An exposure draft and explanatory statement have been released for public comment with proposed amendments to the Private Ancillary Fund Guidelines 2009 and the Public Ancillary Fund Guidelines 2011.

The Private Ancillary Fund and Public Ancillary Fund Amendment Guidelines 2015 (amending guidelines) include a number of amendments, including to update the Private Ancillary Fund Guidelines 2009 to incorporate improvements in the later made Public Ancillary Fund Guidelines 2011, and to reflect the introduction of the Australian Charities and Not-for-profits Commission (ACNC).

On 22 October 2015, Rob Jeremiah delivered a presentation at the ‘Taxation Aspects of Estate Planning and Business Succession – The First Annual Symposium’ held in Melbourne by Television Education Network.

At this event, Rob presented a paper called ‘CGT Hotspots in Restructuring Trusts in Estate Planning,’ written by Sam Campbell, Will Monotti, Ashleigh Eynaud and himself.

The Full Federal Court dismissed the Commissioner’s appeal in Commissioner of Taxation v Devuba Pty Ltd [2015] FCAFC 168, confirming the earlier Administrative Appeals Tribunal (AAT) decision that the existence of a dividend access share (DAS) arrangement did not affect the taxpayer’s ability to apply the capital gains tax (CGT) small business concessions to a capital gain arising from the disposal of ordinary shares in the applicant company.

The primary issue considered in that case was whether the existence of the DAS caused the taxpayer to fail to meet the small business participation percentage (SBPP) of 90%.

In September 2015, Part 2 of a 2 part series written by Sladen Legal's Renuka Somers and Ashleigh Eynaud was published in the Tax Institute’s Journal, Taxation in Australia.

It discusses draft Taxation Ruling TR 2015/D2 and the Australian Taxation Office’s proposed treatment of trust unpaid present entitlements for the purposes of the maximum net asset value test applicable to the capital gains tax small business concessions.

In August 2015, Part 1 of a 2 part series written by Sladen Legal's Renuka Somers and Ashleigh Eynaud was published in the Tax Institute’s Journal, Taxation in Australia.

It discusses some of the unresolved issues and complexities associated with the taxation treatment of trust unpaid present entitlements for Division 7A purposes and bad debt write-offs, despite the Australian Taxation Office’s attempts to address these matters in draft Taxation Determinations TD 2015/D4 and TD 2015/D5.

The Federal Treasury has released the Exposure Draft for the Tax and Superannuation Laws Amendment (2015 Measures No. 6) Bill 2015: Small business restructure rollovers to amend the Income Tax Assessment Act 1997 to allow small businesses to defer gains and losses arising from the transfer of capital gains tax assets, depreciating assets, trading stock and revenue assets between entities as part of a restructure.

The proposed amendments attempt to provide greater flexibility for small businesses to change the legal structure through which they operate without triggering adverse taxation consequences.

On 28 October, 2015 Sladen Legal delivered a presentation on various topics in the area of Hot Issues in Structuring and Rewarding Employees.

Topics presented were:

• Professional Practices Structures – the ATO views and the law - Rob Jeremiah
• Superannuation and employees - Phil Broderick
• Employment risks in corporate and business restructures - Louise Houlihan
• The new employee share scheme regime – the promised land or a mirage? - Carlos Barros

In Alderton and Commissioner of Taxation (Taxation) [2015] AATA 807 (16 October 2015), the Administrative Appeals Tribunal (AAT) upheld the Commissioner’s decision to assess a trust beneficiary to tax on a distribution from the trust, despite her attempted disclaimer in November 2014 of “the entirety of any interest accrued by her in the past or which may accrue in the future in the income or corpus of the trust fund”, with such disclaimer to take effect from the date of settlement of the trust.

Division 7A of the Income Tax Assessment Act 1936 can operate to deem a dividend to be paid by a private company that is a subsidiary member of an income tax consolidated group (subsidiary).

If a subsidiary makes a loan to a shareholder (of the Head Company of the tax consolidated group) or their associate in a manner that evokes the application of the “deemed dividend” provisions in s 109D, the relevant time for complying with the Division 7A provisions would be the “lodgment day” of the Subsidiary’s income tax return for the relevant financial year (s 109D(1)(b)) – however, a Subsidiary member of a tax consolidated group is not required to lodge an income tax return.

