents.

Material from this session:

Intangible property

Author(s):  Roan FRYER

This paper covers how the taxation of intangible property is treated and whether it is any different to tangible property. Topics covered include:

  • the different forms of intellectual property including water rights, emerging forms of intangible property, trade marks, goodwill and copyright, confidential information, computer software
  • what falls outside the capital allowances regime?
  • planning issues (eg. asset protection and income splitting)
  • exploitation of intangibles, including special deduction and CGT rules
  • black holes.

Material from this session:

Should you be moving on from Service Trusts?

Author(s):  William (Bill) D THOMPSON

Many are saying that Service Trusts have become a compliance nightmare - should you replace them and what are your options? Including:

  • The current state of play - what you need to do including safe harbours
  • Addressing compliance issues
  • Retrospectivity
  • Should you restructure? What are the option and implcations?
  • How do you ensure professional clients have asset protection? 

Material from this session:

"Market Value" - important, relevant, critical

Author(s):  Jim MCMILLAN

Topics discussed in this paper include:

  • Tax law concepts of market value and differences from accounting treatment
  • Overview of the market value concept in legislation and cases
  • The importance of market value concepts under tax consolidations
  • Practicalities of obtaining market valuations
  • ATO guidelines and practices

Material from this session:

The tax consequences of Employee share plans

Author(s):  Sarah BERNHARDT

An update on the current state of play in respect of employee share and option plans including:

  • Are the Division 13A benefits real?
  • Tricks and traps with Division 13A
  • Takeovers/restructures
  • Cross border iseeuse
  • IFRS2 (share based payments) - the tax issues 

Material from this session:

Superannuation - Current issues in the contributions phase

Author(s):  Allan MCPHERSON

Addresses current issues in the context of SMSFs in the contributions phase including:

  •  Impact of the sole purpose test on what a SMSF can do
  • ATO Audit focus on audits
  • Ensuring compliance with choice requirements
  • Inhouse assets
  • Cloning of SMSFs as a means of separation 

Material from this session:

Expanding your business offshore

Author(s):  Con TRAGAKIS

This paper includes a case study to demonstrate the practical issues including:

  • Setting up your business structure
  • Bringing profits home
  • Selling shares in an overseas company c selling assets
  • Pricing of your goods and services
  • Debt or equity financing? 

Material from this session:

GST and property

Author(s):  Graeme COTTERILL

Topics to be discussed in this paper include:

  • Using the margin scheme to advantage and avoiding problems
  • Then is there an enterprise in relation to property?
  • The going concern and farmland exemptions - opportunities and limitations
  • Interaction of GST and stamp duty on property
  • Getting the GST right in property transaction documents

Material from this session:

You've worked hard to earn it; Keeping it is even harder - Structuring for asset protection

Author(s):  Mark WEST

The environment in which practitioners and their clients operate is constantly changing - key matters from the past 12 months in tax and non-tax areas affecting how we can manage asset proctection issues within our tax effective business and investment structures. Issues includes:

  • Superannuation and bankruptcy clawbacks - the current position
  • The decision in Prentice v Cummins
  •  Further proposed bankryptcy changes - implications for structures
  • Expanded powers of the Family Court to deal with assets
  • Marriage breakdown rollover relief, and its limits
  •  Issues with revising structures - eg family trust elections

Material from this session:

The major continuing compliance issues for ATO on Consolidations

Author(s):  Peter COAKLEY

Addresses the major issues concerning compliance with the consolidations regime which the ATO has identified and addressed during the 12 months prior to the convention. Including messages for:

  • Changes to membership
  • The cost-setting rules for assets
  • Losses
  • MECs
  • Valuations
  • Why these are issues
  • How the ATo is working to deal with them 

Material from this session:

The anti-avoidance provisions other than Part IVA - How relevant are they to your property dealings?

Author(s):  Mark ROBINSON

We have focused on Part IVA very heavily over the past few years but are there other beasties lurking which we should not lose sight of least the consume us? Whare are they? How have they been applied? How is the Federal Cpurt likely to approach them? Including:

  • ss82KJ, 82KK, and 82KL
  • s100A
  • Div 7A relating to lending to unit trusts
  • Div 9C

Material from this session:

Tax Traps for SME loans

Author(s):  Andrew O'BRYAN

What has happened in the last 12 months concerning loans to and from entities including:

  • Debt / Equity - what's debt?
  • Credit at call loans carve out
  • Sec 45B - we have a profits first rule
  • Statute barred loans and Division 7A
  • Unpaid Trust distributions and Sub Division EA

Material from this session:

Will my deductions be disallowed under Division 16D or s51AD or the new rules replacing them?

Author(s):  Michael WILEY

The government has been grappling with a new regime to regulate the allowance of deductions where government bodies, other tax exempts and non-residents lease assets from private owners, are involved in certain financing transactions or where there is the private provision of public infrastructure. This session looks at where they are up to, including:

  • How we got to the current position
  • Some of the difficulties in applying the current legislation
  • The new rules - how they should work
  • Effective dates and the transition from s51AD & Div 16D to the new rules 

Material from this session:

What is "best practice" for Practice Management?

Author(s):  Neil EARLE

We will examine "best tax practice" strategies to assist in dealing with the tsunami of change that hit practices in 2000, including:

  • Setting course on a tax management QA program in your firm and winning those 'tacking' duels with clients
  • Improving productivity and client service through document management and 'ship shape' practices
  • Consigning time sheets to the murky depths - value billing to improve client relationships and practice profitability
  • Joining the value added professional services fleet and avoiding a sign up to a minesweeper
  • Finding, training and managing the hearty crew

Material from this session:

The current imputation system - Traps and opportunities

Author(s):  Jane MADDEN

Examines the Imputation System as it currently operates, including:

  • What's frankable and what's not
  • Traps in living with the benchmark rule
  • issues for tax xonsolidated groups vs unconsolidated groups
  • Strategies for accessing franking credits
  • Strreaming and other anti-avoidance traps 

Material from this session:

Property Syndication - The Income Tax and GST Issues

Author(s):  Lachlan R WOLFERS

A number of recent cases and ATO rulings have significantly impacted on the income tax and GST treatment of property syndicates. This is an emerging area of tax with big dollars at stake. This session will examine:

  • Serviced apartments and management arrangements - the new GST treatment
  • Does TD 2005/28 apply to all property syndicates?
  • The income tax and GST impact of guaranteed rental streams
  • Common property and capital allowances
  • using nominees or custodians to hold syndicate property - the income tax and GST issues 

Material from this session:

How fixed is your trust - can you assume that it will survive a change of the ATO's present view?

Author(s):  Karen ROOKE

This paper was written for the Taxation Institute of Australia’s National Convention in April 2006. It examines the “vested and indefeasible interest” test in our taxation legislation, which is perhaps best known in the context of the “fixed trust” provisions but has a number of other roles to play. The paper looks at the different ways in which the test applies in the legislation, the difficulties in its application, and the potential impact of the High Court decision in CPT Custodian Pty Limited v Commissioner of State Revenue on the test.

Material from this session:

Professional Liability - Minimising the risk of adverse civil consequences for tax practitioners

Author(s):  Jennifer BATROUNEY

Focuses on just how easy it is to get into a problem situation potentially involving some form of civil liability using a number of role plays to identify and then analyse some commonly occuring situations including:

  • Negligence risk (including s251M)
  • Breach of contact risk
  • Section 51 TPA risk
  • Professional indemnity risk
  • Professional body ramifications 

Material from this session:

Living with ROSA - implications of the self-assessment changes for tax practitioners

Author(s):  Stephen GRAW

Self assessment has been overhauled but how effective are the changes and how will they impact on tax practice? Topics covered in this paper Include:

  •  ATO amendment powers - the basic two-year period and exceptions
  • changes to the rulings and non-binding advice provisions - the new structure and base provisions
  • obtaining and relying on private rulings - wider scope, but some dangers
  • penalties - the new penalty regime; reasonably arguable positions; GIC and SIC; and penalty remission procedures.

Material from this session:

CGT - old chestnuts and emerging issues

Author(s):  Gordon S COOPER

After more than two decades of CGT some issues remain unresolved and new issues keep emerging. This paper examines examples of both including:

  • problems with the CGT small business concessions
  • roll-overs
  • market value
  • pet peeves
  • life estates and remainder interests.

Material from this session:

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