Moving business real property into a self managed superannuation fund (SMSF) can have significant tax advantages. These include concessional tax treatment to the SMSF on rental income of 15%, and capital gains tax on the sale of the property at the rate of 10% (if the property is held for 12 months or more). While if the SMSF is in “pension phase”, the income tax and capital gains tax rates can drop to 0%.  In addition, if the member is aged 60+ any payments from the SMSF to the member will be tax free.

The Victorian Government has announced that effective from 1 July 2015, it will change the way it collects contributions towards the provision of infrastructure from developers.

At present, developers of land may be required to pay infrastructure levies at different rates and using different methods of calculation depending on whether the land is in a development contributions plan (DCP), the use of the land, the area of land being developed, and other criteria determined by the municipality in which the land is located. It is widely believed that the existing system is onerous, expensive, lacks flexibility and accountability and delays the development approval process.

A reminder that with 15 May 2014 (being the due date for lodgement of the 2013 FY income tax return for most trusts) fast approaching, it is time to review prior year unpaid present entitlements (UPEs) owing from trusts to private companies and ensure that appropriate documentation is in place prior to that date.

Treasury has released the draft Corporations Legislation Amendments (Deregulatory and Other Measures) Bill 2014 for public comment which proposes, amongst other things, to alter the test for the circumstances in which companies can declare or pay dividends.

This article discusses the complexity associated with a trust satisfying the maximum net asset value test for the purposes of accessing the capital gains tax (CGT) small business concessions where it is unclear whether an unpaid present entitlement (UPE) would be classified as a liability relating to the CGT assets of the trust.

The Australian Taxation Office (ATO) updated its Practice Statement PS LA 2003/12 on 10 April 2014. The Practice Statement confirms that the Commissioner will not depart from the long-standing administrative practice of treating the trustee of a testamentary trust in the same way as a legal personal representative (LPR). 

The Australian Taxation Office (ATO) has released a private binding ruling extract in which it found that a nil interest limited recourse borrowing arrangement (LRBA) loan triggered the non-arm’s length income rules. 

Just as everyone has gotten their heads around the Personal Property Securities Act 2009 (Act) and implemented the necessary policies and procedures, the Act is now being reviewed by the Australian Government to assess its operation and effect on businesses with particular attention being paid to how the Act has impacted small businesses.

Has your Twitter account been sending unapproved tweets? On Sunday 6 April, that’s exactly what happened to us at Sladen Legal. But fear not - such spam is usually harmless and the issue is easily rectifiable.

There are several reasons why your Twitter account may send unauthorised, unexpected tweets. Usually the culprit is a third party application which you have inadvertently authorised to access your account. For functionality, it’s important for Twitter to interact with other platforms. In doing so, each program will have access to your account. Many of these are legitimate, but sometimes a third party will surreptitiously request this authorisation – and you will grant it. But don’t worry, it happens to the best of us and is easy to manage.

Ever copy a photograph from the internet without permission?

An American photographer has pursued a travel agent operating in Melbourne for the unauthorised use of a picture of Hawaii. Mr Tylor takes photographs and sells or licenses them through photo stock libraries (e.g. Getty Images). Ms Sevin published one of Mr Tylor’s photographs on her website to advertise flights to Hawaii. She is now liable to pay Mr Tylor $24,000 for copyright infringement and costs.

This paper was presented by Amanda Morton and Rob Jeremiah at the Eighth Annual Estate Planning Conference Television Education Network, held on 20 March, 2014.

The purpose of this paper is to discuss a number of tools which may be used to implement an estate plan and to achieve the client’s objectives.

Given (unfortunately) that disputes are more likely to arise between family members upon the death of a client in a blended family situation, it is most important that proper consideration be given to the client’s estate plan and how to achieve their objectives.  

This paper was presented by Phil Broderick to The Eighth Annual Estate Planning Conference Television Education Network, held on 21 March, 2014.

This paper addresses the use of BDBNs and reversionary pensions and the interaction between the two. It also examines a number of strategies relating to their use.

