The Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019 received assent on 17 February 2020. The legislation includes a range of measures targeting illegal phoenixing including penalties for directors related to GST liabilities (making directors personally liable for unpaid GST if the unpaid liability is not paid within 21 days of a director penalty notice being issued) and retaining tax refunds.
The legislation, which lapsed at the dissolution of Parliament in the lead up to the last federal election but was revived months later, had been the topic of much debate in the lead up to its expected enactment last October. […]
Increasing maximum SMSF members to six is still official policy
The SMSF Association held its annual conference recently, which was addressed by Assistant Minister for Superannaution, Senator Jane Hume, who stated that it remains government policy to see an increase in the maximum number of SMSF members from four to six. Implementation of the Hayne banking commission recommendations was however a priority, she said. (See full speech here.)
“This proposed change is significant,” Hume said, “because it increases the flexibility of our self-managed superannuation sector. It will allow situations such as families with up to four children to be part of a single family superannuation fund.” […]
Taken goods for private use? Here’s the latest values for tax purposes
The ATO knows that many business owners naturally help themselves to their trading stock and use it for their own purposes. This common practice can occur in businesses such as butchers, bakers, corner stores, cafes, wine shops and more.
The ATO regularly issues guidance for business owners on the value it expects will be allocated to goods taken from trading stock for private use. The table below shows these values for the 2019-20 income year, taken from Taxation Determination TD 2020/1. […]
In the Federal Budget last April, the Government announced it would make changes to the tax treatment of testamentary trusts, and an exposure draft of amendments was released by Treasury at the start of the current quarter.
The assessable income of a minor from a distribution from a testamentary trust is taxed at ordinary rates, rather than the highest marginal tax rate like other passive income received by minors. This has led some taxpayers to inject unrelated assets into one of these trusts to take advantage of the concession that is available to minor beneficiaries of these trusts.
This change will ensure that this tax concession available to minors in these trusts only applies in respect of income generated from assets of a deceased estate that are transferred to the testamentary trust under a will, or the proceeds of the disposal or investment of those assets. […]
When the legislation to limit the amount that can be transferred into a pension account took effect on 1 January 2017, there was always written into those rules a requirement for the transfer balance cap (TBC) to eventually be indexed.
The legislation, the Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016, provides that the general TBC is to be indexed in increments of $100,000 if the indexation rate reaches a prescribed figure (and this is calculated using a formula set out in the legislation). […]
For some time now, the ATO’s data matching arm has been collecting bulk records from Australian cryptocurrency designated service providers. It follows a growth in Australian taxpayer participation with bitcoin and other cryptocurrency assets over recent years, with estimations from the ATO that between 500,000 to one million local taxpayers (including SMSFs) have invested in crypto assets.
ATO Deputy Commissioner Will Day announced that it will be working with other regulators, particularly AUSTRAC and ASIC, to make sure tax laws are adhered to within a whole-of-system approach. “The ATO is also working in a joint international effort as part of the Joint Chiefs of Global Tax Enforcement” (also known as J5) “aimed at investigating cryptocurrency-related tax evasion and money laundering,” he said.
According to a report from US-based blockchain and crypto news site BitcoinerX, the ATO expects a three-fold return on an estimated $1 billion spend on chasing what it calls “crypto tax”. […]
Draft guidance directs that capital gains are not to be included in FITO limit
A draft taxation determination has been issue by the ATO to clarify that capital gains are not included when calculating the foreign income tax offset (FITO) limit.
TD 2019/D10 says the FITO limit calculation involves a comparison between Australian tax actually payable and the Australian tax that would be payable if certain income, and deductions reasonably related to that income, were disregarded. Generally, the higher the amount of income captured, the higher the FITO limit.
The draft determination states that if a taxpayer made a capital gain in respect of which you have not paid any foreign income tax, no amount in respect of that capital gain will be included. The ATO states that amounts are included if they are amounts of “ordinary” or “statutory” income from a source “other than an Australian source”.
But it adds that a net capital gain does not have a source. “It is a product of capital gains and capital losses made during the income year from Australian and non-Australian sources, the application of unapplied net capital losses from earlier income years, and applicable discounts.” […]
The ATO has in place a ruling that can allow a superannuation contribution to an accumulation account made in one financial year to be deemed to “take effect” (that is, allocated to a particular year’s contribution total) in the financial year that follows.
Importantly, the ATO requires a form to be lodged, which serves to notify it that a member of a self-managed superannuation fund (SMSF) has made a concessional contribution in one financial year (year 1) but the SMSF did not allocate this to the member until the next financial year (year 2).
Most SMSFs use provisions in their trust deeds concerning contribution reserves to enable this strategy, commonly referred to as a “contribution reserving strategy”. Typically, SMSF members will have made these arrangements to allow contributions to be recognised for income tax deductibility and other purposes in year 1 while not being counted towards their concessional contributions cap until year 2. […]