Monthly Archives: July 2017

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BCI Finances Pty Ltd (in liq) v Binetter (No 4)

The Federal Court has ruled that two directors of a company (one a de facto director rather than a registered director) that engaged in a tax evasion scheme breached their duties as directors, allowing liquidators of the company to personally recover amounts related to the tax debts of the company from the directors. The scheme involved the establishment of sham “back-to-back” loan arrangements with foreign banks that enabled the company to hide offshore deposits. The two directors were found to have been actively involved in the establishment of the scheme, in lodgment of false tax returns and in concealing the existence of the offshore deposits from the ATO, in breach of their statutory and common law duties to the company.

 

Gleeson J, BCI Finances Pty Limited (in liq) v Binetter (No 4) [2016] FCA 1351 (18 November 2016)

 

FEDERAL COURT OF AUSTRALIA

Seven Seas luxury liveaboard experience

www.thesevenseas.net

I joined Mark, the cruise director, with members of his family and friends on a 12 night cruise east of Flores. The pictures shown, while spectacular, do not do justice to the Sevenseas and the experience of traveling on it. This was a once in a lifetime experience, where I kayaked, snorkeled and walked (including some great beach runs) in locations you have to see because any description will fall short. A travel experience on The Sevenseas is for anyone with a thirst to experience some of the magnificent locations this world has to offer, while experiencing the on board team who’s friendly service and company adds an additional level of experience.

Thompsons Australia has been associated with this business providing Australian based services for a number of years. The opportunity for my self to join this trip has been an opportunity I will long remember.

                                                                                                                                                       -Greg Thompson

                                                                                                                                      

CGT main residence exemption removed for foreign and temporary residents

In the 2017/18 Federal Budget, it was announced that foreign and temporary tax residents will no longer have access to the CGT main residence exemption. The removal of this exemption will apply from 9 May 2017. However, any foreign or temporary resident who owned a home on Budget night will be able to sell their main residence before 30 June 2019 and still get the exemption.

This announcement poses many questions, which hopefully will be clarified on release of the legislative Bills and their attached explanatory memorandum.

 

Foreign and temporary residents

The terms “resident”, “resident of Australia” and “non-resident” are defined in ITAA 1936 s 6, while the definitions of “foreign resident” and “temporary resident” are contained in ITAA 1997 s 995-1.

A “foreign resident” means a person who is not a resident of Australia for the purposes of ITAA 1936.
Section 6 of that Act defines a resident of Australia as someone whose domicile, or permanent place of abode, is in Australia. Also, individuals who have actually resided in Australia, continuously or intermittently, for more than half of the income year are determined to be residents.

The above paragraph shows an obvious issue in relation to this new legislative announcement.

Notably, if an individual who has a temporary visa sells their permanent place of abode, say to move back to their native country, at the time of the CGT event they were an Australian resident under ordinary terms.

There will be an opportunity for the Treasury to outline the definition of foreign and temporary resident as it will only relate to ITAA 1997 Subdiv 118-B. Therefore, areas of law dealing with residency vs non-residency will not be affected. Specifically, the removal of the CGT discount for non-residents should have no change.

 

Connection with state government changes

Recently, various state governments have implemented additional taxes and duties for individuals who are foreign and temporary residents. It is unconfirmed at this stage how the federal government will define an Australian resident in this manner for ITAA 1997 Subdiv 118-B. In most (if not all) state jurisdictions, the following individuals are declared exempt from additional charges of stamp duty on purchase and land tax surcharge:

  • Australian citizens
  • individuals who have a current permanent residency visa
  • a New Zealand citizen who holds a special category visa with s 32 of the Migration Act 1958 (Cth).

 

Transitional rules and other exemptions

Upon the enactment of the removal of the CGT discount for property held by foreign residents in the 2012/13 Federal Budget, transitional rules applied to homes owned after this point. It appears that the grandfathering rule only applies to 30 June 2019, meaning homes could become fully taxable after this point.

However, what we do not know is the circumstances surrounding a change in residency status and this provision.

