VICTORIAN/TASMANIAN STATE CONVENTION: TAX - A BALANCING ACT
VICTORIAN/TASMANIAN STATE CONVENTION: TAX - A BALANCING ACT
Published on 09 Sep 2004
| Took place at Country Club Resort, Launceston
With the High Court celebrating the role of diversity over certainty in Hart's case, this convention started with an address from Sackville J of the Federal Court on topics such as the role of the courts and Part IVA. The convention had three broad themes - investment issues, the SME sector and the corporate market.
Get a 20% discount when you buy all the items from this event.
When is a partnership not a partnership and if it isn't what should you be doing? If it is, are you sure you are doing it correctly? How do joint ventures properly fit in? This convention paper looks at the various tax issues that need to be considered in creating, dealing with and ending tax partnerships and/or law partnerships so the tax results are correctly understood and applied.
The paper considers the effects of:
- tax law partnership v general law partnership
- CGT (including the small business concessions)
- GST (including registration of the correct entity/ies)
- stamp duty
This paper was also presented on 11 September 2004 at the Victorian/Tasmanian State Convention held in Launceston.
Loan arrangements impacted by the debt/equity rules
1 July 2001 heralded a whole new approach to the taxation classification of debt and equity interests. The rules are complex and encompassing. There has been a further extension for at call loans and a carve-out for certain taxpayers. It is important to understand the practical impact of the debt equity rules on loan arrangements and what you need to do to ensure unforeseen impacts do not occur. The issues covered in this paper include:
- identifying debt and equity interests?
- at call loans and the transitional period up to 30/6/04
- the consequences of a loan being a debt or equity interest
- maximum 10 year terms and charging of interest
- documentation requirements.
Income tax considerations of financial investments
The important aspects of a range of current financial investments and their tax treatment are examined in this paper. These include:
- dividend imputation
- the need to pass on franking credits
- interest on borrowings to buy back shares
- absolute return and hedge funds
- emerging market funds and private equity
- hybrid securities
- exchange trade funds.
The rules for use of tax losses have once again been subjected to considerable change. This paper analyses the recent reforms as they affect corporate groups. Case studies are used to analyse:
- the new continuity of ownership test
- impact of the abolition of the same business test on corporate acquisitions
- the same business test applied to consolidated groups
- tricks in applying pre consolidation losses to post consolidation gains
- the loss denial rules.
Compliance program - small to medium enterprise segment
The ATO has recruited and trained a large workforce of auditors, who have commenced audits in accordance with the Compliance Program 2003-04 released in August 2003 by the Commissioner. Recent announcements in the Federal Budget have provided increased audit funding for the 2004/05 year targeting the SME sector. In this presentation Michael Cranston will outline how the ATO assesses risk in its Compliance Program and provide feedback on the results of
ATO activity in the SME sector. Issues to be covered include:
- the type of businesses being targeted
- common problem areas of non-compliance
- update on GST compliance.
This paper gives a comparative analysis illustrated through examples of selected income tax (including CGT), GST, Victorian and Tasmanian stamp duty and land tax consequences of 'property development' and 'property investment' effected by an individual, partnership, trust, company or joint venture. The examples consider:
- consequences of purpose on acquisitions
- consequences of changes of purpose
- consequences of changes of structure
- use of losses from development costs and negative gearing
- access to the CGT discount, small business concessions and main residence exemption
- application of the land rich provisions.
Tax consolidation is entered into by way of an irrevocable election. Many SME corporate groups have delayed the
consolidation decision or have chosen not to consolidate.
This paper uses a case study approach to analyse the consequences of not consolidating and issues arising from
groups operating outside the consolidation environment, including:
- recap on what was lost including no access to group losses and rollover relief for CGT/UCA assets and intra-group dividend issues
- income equalisation strategies using passive and active income
- the transfer of assets including trading stock, loans, GCT and UCA assets
- the anti-avoidance rules including value shifting considerations and Part IVA
- the impact on cash flows, stamp duty and GST.
The recent decision in Transurban City Link Ltd v C of T reinforces the fact that in order to determine whether a receipt or outgoing is of a revenue or capital nature you need to understand the true underlying character of the outgoing or receipt.
This paper explores the approach you need to take to ensure that you have correctly characterised a receipt or outgoing:
- can you assume that the label by which an item is referred to in a contract reflects its true character?
