Legal news
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.
Charities have a number of ongoing reporting obligations, including the requirement to submit an Annual Information Statement (AIS) and annual financial report to the Australian Charities and Not-for-profits Commission (ACNC).
The reporting requirements depend on the size of the charity:
In the decision of Australian Annuities v Rowley Super, the Victorian Court of Appeal has held that over $1.6 million of super contributions made by a discretionary trust and members to a self managed superannuation fund (SMSF) could be clawed back to a liquidator on the basis that the director of the corporate trustee breached his fiduciary duties to the corporate trustee.
The recent Federal Court case of Krok v Commissioner of Taxation has provided a reminder that a taxpayer may impliedly waive their right to legal professional privilege by disclosing documents which refer to the purpose and reasoning of legal advice. As a result of the implied waiver, the taxpayer may be required to discover documents that would otherwise have been protected by legal professional privilege.
The Australian Taxation Office (ATO) has set out its view in ATO Interpretative Decisions, ATO ID 2015/2 and ATO ID 2015/3 that the superannuation laws and tax laws prohibit superannuation death benefits from being paid by mere journal entries.
In the ATO IDs, the taxpayer/beneficiary and self managed superannuation fund (SMSF) trustee wished to effect the death benefit to the beneficiary by the transfer of money from the deceased member's account, to the beneficiary's own account in the SMSF by way of journal entry (to save on transactions costs). The ATO noted that set offs can occur in a superannuation context, but that there needs to be “mutual liabilities between the taxpayer and the SMSF and there is an agreement between those parties to set-off the liabilities”. Here, the ATO found there was “not a mutual liability in this case as the taxpayer does not have a liability to the SMSF”.
Treasury has released a draft bill to enact a “look through” approach to apply to limited recourse borrowing arrangements (LRBAs) for income tax and capital gains tax (CGT) purposes, with effect from 1 July 2007. Under a LRBA the asset must be held by the trustee of a separate trust (referred to below as a bare trustee). This has raised a number of issues in relation to how the tax laws interact with the holding of the asset, the super fund and the bare trustee.
Two Federal Court decisions from 2014, DCT v Lyons and DCT v Graham Family Superannuation Pty Ltd have demonstrated the Court’s relatively lenient approach to applying penalties under the Superannuation Industry (Supervision) Act 1993 (SIS Act) for cases involving multiple numbers of very serious breaches.
Further to the recent Australian Taxation Office (ATO) release of two ATO Interpretative Decisions, ATO ID 2014/39 and ATO ID 2014/40, as outlined in a recent Sladen Snippet, the ATO has released further information on what factors will be considered when applying the non-arm’s length income (NALI) rules to non-commercial limited recourse borrowing arrangements (LRBAs).
The ATO has released two ATO Interpretative Decisions (ATO IDs), being ATO ID 2014/39 and ATO ID 2014/40 on the application of the non-arm’s length income rules (NALI) to non-commercial limited recourse borrowing arrangements (LRBAs).
On 27 October 2014 the Coroner’s Court of Victoria delivered its finding into the inquest on the death of Kyle Vassil. The deceased was a 12 year old student who, on day one of a school camp, drowned in a dam a few meters from shore. Kyle was a competent swimmer who was swimming with other class members in the presence of supervising teachers and young camp leaders when he drowned. The circumstances surrounding the death were tragic and no doubt traumatic for all persons involved. The purpose of the Coronial investigation was to ascertain, if possible, the cause of death and the circumstances in which the death occurred.
The Tax and Superannuation Laws Amendment (2014 Measures No 6) Bill 2014 (the Bill) was introduced to Parliament on 30 October 2014.
Schedule 1 of the Bill seeks to amend the Income Tax Assessment Act 1997 to extend the CGT roll-over relief afforded under certain replacement asset roll-overs to revenue assets and trading stock.
The Victorian government passed the Justice Legislation Amendment (Succession and Surrogacy) Act 2014 on 16 October, prior to going into caretaker mode leading up to the election.
The Act includes significant amendments to the laws governing the contesting of wills.
Since the removal of any relationship requirement between a claimant and a deceased person in 1996, the courts have dealt with a wide range of claims. These claims are not only by spouses and children of the deceased person, but also grandchildren, nephews and nieces, carers and even neighbours.
In a recent speech to the Australian Institute of Directors, Australian Securities and Investments Commission (ASIC) chairman Greg Medcraft outlined ASIC’s expectations for directors. Previous speeches focused on the director’s role as a gatekeeper, and Mr Medcraft has said this will continue to be a focus for ASIC.
The chairman stated that directors should ensure their company has strong internal and audit compliance functions. He stated these functions are worthless unless the directors back it up with supervision and review, and that these processes are ingrained in the company’s culture. He considered culture a very important point and stressed directors should drive the right compliance culture in the workplace.
A Victorian water authority was found to have contravened the no extra claims clause in its enterprise agreement, in a decision handed down by the Fair Work Commission (FWC) last week. The authority made changes to a vehicle policy which provided some employees with limited private use of work vehicles. The enterprise agreement itself contained no provisions dealing directly with the provision or private use of motor vehicles.
Sladen Legal had two recent successful applications to disregard or reallocate excess non-concessional contributions, with the result that significant excess contributions assessments were extinguished or reduced to a nominal amount.
In the first case the client inadvertently triggered the bring forward rule by paying what she thought was an insurance premium, but was in fact a contribution to a retail superannuation fund (that in turn funded an insurance policy held by the fund). The client also made a $150K non-concessional contribution in that year followed by a $450K in the following year (causing excess non-concessional contributions of over $150K). The Commissioner of Taxation agreed that special circumstances existed and agreed to reallocate the “insurance” contribution to the second year reducing the excess contributions tax from over $70K to approximately $1,500.
Justice Gleeson of the Federal Court of Australia has provided further clarification surrounding the power of the Registrar to correct errors on the Personal Property Securities Register (PPSR) in the case of SFS Projects Australia Pty Ltd v Registrar of Personal Property Securities [2014] FCA 846.
In this case, SFS Projects Australia Pty Ltd (SFS Projects) was assigned three security interests that were already registered on the PPSR. A mistake was made by the assignor who incorrectly changed the end date of the registrations, instead of changing the name of the secured party, to SFS Projects. If the error was not corrected, SFS Projects would be deprived of the benefits of a continuously perfected security interest under the Personal Property Securities Act 2010 (PPSA).
New guidelines released by the Australian Taxation Office (ATO) will assess tax compliance risks associated with the allocation of profits from professional services firms operating in the accounting, architectural, engineering, financial services, legal and medical professions.
