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  • 20th National Convention: Tax Unmasked

20th National Convention: Tax Unmasked

Published on 16 Mar 2005 | Took place at Perth Convention Exhibition Centre, WA, National

The National Convention included a technical program of the highest quality and diversity. In order to 'unmask tax' for delegates with a wide range of interests and specialties three technical programs were run side by side. Each of the three streams provided cutting edge learning.

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Individual sessions

Taxation of financial arrangements - a report card at March 2005

Author(s):  Neil WARD

This paper covers the Taxation of Financial Arrangements and how it affects your corporation/ business including:

  • the story so far
  • history in the making
  • the key players and their fate
  • what does the sequel promise?
  • does the Macquarie Finance case change the plot?
  • when will the final curtain come down?
Materials from this session:

CGT - mature adult or unruly adolescent?

Author(s):  Chris EVANS

The Australian capital gains tax is approaching its 20th birthday. This paper reflects on why the CGT provisions were introduced and considers how they have impacted upon taxpayers and tax practitioners. It argues that there has been progress in removing some of the inconsistencies and anomalies in the CGT regime, but that a number of problems still exist. The paper explores a variety of technical areas that are still problematic, including issues surrounding the grandfathered status of pre-CGT assets, technical difficulties with the operation of the small business concessions, and problems relating to the application of the CGT provisions to trusts.

The causes of these technical difficulties lie in inappropriate policy selection, poor or incomplete legislative drafting, poor implementation and administration of the provisions and 'legislative layering' - whereby new policy and legislation is superimposed upon an existing framework that is insufficiently robust or compatible.

Technical solutions can be attempted, but ultimately, the paper argues, the remedy to many of the technical problems does not lie in ad hoc and reactive fixes, but in a more principled approach to the design of the CGT regime.

This paper was also presented on 17 March 2005 at the 20th National Convention in Perth.

Materials from this session:

SME restructuring

Author(s):  Mark PIZZACALLA

This paper covers SME restructuring for liquidation, sale or generational change of private company groups including:

  • what are the appropriate tools for SME restructuring. Including: CGT roll-overs, de-merger provisions and share buy-backs
  • using the consolidations regime to solve SME issues
  • scrip for scrip roll-overs to circumvent any roadblocks
  • moving assets - capital allowance roll-overs
  • other tax considerations
  • worked examples.
Materials from this session:

Tax risk management: rulings - real protection or a false sense of protection?

Author(s):  Frank O'LOUGHLIN

This paper covers:

  • the 'ATO advice' product offerings - private, public, product and class rulings
  • the effect of having a ruling, including 'Will it cover Part IVA?' and can it be relied upon?
  • withdrawal of a ruling - when and how?
  • material difference in the facts underlying a ruling - what is the impact?
  • where do ATOIDs fit?
  • is a ruling application likely to have consequential issues?
  • timing and cost issues
  • the need for completeness and candour
  • challenging the ATO position - is it better to tackle the ruling or the assessment?
Materials from this session:

Managing consolidation - the state of play and the resolution of major issues

Author(s):  Michael D'ASCENZO

This presentation looks at how the Australian Taxation Office (ATO) managed the Consolidations project including the law development, rulings processes, administrative issues, educational activities and a perspective of where the ATO would like to be at the end of the implementation of the Consolidations project. Parts of the consolidations regime are yet to be finalised. This presentation addresses the most important of these unresolved issues and the plans and timing for their resolution.

This presentation also includes a listing of consolidation related rulings and determinations current as at February 2005.

Click here to view the paper accompanying this presentation which is available from the ATO website.

Materials from this session:

Forgiven not forgotten

Author(s):  Michael HINE

This paper covers debt forgiveness - the current state of play. Including:

  • what will constitute a debt forgiveness?
  • what will not constitute a debt forgiveness?
  • what should not constitute a debt forgiveness?
  • consequences of a debt forgiveness - taxable income or Schedule 2C?
  • the approach of the ATO
  • what type of situations are most likely to be attacked by the ATO?
  • unresolved issues.
Materials from this session:

Having a RAP - does it help?

Author(s):  Glen BARTON

How relevant is a reasonably arguable position in dealing with tax risk? This paper includes:

  • an overview of the administrative penalties regime
  • what is a reasonably arguable position?
  • when is it relevant to be in a reasonably arguable position?
  • large shortfall amounts/reduction provisions
  • taxation statements
  • application of taxation law
  • taking a position that is reasonably arguable
  • what are 'relevant authorities'?
  • practical experience and guidance
  • alternatives.
Materials from this session:

International tax reform - evolution or revolution?