Australian-owned private companies are now exempt from public disclosure taxation rules, as the Tax and Superannuation Laws Amendment (Better Targeting the Income Tax Transparency Laws) Bill 2015 (the Bill) passed through the Senate yesterday.

The Bill amends the Taxation Administration Act 1953 to exempt Australian-owned private companies from the requirement that the Commissioner of Taxation publish information about a corporate tax entity with a total income equal to or exceeding $100 million for an income year.

The Australian Taxation Office (ATO) has published guidance on penalties that could apply for deficient valuations. Valuations for income tax purposes of assets such as real property, shares in companies and units in unit trusts, are relevant in a number of contexts, including the capital gains tax provisions, the maximum net asset value test, the market value substitution rule, the GST Margin Scheme, and for assets held in self-managed superannuation funds.

The ATO warns that taxpayers who undertake their own property valuations or use valuations from unqualified people may be liable to pay administrative penalties where the valuations later prove to be deficient.

Real property is a popular investment for SMSFs (self managed superannuation funds). However, there are a number of unique issues that come with SMSFs receiving, holding and disposing of real estate. In this paper I have examined a number of those issues in great detail.

In June 2015, an article written by Sladen Legal's Sam Campbell titled "Do trustees no longer have unlimited assessment periods?" was published in the Tax Institute’s Journal, Taxation in Australia.

This article discusses whether a new law administration practice statement will give trustees comfort that the Australian Taxation Office will not issue an assessment outside of the normal 2/4 year periods.

Read the published article.

On 19 February 2015, the ATO issued PS LA 2015/2. An early candidate in the ATO’s ongoing campaign to redesign (and rewrite) law administration practice statements (LAPS),1 PS LA 2015/2 seeks to explain

On 10 June 2015, the Australian Taxation Office (ATO) released two draft taxation determinations and a draft taxation ruling, outlining its proposed treatment of unpaid present entitlements (UPEs) for the purposes of bad debt write-offs, Div 7A, and the maximum net asset value test.

Exposure draft legislation - restoring integrity to the consolidation regime

On 28 April 2015 the Commonwealth Treasury released the Tax and Superannuation Laws Amendment (2015 Measures No 4) Bill 2015: Consolidation to implement recommendations made by the Board of Taxation.

The Treasury has finally released long awaited draft exposure legislation regarding ‘look-through’ CGT treatment to earnout arrangements (Draft Bill).

On 12 May 2010, the former Assistant Treasurer, Senator the Hon. Nick Sherry disseminated a media release announcing the previous Government’s intention to amend the law to provide look-through capital gains tax (CGT) treatment for qualifying earnout arrangements entered into as part of the sale of business assets.

On 6 May 2015, the Honourable Joe Hockey with the Honourable Bruce Billson disseminated a media release on Supporting start-ups and entrepreneurship. 

The media release announces new measures which will apply to small business and start-ups proposed to take effect from 1 July 2016.  These new measures will provide much needed relief for small business and start-ups and are another step towards ensuring that Australia provides the right environment for small business, start-ups and entrepreneurs.

The Administrative Appeals Tribunal (AAT) has held that the existence of a dividend access share (DAS) arrangement did not affect the taxpayer’s ability to apply the capital gains tax (CGT) small business concessions to a capital gain arising from the disposal of ordinary shares in the applicant company.

The primary issue considered in this case was whether the existence of the DAS caused the required small business participation percentage (SBPP) of 90% to be failed.

On 1 May 2015, the Australian Taxation Office (ATO) issued a Taxpayer Alert (TA 2015/1) in relation to dividend stripping arrangements involving the transfer of private company shares to a self managed superannuation fund (SMSF).

These arrangements essentially involve a private company with accumulated profits paying franked dividends to a new SMSF shareholder and the original shareholders benefitting as members of the SMSF from franking credit refunds to the SMSF. This could include, for example, the transfer by a member to their SMSF of shares in a corporate beneficiary that holds retained earnings sourced from trust distributions.