This paper concentrates on the use of BDBNs and reversionary pensions in relation to self managed superannuation funds (SMSFs), although other superannuation funds are looked at, including public offer super funds.

This paper was presented by Phil Broderick on the Television Education Network Webinar held on 12 February, 2014.

The purpose of this paper is to give a broad overview of the law in relation to super fund borrowing (also referred to as limited recourse borrowing arrangements and LRBAs). After a brief review of the background to the introduction to the New Law, this paper will broadly look at the lifecycle of a LRBA.

The Board of Taxation released its Second Discussion Paper on Division 7A of the Income Tax Assessment Act 1936, on 25 March 2014.

Division 7A taxes notional distributions (by way of loans, payments or forgiven debts) from, private companies (which are taxed at the rate of 30%) to shareholders and associates (who are taxed at higher marginal tax rates) as unfranked “deemed dividends”. Division 7A also operates where private company assets are used by shareholders and associates, and where a trust has an unpaid present entitlement (UPE) owing to a private company (directly or indirectly through one or more interposed entities), and makes a payment or loan to, or forgives a debt owing by, a shareholder (or an associate of a shareholder) of the private company.

The Federal Court has overturned one of the few AAT cases that found special circumstances exist for an excess contribution assessment. In FCT v Dowling there were two relevant contributions. First, a non-concessional contribution of $156,142 made by the taxpayer’s husband in the 2009 year for the purposes of increasing his age pension entitlement. This contribution was made as a result of free advice from Centrelink and a public offer super fund. The contribution triggered the bring forward rule for the taxpayer. Second, a $200,000 non-concessional contribution in the 2011 year under a recontribution strategy which caused the taxpayer to exceed her non-concessional cap under the bring forward rule.

On 19 March 2014, the ATO issued its decision impact statement (DIS) on the AAT decision in Gutteridge & Anor v FC of T 2013 ATC.

In that case, a trust made capital gains from the sale of business assets and the taxpayers, Mr and Mrs Gutteridge, sought to apply the small business capital gains tax concessions when taxed on the capital gain. The Commissioner, in applying the $6 million maximum net asset value ("MNAV") test held that the trust was controlled by the taxpayers’ daughter who was the sole director and shareholder of the corporate trustee, and included the values of the assets held by a company also controlled by her on the basis that it was “connected with” the trust. As a consequence, the trust failed to satisfy the MNAV.

The SMSF administrative penalties, rectification directions and education directions regime is now law (via the Tax and Superannuation Laws Amendment (2014 Measures No. 1) Act 2014). From 1 July 2014, the ATO will have the power to: - issue scaled penalties to SMSF trustees for breaches of the SIS Act (in addition to the power to make a SMSF non-compliant); - order SMSF trustees/directors to attend education courses if they have breached the SIS Act; and - order SMSF trustees to rectify breaches of the SIS Act. The Bill also introduces penalties to deter and penalise persons who promote illegal early release schemes from regulated superannuation funds.

As we previously identified (see http://tinyurl.com/mgl5z7b) the operating standard compelling SMSF trustees to hold their assets separately is a limited obligation due to the wording of the standard in regulation 4.09A of the SIS Regs. The obligation only prevents mixing of the trustee’s personal assets or those held by a standard employer sponsor (or associate of the employer sponsor).

In our previous articles on Stronger Super and SMSFs, we outlined how the SuperStream measures would affect SMSFs and that some of those obligations would commence from 1 July 2014. Subsequently, the Australian Taxation Office (ATO) has released further information, including a letter to SMSF trustees, outlining the SuperStream compliance obligations for SMSF trustees.

As part of the reforms to the Privacy Act 1988 Update on the Australian Privacy Principle Guidelines and Changes to the Privacy Act - Ensuring the fine print is not forgotten, credit reporting in Australia will be regulated by a new Part IIIA of the Privacy Act. This will be accompanied by a new Credit Reporting Code which will replace the existing Credit Reporting Code of Conduct.

This new regime comes into effect on 12 March 2014 with the aim to simplify, clarify and update the current credit reporting provisions.  The new regime will affect most industries.