Author(s):  Leonid SHAFLENDER,  Mark HADASSIN

This article examines the development of Australia's international tax reform measures and discusses the changes introduced by the New International Tax Arrangements (Participation Exemption and Other Measures) Act 2004.

This is an updated version of a paper that was presented at the 20th National Convention in Perth on 18 March 2005.

 

Materials from this session:

Division 152 - the small business concessions - some of the complexities explained

Author(s):  Susan YOUNG

This paper contains consideration of and case studies illustrating Div 152 including:

  • what is necessary to satisfy the basic conditions for relief
  • timing of the $5m net asset value tests
  • the excluded assets and the importance of superannuation
  • what are connected entities?
  • the ATO's views on the control of trusts
  • common pitfalls in the family business context.

This paper was also presented on 15 October 2005 by Chris Evans at the Tasmanian State Convention held in St Helens.

Materials from this session:

Maintaining records of transactions

Author(s):  Sue WILLIAMSON

Do YOU have the appropriate and right documents? Topics covered in this paper include:

  • record keeping obligations
  • do the documents you keep stack up?
  • do in-house transactions stack up?
  • computer records
  • the effect of the consolidations regime
  • management of directors' minutes
  • understanding the importance of third party records/evidence, eg financiers
  • understanding the expectations of the ATO
  • contemporaneous documents should disclose facts, not fairy tales
  • evidential aspects
Materials from this session:

Australian taxation aspects of major funding transactions

Author(s):  Tony CLEMENS

This presentation explores issues facing the issuer of various instruments to obtain funding including:

  • debt/equity
  • thin capitalisation
  • interest withholding tax
  • FX gain/loss re foreign assets
  • product rulings
  • cross border instruments
  • impact on tax consolidation
  • impact on loss recoupment.
Materials from this session:

Liquidate but only after you contemplate - getting money out of private companies

Author(s):  Andrew SINCLAIR

This paper covers winding up a private company from income tax, GST and stamp duty viewpoints, including:

  • why liquidate? - comparison with capital return mechanisms
  • dividend v capital proceeds - where do I start?
  • managing available franking credits
  • CGT events C2 and G1
  • liquidating consolidated entities - where should you start?
  • timing issues - some curious results emerge
  • interaction with CGT discount and small business concessions
  • stamp duty exemptions and GST issues on liquidations
  • implications of various liquidation strategies.
Materials from this session:

To quote the ATO - it's your money - but not yet!

Author(s):  Ron DOIG

SMSF issues - the ATO has been warning for nearly two years that it aims to ensure the SMSF industry is fully compliant. It has highlighted its main areas of concern which need to be addressed to ensure the risk of acting as trustee of one's own fund is minimised. Topics covered in this paper include:

  • restrictions on investment decisions and what is permitted
  • carrying on a business - is it possible for a SMSF? Or is the risk too high? What about a joint venture?
  • common misconceptions, using old principles to solve new problems
  • what happens when a breach occurs?
  • what the ATO expects of auditors of SMSFs
  • sole purpose test - the ATO's favourite fall back position
  • compliance checks for trustees.
Materials from this session:

What's rockin' on the minesite?

Author(s):  Mark CEGLINSKI

This paper covers recent developments in mining and in oil and gas, including:

  • funding of projects
  • capital deductions
  • derivation and timing of income
  • GST on sale of a going concern in the context of mining or oil and gas operations
  • withholding arrangements for foreign contractors
  • farm-in and farm-out arrangements
  • investor access to exploration and prospecting deductions
  • consolidation issues
  • stamp duty developments.
Materials from this session:

Bankruptcy law: developments and update

Author(s):  Michael LHUEDE

Where is the proposed legislative change heading? Where have the recent decisions in Cook v Benson Benson, Hanel v ONeill and Cummins v Prentice taken us? This paper covers topics including:

  • a legislative update
  • a case law update
  • where is this area heading?
  • how it impacts on SME practice
  • how it impacts on choice of structure
  • interaction with family law and property settlements.
Materials from this session:

Some problems faced by internal tax managers

Author(s):  Andrew MILLS

This paper looks at matters with respect to corporate governance, managing resources and relationships and staying in a job viewed from the position of an in-house tax professional including:

