The Tax Specialist

Articles from the current issue:

• Permanent establishments: Past, present and future

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  In the context of business profits, the ability of a country to tax a non-resident entity of a tax treaty partner is largely dependent on whether that non-resident has a permanent establishment situated within its borders. Broadly, this requires either a sustained physical occupation or the presence of dependent actors that bind the enterprise in the other jurisdiction. While the permanent establishment concept has existed for many decades, in recent years, it has undergone significant changes, as many countries have become increasingly concerned that it does not adequately prevent base erosion and profit shifting tactics employed by multinational enterprises or address challenges posed by the digitisation of business. This article explains the significance of
  the permanent establishment concept, when one is created, how this has recently changed under the OECD’s base erosion and profit shifting project, and how further changes, particularly in relation to the digital economy, may be on the horizon.

• Tackling financial crime and protecting tax revenues through global collaboration

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  Financial crime, including tax evasion, has long been a problem faced by governments and regulators around the world. Rapid developments in electronic trading and the globalisation of business generally have inevitably brought with them increased opportunities for criminal financial activity. It has also become apparent that no-one can tackle these problems alone. Governments worldwide must collaborate, as must regulatory bodies and police forces. This article looks at the development of financial crime and draws on examples to show how active collaboration on a worldwide scale is helping to bring financial criminals to justice and protect global tax revenues. It also recognises, however, that all of these collaborative efforts merely represent a “work-in-progress” and that the Holy Grail of eliminating tax evasion is a war where battles may be won along the way, but ultimate victory remains frustratingly elusive.

• Succession of a super fund

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  For many Australians, superannuation represents a major portion of their legacy to be left to dependants and beneficiaries. However, there are a number of traps when using a self-managed superannuation fund (SMSF) for estate planning, particularly where blended families are involved. For that reason, it is important to understand the rules for succession and control of SMSFs, and to set in place strategies to ensure your assets are passed to the right people in the most effective way on your death. By reference to current legislation, leading case law and commonly encountered problems, this article discusses how interests in an SMSF should be dealt with as a part of a comprehensive estate plan.

• Testamentary trusts: The need for integrity, effectiveness and quality

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  The greatest transition of intergenerational wealth and an ageing population are together compounding the complexity of modern succession planning. Against this socio-economic backdrop, the utility and relevance of testamentary trust structures cannot be understated. The income tax benefits and asset protection afforded by testamentary trusts can achieve significant outcomes for the succession of family wealth. However, testamentary trusts should not be viewed as a “catch-all” vehicle that are relevant or appropriate for use in all circumstances. There is an increasing need for advisers to turn their minds to the integrity, effectiveness and quality when drafting testamentary trusts to ensure that their clients’ succession planning objectives can be achieved.