president’s report Tax time – when the ATO decides
whether you’ve been naughty or nice
by Peter Murray
This month, Peter Murray discusses the trials and tribulations of the end of the
financial year, tax time and a multitude of recent legislative changes.
The end of the financial year has always
been a tough time for tax professionals.
As the witching hour beckons, tax agents
are consumed by clients seeking advice
on last-minute purchases and end of
financial year tax strategies, and worries
about whether the ATO’s systems will run
smoothly through tax time 2011.
Changes to the taxation
of trusts
This year, the end of the financial year
brought even more challenges – changes
to the trust rules that apply from 1 July
2010 required much to be done before
30 June.
We welcome these new rules which
allow for the streaming of capital gains
and franked distributions to specific
beneficiaries in certain circumstances
and set right the uncertainty created by
Bamford. However, the new rules are
complex and include a new anti-avoidance
rule that will need to be watched closely.
The good news is that the ATO has
announced that it will administer the
new laws so that trustees with a usual
30 June balance date will be given until
31 August 2011 to make records to satisfy
the “specifically entitled” requirement for
franked distributions. This administrative
practice is welcome breathing room for
many practitioners and has come about
following consultation with The Tax Institute.
Members who require guidance or future
information are encouraged to utilise our
trust distributions information package,
which includes regular updates, face-toface and online CPD, printed publications,
and discussion forums.
Reportable tax positions
schedule – coming soon to
a tax return near you
The ATO’s reportable tax positions schedule
went live on 1 July 2011. This project was
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TAXATION IN AUSTRALIA | JUly 2011
born out of increased reporting requirements
in the United States, and is being launched
in Australia as a pilot program.
The schedule will be mandatory for
approximately 80–100 of the largest
economic groups in Australia for the
income year commencing 1 July 2011,
that is, those groups assessed as being
“higher-risk taxpayers” or “key taxpayers”
under the large market Risk Differentiation
Framework. However, the Commissioner
has signalled his intention to roll this
project out to a wider group of taxpayers
in later income years.
We are consulting with the ATO to resolve
outstanding issues in relation to the
implementation of this schedule. We also
hope to host a number of CPD sessions to
inform members of changes in this area,
and how the ATO’s changing focus may
affect your practice in years to come.
Changes to statutory rate for
car fringe benefits
Legislation to implement the announced
Budget change to the statutory rate
applicable in respect of car fringe benefits
was also enacted recently. This rate will be
changed (over the next four years) from a
sliding scale (that allowed for an increase in
tax benefits with an increase in kilometres
driven) to a flat rate of 20%.
The Tax Institute welcomed these sensible
changes – which will ultimately result in a
decrease in compliance costs and benefits
for the environment – and engaged with
Treasury in relation to the implementation
of the measure.
Tax advice privilege
We will also be lodging our submission
to Treasury this month in relation to
the proposed privilege for tax advice.
The Tax Institute believes strongly in the
sanctity of the relationship between tax
adviser and client, and will be submitting
to Treasury that a tax advice privilege is
essential to both preserve this relationship
and encourage taxpayers to obtain tax
advice in relation to their affairs.
Resources tax
This month, the government publicly
released for consultation preliminary
exposure draft legislation on the new
resources tax regime.
The Tax Institute has been extensively
involved in the confidential consultation
process with Treasury conducted through
the Resource Tax Implementation Group,
and with the ATO through the National
Tax Liaison Group Resource Rent Tax
Subcommittee. We will continue to be
involved in the ongoing consultation
process in relation to this proposed tax.
Events
I was fortunate enough to attend the Private
Business Tax Retreat held at the Palazzo
Versace on the Gold Coast from 2 to 4 June.
This event was a great success and I very
much enjoyed talking with out members in
relation to their concerns.
In total, 110 delegates from throughout
Queensland and interstate attended this
event and participated in a variety of
presentations from leading practitioners
on a range of topics, including Div 7A,
SME structures and transactions,
succession planning and trust.
In addition, over 50 individuals took
advantage of the live streaming of key
sessions. Live streaming and recorded
events that are available on The Tax
Institute website (taxinstitute.com.au)
represent a new and exciting way to
provide education-based services to our
members who are otherwise unable to
attend in person.
We look forward to further harnessing this
exciting opportunity to connect with our
members and provide education services.