  • how do you advise the Board? And what tax issues should be referred to the board?
  • what tax issues should be referred to external advisers?
  • getting the most out of the relationship between internal advisors and external advisors, the Internal Auditors, the External Auditor and the ATO
  • importance of a Corporate Values System
  • role of voluntary disclosure
  • what do you really need?
  • is more riding on this than you think?
Materials from this session:

Some emerging GST risk areas for corporate taxpayers

Author(s):  David KUHNE

The emerging GST risk areas covered in this paper include:

  • assumption of vendor liability in a sale of business
  • GST audit experience
  • Commissioner's discretion for non complying tax invoices
  • recipient created tax invoices - when to use them and what formalities are required
  • what to do if I fail to remit GST on B to B transactions?
  • sale of capital assets
  • GST timing issues - what to do if you have remitted GST at the incorrect time, or claimed input tax credits in the wrong tax period
  • entertainment - FBT and GST interaction
  • deposits and prepayments.

This paper was also presented by John Haig on 15 October 2005 at the Tasmanian State Convention held in St Helens.

Materials from this session:

Down on the farm should not mean to be left in the woods. Tax and primary production do go together!

Author(s):  Barbie CHIRO

Whether developing a vineyard, running sheep or cattle, planting seeds or growing trees, there are always tax issues to consider. This paper gives an update on recent primary production changes and revisits issues that continue to plague the primary producer. Topics reviewed include:

  • derivation and timing of income
  • capital deductions (including new grapevine rules)
  • CGT including water licences, wine labels, intellectual property
  • pre-CGT land/post developments and effect of balancing charges
  • Division 35
  • product rulings and Part IVA exposure post Hart
  • GST on sale of farming operations
  • an overview of duty concessions in all states/territories.
Materials from this session:

Standing in the shadows, or on the burning deck? Advisors and executives as directors or shadow directors

Author(s):  Leigh WARNICK

Recognising and managing the risks for internal or external advisors in acting as a director. Issues covered in this paper include:

  • who is a director, under the Corporations Act and tax legislation?
  • what liabilities come with the label, and how threatening are they?
  • if you don't have to be a director ... avoiding the 'shadow director' trap
  • if you are a nominee or executive director - managing liability risk.
Materials from this session:

It's important to start by getting your As and Bs right

Author(s):  Ken SPENCE

This paper looks at some practical emerging issues flowing from the operation of sections 45A and 45B in relation to distributions by companies including:

  • overview of ss 45A and 45B including role, function and application so far
  • S45B and demergers
  • where is the ATO likely to apply the provisions?
  • how do we speed up the process and add certainty to getting the Commissioner's favourable determination?
  • how are these provisions to be practically applied by taxpayers - does it mean that every transaction involving a distribution by a company needs a ruling from the ATO before it can proceed?
Materials from this session:

When can you put the tax year away?

Author(s):  Arlene MACDONALD

This paper covers dealing with the tax risk of 'live' assessments in the context of income tax, GST, FBT and state taxes including:

  • exactly what is an assessment and what does it do in law?
  • when does an assessment arise?
  • how long does it stay 'alive' - when is it too late to amend an assessment to increase liability?
  • the effect of losses on the time for amendment
  • the effect of nil income on the time for amendment
  • making certain you have an assessment
  • who is covered by an assessment for a head company?
Materials from this session:

Part IVA - a post-Hart report card

Author(s):  Graeme S COOPER

This paper covers:

  • what ever happened to the Ralph Part IVA recommendations?
  • the wash-up of the mass-marketed scheme cases
  • what we learned from Hart
  • life after Hart - Macquarie Finance.
Materials from this session:

Some trust oddities

Author(s):  Ken SCHURGOTT

This paper gives an update on where we are in relation to some key issues affecting trusts including:

  • trends in the use of trusts as investment vehicles
    • testamentary trusts
    • split and mirror trusts
    • generational shifts
  • managing assets within a trust
  • CGT events for trusts
    • discretionary trusts
    • other trusts
  • other issues on termination or vesting
  • why is stamp duty so bothersome?

This paper was also presented on 8 July 2005 at the Queensland State Convention on the Gold Coast.

Materials from this session:

Loans

Author(s):  Peter MOLTONI

This paper pulls together a number of issues relating to loans - looking at them from a different direction/angle including:

  • no-doc loans
  • Section 109XB
  • debt and equity rules for at-call loans (No 4 Measures Act)
  • other debt/equity issues for SMEs
  • impact of recent cases on interest deductions
  • redraw facility for private purposes - interest deduction apportioned - AAT Case [2004] AATA 815, Re Domjan and FCT
  • limited recourse loans.
Materials from this session: