Tax Law for Business Articles
Tax Law - Exempt or rebatable employers
Date: February 27, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
This article deals with the subject of non-profit employers who receive exemptions or rebates for FBT purposes. Since employers are the entities that report and pay FBT, it is vital for the employer to determine accurately whether they are eligible for such concessional treatment.
Tax Law - Advance pricing(Part 2)
Date: February 22, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
In part 1 of this article we saw that advance pricing arrangements (APAs) are a means by which the ATO seeks to kerb transfer pricing. This part of the article goes into more detail on the APA system.
Tax Law - Advance pricing(Part 1)
Date: February 22, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
One of the ways that the ATO can impact international transactions is through the advance pricing arrangement (APA) program, which aims to mitigate the practice of “transfer pricing”.
Tax Law - Annual compliance arrangements(Part 1)
Date: February 22, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
The ATO has always recognised the importance of large business entities to the general well-being of the Commonwealth. If nothing else, large business entities contribute no less than 60% of annual income tax revenue to the Commonwealth. Annual compliance arrangements (ACAs) are just one way amongst many for the ATO to engage with large businesses and ensure throughgoing compliance as far as possible.
Tax Law - Annual compliance arrangements(Part 2)
Date: February 22, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
Part 1 of this article set out the basics of what an annual compliance arrangement (ACA) is, and how to enter one. This part of the article will talk about what the arrangement involves during each year.
Tax Law - Capital Gains Tax - CGT Events(Part 1)
Date: February 22, 2012
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
CGT events are circumstances that could either give rise to a capital gain or result in a capital loss. It is only after the occurrence of a CGT event that an entity would be liable to pay CGT and be subject to the application of the provisions for that particular event.
Tax Law - Capital Gains Tax - CGT Events(Part 2)
Date: February 22, 2012
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
CGT events are circumstances that could either give rise to a capital gain or result in a capital loss. It is only after the occurrence of a CGT event that an entity would be liable to pay CGT and be subject to the application of the provisions for that particular event.
Tax Law - FBT and salary sacrifice arrangements
Date: February 22, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
As described in our companion articles on FBT, salary sacrifice arrangements (SSAs) were in former times a way of rewarding employees whilst getting around income tax. While the advent of FBT in 1986 made such considerations less viable, SSAs are still common as a way of providing incentive to employees.
Tax Law - FBT nexus requirement
Date: February 22, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
Possibly the most basic question in determining whether a taxable fringe benefit exists, is whether the relevant benefit is provided “in respect of employment”. This article deals with this seemingly innocuous requirement and the complexities it hides.
Tax Law - FBT, associates and third parties
Date: February 22, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
FBT is a tax upon fringe benefits, which most people would associate with benefits other than money which employers bestow directly upon employees. However, what happens if the benefit is provided to a family member of the employee? What is the employee receives a benefit from a party other than the employer? This article deals with associates and third parties for the purposes of FBT.
Tax Law - Tax Evasion - Tax planning
Date: February 22, 2012
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
It goes without saying, tax evasion is the biggest threat to the Commonwealth’s largest revenue stream. Suffice to say the ATO continuously revamps and improves its strategies year after year to address the problem. While the number of tax offenders has dwindled since the implementation of new tax system (ANTS) there continues to be a large number of entities who fail to comply with their tax and superannuation obligations.
Tax Law - Value Shifting Essentials (Part 1)
Date: February 21, 2012
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Value shifts happen when there is transaction between two parties and the value used for the transaction is not the market value of the asset(s). As a result, the value of an asset from one party is decreased while the value of the other is increased, creating an opportunity to artificially create losses or gains to be used for tax evasion purposes.
Tax Law - Value Shifting Essentials (Part 2)
Date: February 21, 2012
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Indirect value shifting happens when two parties under the same ownership engage in a transaction.
Tax Law - Compliance Programme 2011 - 2012 Fiscal Year (Part 3)
Date: February 20, 2012
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
The collection and recovery of tax debts has proved challenging for the ATO in the last financial year. Declining economic conditions coupled with natural disasters have made tax and superannuation compliance hard for everyone. That said, some taxpayers have resorted to cheating the taxation system but as the year progressed, the ATO was able to address some of these problems.
Tax Law - Compliance Programme 2011-2012 Fiscal Year(Part 2)
Date: February 20, 2012
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
The collection and recovery of tax debts has proved challenging for the ATO in the last financial year. Declining economic conditions coupled with natural disasters have made tax and superannuation compliance hard for everyone. That said, some taxpayers have resorted to cheating the taxation system but as the year progressed, the ATO was able to address some of these problems.
Tax Law - Financial Year 2010-2011 - Offences, convictions, recovered amounts and sentencing
Date: February 20, 2012
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
The ATO has become more vigilant and has adopted a far more sophisticated approach to pursue individuals and companies who not comply with their tax-related obligations. The 2010-2011 financial year has lead to a large number of tax-related convictions and superannuation offences.
