Incorporating Superannuation into Estate Planning: Common Challenges

Incorporating Superannuation into Estate Planning: Common Challenges

This paper was presented by Phil Broderick at the Legalwise Seminar on Will Drafting and Estate Planning, held on 12 August, 2014.

Superannuation benefits do not automatically form part of a member’s estate upon the death of the member. As such, a member’s will cannot deal with their super benefits, unless the benefits are paid to the estate of the member.

Consequently, a person’s super benefits must be dealt with separately in the estate planning process. Rather than dealing with super in a person’s will the tools for dealing with super death benefits are binding death benefit nominations (BDBNs), reversionary pensions, and the control of the decision making process through the control of the super fund trustee.

Payment of a non-assessable amount to an owner of discretionary units and CGT event E4

Payment of a non-assessable amount to an owner of discretionary units and CGT event E4

Capital Gains Tax (CGT) event E4 will arise when a beneficiary receives a payment from a trustee of a trust in respect of the beneficiary’s unit or interest in that trust and either some, or all, of that payment is not included in the taxpayer’s assessable income.

An Australian Taxation Office (ATO) private binding ruling, and minutes from the National Tax Liaison Group, suggest that CGT event E4 will not arise when the payment of a non-assessable amount is made to an owner of discretionary units.

Division 7A - Commissioner’s Discretion, ADR and ATO Internal Facilitation

Division 7A - Commissioner’s Discretion, ADR and ATO Internal Facilitation

This paper was presented by Rob Jeremiah at the 2nd Annual Trusts and Companies Taxation Symposium Television Education Network, held on 7 August, 2014.

The paper focuses on dealing with situations where non-compliance with of Division 7A of the Income Tax Assessment Act 1936 has been discovered, and understanding the operation of the Commissioner of Taxation’s discretion to disregard Division 7A. The paper considers the interplay of making a voluntary disclosure and requests to apply the Commissioner’s discretion and the application of the Alternative Dispute Resolution and the Australian Tax Office’s Internal Facilitation process.

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Sladen Snippet - Transfers of cash and property from private companies in family law settlements

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Sladen Snippet - Transfers of cash and property from private companies in family law settlements

On 30 July 2014 the Australian Taxation Office issued Taxation Ruling TR 2014/5 (previously released in draft form as TR 2013/D6) to address the tax effect of private companies paying money or transferring property to shareholders or their associates, in order to satisfy Family Court orders made pursuant to section 79 of the Family Law Act 1975.

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Sladen Snippet - Loan from an SMSF to an unrelated unit trust, not an in-house asset

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Sladen Snippet - Loan from an SMSF to an unrelated unit trust, not an in-house asset

The Australian Taxation Office (ATO) has confirmed in ATOID 2014/23 that a loan from a self managed superannuation fund (SMSF) to a unit trust, where the SMSF and its related entities held less than 10% of the units in the unit trust, and did not otherwise ‘control’ the unit trust, will not be treated as an in-house asset.

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Sladen Snippet - ATO confirms adult children can be super dependants

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Sladen Snippet - ATO confirms adult children can be super dependants

The Australian Taxation Office has confirmed in ATOID 2014/22 that an adult child can be a death benefits dependant under the superannuation laws. In the particular facts of the ATOID, the adult child had given up work to care for a terminally ill parent and received no financial support from anyone, other than the parent, during that time. The child was found to be both financially dependent on, and an interdependent of, the child’s mother. Consequently, any death benefits paid to the adult child would be tax free.

Super contributions result in breach of director’s duties

Super contributions result in breach of director’s duties

To what extent do directors of a corporate trustee owe duties to a corporate trustee, its shareholders and/or the beneficiaries of the trust?

This article examines a Federal Court case in which a director of a private company, acting as trustee of a private trust, was found to have breached his fiduciary duties to the company by entering into a series of transactions to effect superannuation contributions.

