Taxation in Australia

Articles from the current issue:

• Member profile: Amanda Donald

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• International tax: “Pillars” of strength or ruins in the making?

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  The taxation of multinational corporations is undergoing a paradigm shift in Australia and around the world. Taxing multinationals appears to be a win–win for governments: it satisfies voter concern that multinationals aren’t paying their “fair share”, it isn’t as politically fraught as increasing the taxes (directly) paid by said voters, and it raises much-needed revenue. The main risk is capital flight, but this is minimised where countries act together. To this end, in addition to Australia’s recent unilateral and multilateral measures (the multinational anti-avoidance law and diverted profits tax, and the anti-hybrid rules, the multilateral instrument and country-by-country reporting, respectively), Australia and the 134 other countries in the Inclusive Framework of the Organisation for Economic Cooperation and Development are currently considering an ambitious plan to harmonise and increase the taxation of multinationals — the “two pillars” plan. This article examines the plan and makes predictions about its future.

• Tax News - at a glance: December – What happened in tax?

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  The following points highlight important federal tax developments that occurred during December 2019. A selection of the developments is considered in more detail in the “Tax News – the details” column on page 349 (at the item number indicated).

• Alternative assets insights: Significant global entities

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  Draft legislation expanding the definition of a “significant global entity” makes more taxpayers subject to the Australian multinational tax avoidance rules and increased penalties for non-compliance.

• Superannuation: When SMSF advice is unlawful

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  This article examines what advice SMSF advisers can provide without “stepping over the line”, especially when providing taxation, financial product or legal advice.

• Tax tips: Active asset test

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  A recent decision of the Federal Court considers aspects of the active asset test that apply for the purposes of the CGT small business reliefs.

• Tax cases: Pavihi – The helpful bank teller

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  What was the appropriate level of penalty for an unlicensed individual who promoted and assisted with the implementation of superannuation early release schemes?

• President's report: Looking ahead with 2020 vision

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  Incoming president Peter Godber’s first report for the Taxation in Australia journal.

• CEO's report: The best is yet to come

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  CEO Giles Hurst looks forward to another exciting year at The Tax Institute.

• Trusts and the franking credits trap: Can we fix it?

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  The Commissioner considers that a beneficiary’s interest in the corpus of a unit trust cannot be fixed. How then can beneficiaries access franking credits on franked dividends received by a trust?

• Tax education: How The Tax Institute propelled a partner’s career

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  Suzie Boulous, CTA and partner at Brown Wright Stein, shares her journey to partner and the role that membership has played in her success.

• Senior tax adviser's report: Tax reform can’t wait

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  An important anniversary for Australia’s taxation system passed without much notice late last year and another significant anniversary will occur later this year.

• Reconsidering the Commissioner’s remedial power

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  In February 2017, the Commissioner’s remedial power (CRP) was introduced into Div 370 of Sch 1 to the Taxation Administration Act 1953 (Cth). The CRP was intended to provide a mechanism to resolve the growing number of unintended outcomes and deficiencies within Australia’s tax system (without having to inundate the limited parliamentary and Treasury resources). The explanatory memorandum to the Bill that became the Tax and Superannuation Laws Amendment (2016 Measures No. 2) Act 2017 (Cth) estimated that the CRP may be used up to 10 times per annum. However, to date, the CRP has only been successfully exercised twice — highlighting a discrepancy between its policy intent and operation. This article examines the effectiveness of the CRP and suggests that it needs to be reconsidered to ensure that it can operate as intended and alleviate the significant legislative uncertainty borne by taxpayers.

• Tax and estate planning in 2020: What has changed?

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  In light of ongoing changes to the taxation regime and the expanding wealth of Australia’s ageing population, there has for many years been a growing need for estate planning to utilise appropriate structuring. Estate planning related areas have largely been outliers from radical simultaneous rule overhauls. 2018 was an exception to this position, with a range of changes announced. Indeed, the 2018 changes were, in theory, destined to see a potentially radical impact on a number of areas, including trust vesting, trust splitting, testamentary trusts, excepted trust income and family law roll-overs. One year on, however, the question needs to be asked: what has actually changed? Arguably, 2019 has shown that most critical aspects of the 2018 changes remain in a state of flux. With the post-baby boomer intergenerational wealth transfer wave gathering pace, the inertia during 2019 in a number of key areas is disappointing.

• Successful succession: Family law asset protection of a testamentary trust

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  In a rare recent decision, the Family Court has reviewed the asset protection that can be offered by a testamentary trust in a financial settlement.