Taxation in Australia

Articles from the current issue:

• Tax news: July – What happened in tax?

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  The following points highlight important federal tax developments that occurred during July 2019.

• Mid market focus: ESIC tax incentives: How well are they understood?

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  Considering the impressive tax benefits that ESIC tax incentives can provide investors, it is surprising that these rules are still not well-known and are often misunderstood.

• No restrictions to negative gearing? Think again!

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  Significant changes to negative gearing are on the horizon for individual, family trust and self-managed superannuation fund taxpayers. Adverse tax consequences during construction phase involving involuntary destruction, significant damage and otherwise legitimately vacant rental properties are raised for consideration. The article discusses new concepts proposed to apply from 1 July 2019, including an unexpected and expanded meaning given to “vacant land” and “substantial permanent structure”. There are practical examples of how the proposed measures apply in the simple case of a residential property investor building on vacant land, and an individual or family trust taxpayer purchasing a basic house and land package for rental purposes. There is an exemption for assets used in business, and the not-so-transitional application dates are also looked at. This is an important legislative proposal that all advisers of residential property investors need to be aware of.

• Alternative assets insights: ATO guidance on non-concessional MIT income

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  On 26 June 2019, the Australian Taxation Office issued guidance in the form of a draft law companion ruling LCR 2019/D2 (the draft LCR) on the concept of “non-concessional MIT income” (NCMI) on which a withholding tax rate of 30% applies to fund payments made by a managed investment trust (MIT) from 1 July 2019, unless transitional rules apply.

• The onus of proof following the Cassaniti decision

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  The Full Federal Court decision of Steward J (Greenwood J agreeing and Logan J concurring with additional reasons) in FCT v Cassaniti notably clarifies the law in relation to what is necessary for a taxpayer to discharge their burden of proof on review in a  tribunal or court. The practical effect of this clarification may be that taxpayers are more likely to succeed in meeting their burden of proof on review. For corporations, both large and small, individuals and small-to-medium enterprises, the commentary in the case provides an effective roadmap to assist them in discharging the burden of proof.

• Tax tips: Tax indemnities

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  A recent decision of the England and Wales Court of Appeal considered how tax indemnities and warranties contained in a contract for the purchase of shares were to be construed and applied.

• Tax cases: Who owned the residence?

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  Did the taxpayer or a trust own the residence, and did the CGT main residence exemption apply?

• President's report: What constitutes a “tax professional”?

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  President Tim Neilson on what it means to be a “tax professional”.

• Tax counsel's report: Is the turbulence over?

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  Tax Counsel Stephanie Caredes, CTA, discusses whether the turbulent times of the first half of 2019 have passed and whether there will be smooth sailing for the rest of 2019.

• Elections: Outlays by candidates, and gifts and donations for candidates

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  Many practitioners are about to wrestle, perhaps for the first time, with the deductibility of outlays incurred in relation to elections, whether as gifts or donations for candidates, whether by candidates themselves and whether in relation to federal, state or municipal elections. In the first part of the article, the author examines the tax treatment of donations or gifts made for, by or on behalf of candidates in the May 2019 federal election. The relevant tax provisions were last amended in 2010. In the second part of the article, the author considers the deductibility of outlays made by candidates themselves and the consequences of a recoupment. The article does not consider outlays in relation to elections conducted for internal positions within political parties  or for elections conducted by trade unions or similar bodies.

• A matter of trusts: Residency of a trust: Don’t get it wrong

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  This article looks at what determines the tax residence of a trust and what the consequences can be from a change of tax residence.

• Tax education: Not just another program

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  The Tax Institute’s 2018 study period 3 duces share their thoughts on The Tax Institute’s programs.

• Member profile: Paul Sokolowski

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  This month’s column features The Tax Institute’s 2019 Chartered Tax Adviser of the Year, Paul Sokolowski, CTA, Arnold Bloch Leibler.

• CEO's report: With a view to the future

  file_download Free to download 01 Aug 2019

  CEO Giles Hurst discusses some key wins and what’s on the horizon.

• Superannuation: Is the SG system in need of an urgent overhaul?

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  Employers are required to make the minimum superannuation guarantee (SG) contribution for each employee to avoid a shortfall under the Superannuation Guarantee (Administration) Act 1992 (Cth) (SGAA). This appears to be a simplistic rule.