For example, a foreign or temporary resident may own a property at the date of the announcement and choose not to sell, as they are in the process of becoming a permanent resident or Australian citizen. Will there be transitional rules if the individual becomes a permanent resident:

  • between 9 May 2017 and 30 June 2019, or
  • after 30 June 2019? Will the individual’s intention matter for ITAA 1997 s 118-B, as it does for other capital gains tax provisions?

Winning feeling for HiQA at business awards

HiQA Geotechnical was a major winner at the 2017 Telstra Northern Territory Business Awards coming away with two accolades.

 

The company, led by managing director and founder Luke Myall, was named Northern Territory Business of the Year.

Local Geotechnical Services for the Territory. A ‘Yes’ experience, every time.

If you want your geotechnical testing and sampling done fast and done right the first time, you’re in the right place. A Territory-owned-and-operated business since the late 1980s, we deliver local geotechnical services to ensure your projects run smoothly.

 

www.hiqa.com.au/

Victorian vacant residential property tax

The nation’s first vacant property land tax will be levied in Victoria. Originally announced earlier in the year as part of the State Budget, the legislation for the Victorian Vacant Residential Property Tax has been introduced.

 

Various unknowns and exclusions about the tax when it was originally announced have been clarified, and are discussed in the client impact statement.

 

Included below is a map of Melbourne with highlighted boundaries where the vacant land tax applies. This is shown with the bordering postcodes attached.

 

Residential properties that are left vacant for more than six months in inner city and middle areas of Melbourne will be taxed from 1 January 2018. The Victorian government has announced a 1% tax on the capital improved value of vacant property.

 

The Vacant Residential Property Tax is the first of its kind in Australia. It is intended to encourage owners to make their property available for rent or purchase.

 

Source: State Taxation Acts Amendment Bill 2017 (Vic); State Revenue Office Victoria

 

Victorian Vacant Residential Property Tax

 

Under the proposal, owners of residential real estate in inner city or “middle areas” of Melbourne are to inform the State Revenue Office if it is vacant. Vacant is defined as being unoccupied for a period of six months or more in the preceding calendar year. The six-month period applies whether the property was unoccupied continuously or in aggregate.

 

The Vacant Residential Property Tax will be a 1% tax levied on the capital improved value of the property. The capital improved value is defined in the Valuation of Land Act 1960.

 

In that Act, “capital improved value” means essentially means the value of the property by which a genuine seller might in ordinary circumstances be expected to receive.

 

Inner city and “middle areas” of Melbourne have been defined as being within specific local council areas. These local councils will have VRPT applied where necessary:

 

Banyule, Bayside, Boroondara, Darebin,
Glen Eira, Hobsons Bay, Manningham, Maribyrnong,
Melbourne, Monash, Moonee Valley, Moreland,
Port Phillip, Stonnington, Whitehorse, Yarra

 

Included below is an image that shows which postcodes are within the boundaries of this new vacant land tax.

 

Exemptions Under the new law, residential land is defined as land which is capable of being used solely or primarily for residential purposes.

 

An exemption to this clarifies that residential land does not include commercial residential premises, residential care facilities, supported residential services or retirement villages. A commercial residential premises is taken its definition from the GST Act (Cth), and essentially means a business who provides short-term accommodation (although not exclusively).

 

The law allows a property to be exempt if it is used as the owner’s main residence. Also, an exemption is allowed if the property is the principal residence of the owner’s permitted occupant. Permitted occupant is defined as somebody with permission to live at the residence by the owner (ie a rent-free tenant). Also excluded is where a natural person occupies under a genuine lease or several short-term leases. Therefore, it is understood that an exemption will apply as long as the property was occupied for 183 days in the previous calendar year.

 

Vacant land zoned low-density residential will incur the additional levy unless construction (or renovations) have commenced. An exemption will apply for two tax years for these to be finished. For example, vacant land may be purchased in March 2020. The owner is exempt from the additional tax at 31 December 2020 and 2021, but construction must be complete (and other rules adhered to) by 31 December 2022.