- interpreting contracts
- when are extraneous materials relevant?
- what do you do when the parties to the contract have a different understanding as to the character of outgoing or receipt?
- what do you do when third parties such as merchant bankers or the ATO have a different understanding as to the character of the outgoing or receipt?
Market values are increasingly important in calculating assessable income for many kinds of taxpayers. This paper provides an overview of the commonly encountered tax provisions requiring market valuations, including:
- recent administrative developments
- the impact of self-assessment
- consolidation and market valuations
- why market value is so important
- the use of safe harbours
- audits, disputes and resolutions.
Caryn VAN PROCTOR,
This paper addresses recent developments in LPP and the ATO's adminstrative guidelines on access to accountants' working papers, including:
- what is LPP and why is it relevant?
- what are the administrative guidelines and how do they differ from LPP?
- why is LPP important in a tax context?
- why aren't accountants privileged?
- can the guidelines be enforced?
- consideration of LPP and the guidelines in the context of real life examples.
This paper gives you practical and technical guidance relating to commonly misunderstood superannuation issues and
recent key changes in superannuation laws including:
- section 279B and 279D - insurance deductions and the anti-detriment provisions explained
- understanding the new pension rules
- recent changes affecting reserving strategies
- binding death benefit nominations - how far can you go?
The interaction between Div. 7A and the debt equity rules
This paper focusses on the Div 7A loan debt/equity interaction in SME structures used to maximise capital retention, asset protection and deductions. The issues
- corporate beneficiaries and loan backs
- trust loans to shareholders
- on lending in an SME group
- on lending and consolidation
- impact on total holdings
- exploitabilities - there are some!
- limiting your practice risk.
The practical issues arising for vendors and purchasers when selling and buying entities in a consolidated income tax environment are considered in this paper, including:
- implications of the single entity rule on funding and acquisition costs
- implications for sale contracts
- CGT on deconsolidation including traps with CGT Event L5
- anomalies with loss transfers on restructures and partial sell downs.
The pace of change in the international tax arena has proceeded unabated since the Board of Taxation's International Taxation Report and the Treasurer's Budget
Announcements in 2003. The subsequent legislative 'deluge' presents a challenge to corporates in understanding the changes.
This presentation takes a practical case study approach and examines:
- key international tax issues relevent to in-bound cross-border structuring and financing arrangements
- utilisation of trust and stapled structures
- Trans-Tasman investment
- DTA's and Free Trade Agreements
- venture capital
- exit and repatriation.
Using case studies, this paper focusses on the small business CGT concessions, including:
- the basic conditions required to access the concessions, focussing on changes to the maximum net asset value test and land being deemed to be an active asset
- how the concessions may be accessed through various business structures
- tips and traps concerning the small business retirement exemption
- the dangers involved in using the small business roll-over.
An analysis of tax project management with a view to risk minimisation including:
- conflicts of interest
- engagement letters
- communicating with clients
- staffing and use of specialists
- working paper structure and management
- review escalation
- report writing including scoping, defensive wording and disclaimers
- managing identified risk
- liability capping.
Recent developments in Victorian & NSW stamp duty (SD) reviewed in this paper. It highlights planning opportunities and traps for the unwary. Topics covered include:
- Vic State Taxation Act 2004 including the deemed transfer of fixtures, new land rich rules and new anti avoidance provisions
- 'sub-sale' SD bogey for nominee clauses and cancelled contracts
- facilitating the SD exemption for in-specie distributions
- vendors stamp duty in NSW.
For many Australian entities the transition to International Financial Reporting Standards will be complex. This presentation overviews:
- the key changes brought about by the transition to IFRS
- their impact on the calculation and reporting of tax
- timeline for introduction of IFRS
- overview of the key impacts
- impact of the new tax standard
- other implications of IFRS on tax.
Tax aspects of creating and exploiting intellectual property
This paper overviews the tax implications of common issues encountered in dealing with intellectual property (IP), including the acquisition or creation of IP, and exploitation or disposal of IP. Topics covered include:
- what IP is
- deductions for expenditure on IP
- income from exploitation and disposal of IP
- royalty withholding tax and transfer pricing
- GST and stamp duty consequences of dealing with IP.