Tax Law - Debt Recovery - False or misleading statements(Part 2 of 4)
Date: January 17, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
This article deals with the ATO’s power to impose and increase administrative penalties upon unpaid tax debts, in situations where the taxpayer has made a false or misleading statement.
Tax Law - Debt Recovery - False or misleading statements(Part 3 of 4)
Date: January 17, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
This article deals with the ATO’s power to impose and increase administrative penalties upon unpaid tax debts, in situations where the taxpayer has made a false or misleading statement. This part of the article deals with “recklessness.”
Tax Law - Debt Recovery - False or misleading statements(part 4 of 4)
Date: January 17, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
This article deals with the ATO’s power to impose and increase administrative penalties upon unpaid tax debts, in situations where the taxpayer has made a false or misleading statement. This part of the article deals with “intentional disregard”.
Tax Law - Large business entities(Part 1)
Date: January 17, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
The ATO does not treat large business entities with the same anonymity as other taxpayers, since there are relatively few of them and they contribute a disproportionate amount to revenues. This article deals with the special rules developed by the ATO to deal with, and engage with, large businesses.
Tax Law - Large business entities(Part 2)
Date: January 17, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
The ATO does not treat large business entities with the same anonymity as other taxpayers, since there are relatively few of them and they contribute a disproportionate amount to revenues. This article deals with the special rules developed by the ATO to deal with, and engage with, large businesses.
Tax Law - Large business entities(Part 3)
Date: January 17, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
The ATO does not treat large business entities with the same anonymity as other taxpayers, since there are relatively few of them and they contribute a disproportionate amount to revenues. This article deals with the special rules developed by the ATO to deal with, and engage with, large businesses.
Tax Law - Large business entities(Part 4)
Date: January 17, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
The ATO does not treat large business entities with the same anonymity as other taxpayers, since there are relatively few of them and they contribute a disproportionate amount to revenues. This article deals with the special rules developed by the ATO to deal with, and engage with, large businesses.
Tax Law - Promoter penalty laws(Part 2)
Date: January 17, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
Part 1 of this article dealt with identifying the promoter entity for the purposes of the promoter penalty laws. This part of the article deals with difficulties relating to identifying the promoter of a scheme, in the case of different forms of entity, arrangement and structure.
Tax Law - CGT exemption essentials
Date: January 12, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
This article sets out in summary form the various available forms of CGT exemption, some of which are dealt with in more detail in companion articles.
Tax Law - Consolidation essentials
Date: January 12, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
Needless to say, separate income taxation of multiple entities can prove complex and costly. Complex tax administration requires resources and personnel that could otherwise be used. That said, the ATO allows wholly-owned groups to consolidate for taxation purposes. The consolidation regime is itself extremely complicated. This article sets out the basics of the regime and how it applies.
Tax Law - Cost Base(Part 1) - Costs of acquisition
Date: January 12, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
A capital gain exists where the capital proceeds attributable to a capital event exceed the cost base of the relevant CGT asset. Capital proceeds are relatively simple to calculate. The more involved issue is the calculation of the cost base of the asset.
Tax Law - Cost Base(Part 3) – Reduced cost base
Date: January 12, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
A capital gain exists where the capital proceeds attributable to a capital event exceed the cost base of the relevant CGT asset. However, a capital loss exists where the capital proceeds are exceeded by the reduced cost base of the asset.
Tax Law - Demerger(Part 5) – Cost base calculation
Date: January 12, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
A complicated and often misunderstood area of tax law is the CGT and dividend tax relief available in respect of demergers. A demerger occurs when a group of entities (basically, companies or fixed trusts) divides itself into multiple entities or groups in a certain way. This part of the article goes into more detail about how the interest-holders of the head entity ought to adjust the cost bases of the interests in the demerged entity they end up holding.
Tax Law - Main residence exemption - Part 1 of 3
Date: January 12, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
CGT normally applies to capital gains that arise upon the disposal of land. To most individuals, the most important exemption applicable to this situation is the main residence exemption.
Tax Law - Widely based tax disputes(Part 1)
Date: January 12, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
Taxation is a complex and ever-evolving field where, inevitably, oddities and contradictions arise every so often. The ATO is aware of this likelihood. Typically, a dispute over the application of tax law is between the ATO and a taxpayer over a specific tax matter. However, there are times when disputes between taxpayers and the ATO, over the same matter, happen on a larger scale. These instances are what the ATO calls as widely-based tax disputes.
Tax Law - Widely based tax disputes(Part 3)
Date: January 12, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
This part of this article looks at the principles that the ATO uses when assessing a settlement proposal relating to a widely-based tax dispute.
Tax Law- CGT Calculation(Part 2) – More about the general discount
Date: January 12, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
As we saw in Part 1 of this article, one of the three alternative techniques for calculating capital gains on the happening of a CGT event, is the general discount method. Using this method, entities including individuals and trusts may receive up to a 50% reduction of the capital gain that would otherwise exist.