 

Holiday homes

 

An exemption from vacant land tax applies to land that is used and occupied as a holiday home for at least four weeks in the previous calendar year. However, the owner of the property must have used and occupied another residence in Australia in that previous calendar year. Also, the Commissioner must be satisfied that it is a genuine holiday home. It is unknown at this stage, but it would appear that the Commissioner would need to be notified of this exemption in writing (or the approved form). An owner may only claim one holiday home per year for the vacant land tax.

 

Work residence

Land that is used and occupied for the purpose of attending the owner’s place of employment/business is exempt, so long as it is occupied for at least 140 days in the calendar year. However, the owner of the property must have used and occupied another residence in Australia in that previous calendar year.
Also, the owner’s place of employment/business must be within the specified geographical location noted above.

 

Re-zoned land

An exemption applies from the vacant land tax if that land became residential land during the previous calendar year.

 

Implementation process

As the 2018 tax year is the first year of operation of the new vacant residential property tax, a few transitional rules will apply that you will need to be aware of.

 

  • An owner of vacant residential land is required to notify the Commissioner of State Revenue in the approved form by 15 January of each year. That is, it is a self-assessed determination whether the vacant land tax applies.
  • All residential land is the specified geographical area will be considered occupied for the first four months of the 2017 calendar year. This means that, for the period May 2017 to December 2017, any property is required to be occupied for a total of two months to avoid the additional tax.
  • For property under construction or renovation at 1 January 2018, it is considered that the property commenced construction on 31 December 2017 under this Act. This means the first year the tax could apply for these properties is on 31 December 2019.

 

Map of taxable area

Is your organisation not-for-profit?

A not-for-profit (NFP) organisation does not operate for the profit or gain of its individual members, whether these gains would have been direct or indirect. This applies both while the organisation is operating and when it winds up.

 
A NFP organisation is not an organisation that hasn’t made a profit. An NFP organisation can still make a profit, but this profit must be used to carry out its purposes and must not be distributed to owners, members or other private people.

 
The Australian Taxation Office accept an organisation as NFP where its constituent or governing documents prevent it from distributing profits or assets for the benefit of particular people – both while it is operating and when it winds up. These documents should contain clauses that are acceptable to the Australian Taxation Office as showing the organisation’s NFP character.

 
The tax law does not prescribe the words that an NFP organisation must have in its constituent documents. Example clauses are available on the ATO and ACNC websites. The organisation’s actions must be consistent with this requirement. Below are examples provided by the ATO.

 
Non-profit clause
‘The assets and income of the organisation shall be applied solely in furtherance of its above-mentioned objects and no portion shall be distributed directly or indirectly to the members of the organisation except as bona fide compensation for services rendered or expenses incurred on behalf of the organisation.’

 
Dissolution clause
‘In the event of the organisation being dissolved, the amount that remains after such dissolution and the satisfaction of all debts and liabilities shall be transferred to another organisation with similar purposes which is not carried on for the profit or gain of its individual members.’

 
Examples of NFP organisations
NFP organisations (including charities) operate in many areas of society. They can include:

  • church schools
  • churches
  • community child care centres
  • cultural societies
  • environmental protection societies
  • neighbourhood associations
  • public museums and libraries
  • scholarship funds
  • scientific societies
  • scouts
  • sports clubs
  • surf lifesaving clubs
  • traditional service clubs.

Checklist – is your organisation an NFP organisation?
Consider the following questions, together with the other information available when working out whether your organisation is an NFP organisation.

  • Is your organisation not operating for the profit or gain of its individual members, either directly or indirectly?
  • Do your organisation’s constituent documents prohibit it from making any distribution – whether money, property or otherwise – to its members during the course of its operations?
  • Do your organisation’s constituent documents prohibit it from making any distribution – whether money, property or otherwise – to its members on dissolution?
  • Are your organisation’s activities consistent with its constituent document’s clauses?
  • Does your organisation have sufficient controls (processes) in place to ensure that members and other private persons do not receive the property or assets of the organisation? Property or assets can be bona fide (legitimate) reimbursement for services they have provided to the organisation, or as reasonable compensation for expenses incurred on behalf of the organisation.
  • Are any profits made by your organisation used to carry out its purposes?

