PAYG withholding variation for foreign resident capital gains withholding payments – deceased estate and legal personal representatives

The Government has confirmed that the proposed increase of the aggregated turnover threshold to $10 million applies to the Small Business Restructure Roll-over relief.

Foreign person duty and land tax surcharges; Of particular interest is the application of the foreign trust provisions to discretionary trusts.

In the April 2016 Edition of the Taxation Institute’s journal ‘Taxation in Australia’, appeared an article entitled ‘Disclaimer of an interest in a trust – can this be tax effective?’ 

In May 2016, " Creating Entitlements in Discretionary Trusts " written by Sladen Legal's Amanda Morton was published in the Tax Institute’s Journal, Taxation in Australia.

In its recent decision in The Executors of the Estate of the late Peter Fowler and Commissioner of Taxation, the Administrative Appeals Tribunal (AAT) held that Mr Fowler was not entitled to apply the small business capital gains tax (CGT) concessions in Division 152 of the Income Tax Assessment Act 1997, on the sale of a block of 10 residential units (Manly Property) as he was not carrying on a business and the Manly Property did not qualify as an “active asset”.

The Victorian Government has passed legislation to increase the duty surcharge on purchasers of residential property by foreign persons to 7% for contracts entered into from 1 July 2016. The changes contain a number of other changes to the foreign purchaser duty regime. 

In in an unheralded move, the Victorian government has extended the land tax exemption for primary production land in an urban zone (contained in section 67 of the Land Tax Act 2005) to include land owned by a trustee of a super fund of which all the members or beneficiaries are relatives and at least one of those members or beneficiaries is normally engaged in a substantially full-time capacity in the business of primary production of the type carried on on the land.

The Administrative Appeals Tribunal (AAT) recently held in FLZY and Commissioner of Taxation that profit arising from the sale of a building by a family trust gave rise to a capital gain despite the property building, development and investment activities undertaken by the privately held family group (Group). 

On 7 June, 2016 Sladen Legal delivered an end-of-financial-year seminar on streaming issues and tips and traps for the new small business rollover.

The ATO has recently released guidelines on its administrative treatment for the application of certain tax issues when interests in ‘no goodwill’ professional partnerships, trusts and incorporated practices (practices) are acquired or disposed. 

In a recent decision the New South Wales Supreme Court held that although the subject land had been purchased for future residential development, during the years relevant to the disputed Land Tax assessments, the dominant use of the land related to cattle-grazing operations under an agistment agreement. The taxpayer property developer was therefore eligible to apply the exemption applicable to land used in primary production in s 10AA(2) of the Land Tax Management Act 1956 (NSW).

On February 26, 2016, the Australian Financial Review named Sladen Legal Principal, Daniel Smedley as one of Australia's Best Lawyers of the Year in the taxation practice area.

The list is compiled by United States peer-review company Best Lawyers from close to 700,000 evaluations, and 2,870 lawyers were chosen from more than 280 law firms nationwide.

In Miley and Commissioner of Taxation, the Administrative Appeals Tribunal (AAT) held that, for the purposes of the maximum net asset value (MNAV) test in s 152-15 of the Income Tax Assessment Act 1997, the market value of the taxpayer’s shares was not his share of the sales proceeds ($5.9 million), but the actual market value of his shareholding in the company just before the share sale.

On 15 February 2016 the Federal Treasury released a consultation paper on new tax incentives for early stage investors, which is part of the National Innovation and Science Agenda (NISA) announced by the Government on 07 December 2015.

The Treasury has indicated that the new tax incentives for start-ups will provide investors with:

• a 20 per cent non‑refundable tax offset based on the amount invested either directly in the qualifying startup or indirectly through a fund, up to an offset cap per investor of $200,000 per year;
• for direct investment, a capital gains tax (CGT) exemption on those investments, provided they are held in the qualifying company for at least three years; and
• for indirect investment through a fund, a CGT exemption on distributed capital gains provided the underlying investment was held for at least three years.

The Tax Laws Amendment Bill (Small Business Restructure Roll–Over) Bill 2016 (Cth) (the Bill) was introduced to Parliament on 4 February 2016. 

The Bill amends the Income Tax Assessment Act 1997 (ITAA 97) to allow small businesses to defer the recognition of gains and losses arising from the transfer of active business assets as part of a genuine restructure of their ongoing business that occurs on or after 1 July 2016.

The Bill extends capital gains tax roll-over relief to transfers to and from a range of different entity types, including transfers of assets from a company to a sole trader, partnership or trust. The small business roll-over (the Roll-Over) is in addition to current roll-over relief available for individual sole traders, partnerships and trusts that convert to a company structure (Division 122 and Subdivision 124-N ITAA 97). 

Sladen Legal is pleased to announce that the 2016 version of the Trust Structures Guide (written by Sladen Legal and published by The Tax Institute) is now available.

The Trust Structures Guide has long been considered to be invaluable guide for professionals advising on structuring and tax matters relating to trusts.

In December 2015, an article written by Sladen Legal's Sam Campbell was published in the Tax Institute’s Journal, Taxation in Australia.

The article discusses the tax issues raised when creating and dealing with unpaid present entitlements by trusts, including CGT issues, which should always be carefully considered before embarking on a proposed transaction.

The recent release of the Federal Government’s National Innovation and Science Agenda outlines key measures to promote and support the growth of innovation and entrepreneurial ventures in Australia.

The Full Court of the Federal Court has dismissed the taxpayer’s appeal in Breakwell v Commissioner of Taxation [2015] FCA 1471 and confirmed the earlier Administrative Appeals Tribunal decision to include an allegedly statute-barred loan of $1.1m in the calculation of the taxpayer’s net assets for the maximum net asset value (MNAV) test when determining the taxpayer’s eligibility for small business CGT concessions.

The taxpayer was the beneficiary and trustee of a family trust (ABFT), which was in turn the beneficiary of a unit trust (ETUT). In July 2007 the ETUT sold its finance broking business for $500,000. In its 2008 income tax return, the ETUT excluded the capital gain from the sale of the business by applying the small business CGT concessions.