Options Paper - Australia’s Charities and Not-for-profits

Options Paper - Australia’s Charities and Not-for-profits

The Options Paper, Australia’s Charities and Not-for-profits has been released to seek feedback on proposed arrangements for charities in Australia following the Government’s planned repeal of the Australian Charities and Not-for-profits Commission (ACNC). The Government’s proposed arrangements attempt to balance reducing the administrative burden of reporting obligations with the need for public accountability.

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Sladen Snippet - Supreme Court grants an injunction against a sham registration on the Personal Property Securities Register

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Sladen Snippet - Supreme Court grants an injunction against a sham registration on the Personal Property Securities Register

There is no requirement to file the underlying agreement that gives rise to a security interest on the Personal Property Securities Register (Register).  This has the potential to give rise to fake or sham registrations because the Register cannot determine if a registration is in fact a genuine security interest. This creates a situation where the Register can be compromised by the lodgement of sham registrations.

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Sladen Snippet – Changes to the PPSA definition of motor vehicle

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Sladen Snippet – Changes to the PPSA definition of motor vehicle

Effective from 1 July 2014, the definition of “motor vehicle” under the Personal Property Securities Act 2009 (PPSA) has been amended to include a motor vehicle that:

- is capable of travelling at more than 10km/hr; and
- has a total motor power greater than 200W.

Entrepreneurs’ Infrastructure Programme announced by the Federal Government

Entrepreneurs’ Infrastructure Programme announced by the Federal Government

As previously reported, the Entrepreneurs’ Infrastructure Programme (EIP) was announced by the Federal Government, with funding of $484.2 million over 5 years. The EIP has an objective to improve the business capabilities of Australian small to medium enterprises, to make them more competitive on the global stage.

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Sladen Snippet – .MELBOURNE, .MONASH, .AFL? – Internet expansion with new top level domain

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Sladen Snippet – .MELBOURNE, .MONASH, .AFL? – Internet expansion with new top level domain

It’s happening.  The internet is changing, growing, expanding.  The .com domain will soon be competing with specific business-owned domains for greater visibility and control on the internet.  What does this all mean?

It means there will be many more domain names available for registration.  Business will have the ability to carve their own personal internet space by obtaining their own top level domain.  And us internet users will see, over time, many more top level domains emerging so web addresses will change too.

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Sladen Snippet - Changes to the Primary Production Exemption for Land Tax

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Sladen Snippet - Changes to the Primary Production Exemption for Land Tax

The Victorian State Revenue Office has recently released General Information Bulletin GEN 2/14 in relation to recent duty and land tax changes that received Royal Assent on 17 June 2014. Of particular note is the change to the area defined as “Greater Melbourne” for the purposes of the Primary Land Tax Exemption.

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Sladen Snippet – Extending unfair contract term protections to small businesses

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Sladen Snippet – Extending unfair contract term protections to small businesses

The Australian Government has released a consultation paper which seeks to protect small businesses from the burden of unfair contract terms in standard form contracts. 

Unfair contract terms go beyond what is necessary to protect the legitimate interests of the party seeking to include the terms in the contract (for example a large corporate business). These terms create a significant imbalance in the rights and obligations of the parties to the contract. Similar provisions currently exist to protect consumers in dealing with businesses.

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Sladen Snippet - Employee Share Schemes and Startups

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Sladen Snippet - Employee Share Schemes and Startups

The consultation period with interested stakeholders in relation to Employee Shares Schemes (ESS) after the issue of the Employee Share Schemes and Start-up Companies: Administration and Taxation Arrangement discussion paper reported on in August last year has now ended.  

GST Groups - Indirect Tax Sharing and Funding Agreements

GST Groups - Indirect Tax Sharing and Funding Agreements

Sladen Legal can now assist GST groups with Indirect Tax Sharing and Funding Agreements.

There are multiple complex taxation laws governing GST Groups. Therefore, it is crucial to have the appropriate documentation in place to clearly define (and be able to determine) each member’s rights and obligations, and thereby avoid any adverse tax consequences.