A not-for-profit organisation does not operate for the profit or gain (either direct or indirect) of its individual members. This applies both while the organisation is operating and when it winds up.

 

About ACNC

Role of the ACNC and corporate information
Discover more site information, including our glossary of terms, useful links and list of regulators. You can also read our privacy and other site policies. Find out more at:…www.acnc.gov.au

Role of the ACNC Find out more

  • the role of the ACNC as the Commonwealth charity regulator
  • the ACNC’s corporate information, including our vision and mission, Advisory Board, leaders and organisational structure
  • ACNC data
  • the sector research network
  • ACNC research publications
  • the background to the not-for-profit sector, and
  • research resources.

ACNC legislation
Read about the legislation that establishes the ACNC and sets out transitional arrangements, and the Charities Act 2013 (Cth), which provides a statutory definition of charity.

 

Red tape reduction
Part of the ACNC’s statutory object is to promote the reduction of unnecessary regulatory obligations on the Australian not-for-profit sector . It is developing a reporting framework, have created a Charity Passport to facilitate the ‘report once, use often’ framework for charities and government agencies, and are working to harmonise reporting and other requirements between the ACNC and other regulators.

 

Regulatory approach and decision-making
The ACNC has developed its approach to charity regulation, in consultation with the sector, which details how it will exercise its regulatory powers. As part of a compliance role, and in investigating concerns raised about charities, it look at risks for charities. It aims to support charities through advice and education, using regulatory powers where necessary.
ACNC decisions are open to review and appeal, under the ACNC Act and administrative law, and information-handling and freedom of information (FOI) requirements apply to the ACNC

Pinnacle TMS Trade Mark Specialists

If you are thinking about trade marking your business or brand name, we highly recommend the wonderful team at Pinnacle TMS.

This linked article sets out a simplified overview of the trade marking process, it will give you an idea of how the process is started and what is involved –

http://pinnacletms.com.au/explaining-the-trademark-process/

2017 Australian Tax tables Quick Reference

Click here to view the Tax Tables Quick Reference 2017  in PDF

Checklist: 2016/17 year end — allowable deductions for individuals

Use this checklist to determine your eligibility for the most common work-related tax deductions for individuals.

Year ending:

Job details
Client name: Prepared by:
Year ending: Date:

 

 

2016/17 year end — allowable deductions for individuals                                                                         Yes      No     Ref
D1 Car-related expenses (work-related daily travel expenses)

  • Do you travel between two work sites?                                                                                          ☐        ☐

Number of kilometres: __________________

  • Do you travel for work?                                                                                                                ☐        ☐

Number of kilometres: __________________

  • Do you travel between home and work carrying bulky equipment or bulky items for sale?                  ☐        ☐

Number of kilometres: __________________
You can only claim this if you don’t have locked storage at work.
All log books from before 1 July 2012 will need to be updated for the current tax year.
All cents per kilometre method claims are at a rate of 66 cents per kilometre.
You cannot claim:

  • a trip consisting of home-work-home
  • travel between work and home more than once a day
  • trips if you are on call, and
  • trips outside normal business hours.
D3 Clothing expenses
  • Do you wear clothing to protect yourself from the risk of illness or injury posed from your

working environment?                                                                                                                           ☐        ☐
Cost of safety-coloured clothing: ____________
Cost of steel-capped boots: ____________

  • Are you required to wear a distinctive uniform by your employer?                                                         ☐        ☐

If “Yes”, is this policy strictly enforced?                                                                                                  ☐        ☐
If “Yes”, list type and cost of clothing:
______________________________
If “No”, has your employer registered the design with AusIndustry?                                                           ☐        ☐
If “Yes”, list type and cost of clothing:
______________________________

