Monthly Archives: August 2016

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STATE TAXES – NSW STATE BUDGET 2016

NSW: Purchaser declaration when acquiring any land in NSW

 
From 18 July 2016, all purchasers and transferees must complete a purchaser’s declaration when acquiring land in NSW.
The purchaser declaration must be lodged with any document assessed for duty dated on or after 21 June 2016.
The purpose of the declaration is to assist in determining liability in relation to, and gather information on:

  • 4% surcharge purchaser duty on the purchase of residential real estate by foreign person from 21 June 2016;
  • Identifying foreign persons for surcharge land tax liability;
  • Commonwealth reporting requirement – to report information to the ATO from 1 July 2016 on transfers of land in NSW.

The OSR notified that an amendment to the Conveyancing (Sale of Land) Regulation 2010 requires the vendor under a
contract for sale of land to provide a current Land Tax Certificate to the purchaser. This applies to all contracts entered into on
or after the 1 July 2016. The taxpayers must use a Client Service Provider to apply a clearance certificate.

SMSF borrowing arm’s-length terms deadline extended

SMSF borrowing arm’s-length terms deadline extended

 
Deadline extended until 31 January 2017 for trustees of (SMSFs) to get any related-party limited recourse borrowing arrangements (LRBAs) onto arm’s-length terms.

 
The ATO has extended until 31 January 2017 the deadline for trustees of self managed super funds (SMSFs) to ensure that any related-party limited recourse borrowing arrangements (LRBAs) are on terms consistent with an arm’s-length dealing. The ATO had previously announced a grace period whereby it would not select an SMSF for review for the 2014–2015 year or earlier years, provided that arm’s-length terms for LRBAs were implemented by 30 June 2016 (or non-compliant LRBAs were brought to an end before that date).

 
The deadline extension to 31 January 2017 follows the ATO’s release of Practical Compliance Guideline PCG 2016/5, which sets out “safe harbour” terms for LRBAs. If an LRBA is structured in accordance with PCG 2016/5, the ATO will accept that the LRBA is consistent with an arm’s-length dealing and the non-arm’s length income (NALI) rules (47% tax) will not apply.

 
TIP:The ATO requires arm’s-length payments of principal and interest for the year ended 30 June 2016 to be made under LRBA terms consistent with an arm’s-length dealing by 31 January 2017.