  • Have you incurred laundry and dry-cleaning expenses for any of the above items?                                  ☐        ☐

If “Yes”, list the cost: __________________
Tip
You can have clothing expenses from prior years, and laundry expenses for such clothing this year.
You cannot claim:

  • purchasing and cleaning of:

– plain uniforms or conventional clothing
– sports clothing
– clothing worn for medical reasons
– everyday footwear (ie dress or casual shoes)

  • items that were purchased or reimbursed by your employer, and
  • a deduction just because you received a clothing, uniform and laundry allowance.
D4 Self-education expenses
  • Did you undertake a course of study designed to lead to an increase in income from your

current employment?                                                                                                                               ☐        ☐
If “Yes”, list the details:
Type of course of study: ____________________________________
Educational facility: ____________________________________
Cost of course fees: ____________________________________
Cost of textbooks: ____________________________________
Cost of stationery: ____________________________________
Cost of equipment/computers: ____________________________________ Cost of
subscriptions: ____________________________________
Cost of travel from work: ____________________________________
Tip: You cannot claim a self-education course for the purposes of finding new employment or starting a
new income-earning activity.

D5 Other out-of-pocket, work-related expenses
  • Did you pay union or professional association fees?                                                                            ☐        ☐

If “Yes”, list the cost: __________________

  • Did you pay fees for professional seminars, courses, conferences or workshops?                                   ☐        ☐

If “Yes”, list the cost: __________________

  • Did you pay for reference books, technical journals or trade magazines?                                               ☐        ☐

If “Yes”, list the cost: __________________

  • Did you pay for safety items such as hard hats, safety glasses or sunscreen?                                       ☐        ☐

If “Yes”, list the cost: __________________

  • Did you use your personal telephone and/or internet service for work?                                                    ☐        ☐

If “Yes”, what is the work-related percentage: ____________% and cost
__________________
Do you have itemised phone bills?                                                                                                            ☐        ☐
If “Yes”, number of months: __________________
Do you have a four-week diary of calls made?                                                                                             ☐        ☐

  • Do you work from home and incur electricity costs?                                                                               ☐        ☐

If “Yes”, list number of hours per week you work from home:
__________________
Do you have a four-week diary of the hours worked?                                                                                    ☐        ☐
A notional claim for electricity when working at home is $0.45 per hour.

  • Did you receive an “overtime meal allowance” as part of your award or industrial agreement?                      ☐        ☐

If “Yes”, did you actually work overtime on those occasions?                                                                         ☐        ☐
If “Yes”, was the amount you received equal to or less than the Commissioner’s
reasonable amount ($29.40 in the current year)?                                                                                           ☐        ☐
If “Yes”, did you spend it on overtime meals?                                                                                                ☐        ☐
If “Yes”, list the cost or number of days: __________________
If you answered no to any of the above, you cannot claim a tax deduction for
overtime meals.

  • Did you pay for tools and equipment (under $300 each)?                                                                          ☐        ☐

If “Yes”, list the cost: __________________
Tools and equipment note
No immediate deduction is available for tools and equipment costing $300 or more. For
items purchased between $300 and $1,000, they may be placed in a low value pool
in Item D6 and depreciated so long as individual remains employed in the industry.
Purchases over $1,000 to be depreciated of their effective life until its written down value
is less than $1,000. Then it may enter the low value pool.
NB: All items only depreciable on work-related portion.
Tip
You cannot claim:

  • child care expenses
  • driver’s licence fees
  • fitness costs
  • meals during a normal working day
  • newspapers or online subscriptions
  • removal/relocation costs, even if you are transferred by your employer, and
  • rent or mortgage interest.
D9 Gifts or donations
Did you make any gifts or donations of $2 or more to a deductible gift recipient?                                                    ☐        ☐
If “Yes”, list below:
____________________________________
____________________________________
____________________________________
____________________________________
Tip
Your receipt from the approved organisation will show whether your donation is tax-deductible.
You cannot claim time spent volunteering for an organisation.