Tax Law - Demergers - Demerger Tests
Date: January 07, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
A complicated and often misunderstood area of tax law is the CGT and dividend tax relief available in respect of demergers. A demerger occurs when a group of entities (basically, companies or fixed trusts) divides itself into multiple entities or groups in a certain way.
Tax Law - Demergers - relief for interest holders of the head entity
Date: January 07, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
A complicated and often misunderstood area of tax law is the CGT and dividend tax relief available in respect of demergers. A demerger occurs when a group of entities (basically, companies or fixed trusts) divides itself into multiple entities or groups in a certain way.
Tax Law - Demergers - Relief for the members of the original demerger group
Date: January 07, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
A complicated and often misunderstood area of tax law is the CGT and dividend tax relief available in respect of demergers. A demerger occurs when a group of entities (basically, companies or fixed trusts) divides itself into multiple entities or groups in a certain way.
Tax Law - Demergers - What is a Demerger?
Date: January 07, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
A complicated and often misunderstood area of tax law is the CGT and dividend tax relief available in respect of demergers. A demerger occurs when a group of entities (basically, companies or fixed trusts) divides itself into multiple entities or groups in a certain way.
Tax Law - Unfair preference payment claims against the ATO
Date: January 07, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
This article deals with a little-known form of action that may be taken against the ATO by a liquidator – namely, an unfair preference payment claim against the ATO itself.
Tax Law - Cash Economy - Data Matching - Privacy - Pursuing Tax Offenders
Date: November 24, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
The government founded the Australian Taxation Office for one primary reason: to collect taxes and tax-related liabilities. The ATO has the responsibility to ensure that every taxpayer pays the correct amount of tax and excise under the law. That said, the ATO has been given power to pursue individuals and entities who are not complying with their tax-related responsibilities including those who provide false information.
Tax Law - Cash Economy Letters Program - Results
Date: November 24, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Putting a stop to businesses that operate in the cash economy could be as simple as informing them that they are indeed operating illegally. That said, the ATO has carried out a project to reduce the risk induced from businesses participating in underground economy called cash economy letters program.
Tax Law - Defining the Cash Economy
Date: November 24, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
The cash economy is often referred to as “black”, “hidden”, or “underground” economy. The essence of the cash economy is when business transactions go unrecorded or unreported to the ATO. Hence, they gain an unfair advantage over other businesses which choose to comply with the requirements of the ATO by deliberately evading their tax-related obligations.
Tax Law - The Cash Economy - Detection
Date: November 24, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
The ATO has pursued tax offenders, especially businesses that participate in the cash or underground economy. In 2010, the government has given the ATO an extra $445 million over the next four years in order to crackdown on the cash economy and GST(goods and services tax) compliance and is expected to gain over $3.2 billion in lost revenue over that period.
Tax Law - Cash Economy - Small Business Benchmarks
Date: November 18, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Business benchmarks allow the ATO, as well as corporate entities to compare the performance of a business to another business in the same industry. In doing so, the ATO is able to discern the different turnover ranges for businesses in an industry. That said, discrepancies from business to business will shed light on which businesses are participating in cash economy or not. As of this writing, the ATO has developed benchmarks for more than 100 industries.
Tax Law - Cash Economy - Voluntary Disclosure - Remission of Penalties and Charges
Date: November 18, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
A voluntary disclosure can involve an entity informing the ATO about a false or misleading statement they made without being prompted or persuaded to do so. It has inherent advantages, one of which is a reduction in penalties and interest. Voluntary Disclosure is an area which is really misunderstood by most tax lawyers or accountants including the role of a Prudential Auditor. Most professionals go about it the wrong way and rarely achieve a good result.
Tax Law - Companies - Company Tax Debt and Recovery
Date: November 15, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Company tax debts come into existence in a number of ways. Normally they are the function of the incapacity to pay for any of a number of reasons. In all such cases company directors assume personal liability where nothing is done to address the company’s taxation debt particularly after a director’s penalty notice has been served on them and the 21 day grace period has expired without action.
Tax Law - Debt Recovery - Freezing Assets and Mareva Injunctions
Date: November 15, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
The power to freeze assets is an integral part of minimising the risk to the revenue when dealing with assets where a taxpayer attempts to frustrate the tax office recovering the amount of any tax debt. It provides the Commissioner of Taxation with a tool to prevent a debtor from evading tax-related liabilities by dealing with assets in such a way as to frustrate the execution of a judgment. Freezing assets allows the ATO to minimise this risk.
Tax Law - Debt Recovery - Overpayments
Date: November 15, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
In the normal course of things taxpayers account to the tax office for tax monies to satisfy their tax related liabilities. But there are instances in which a person may receive money from the ATO which is in excess of their entitlements to a refund or otherwise. Where this occurs the monies received fall under Section 8AAZN of the TAA 1953 as an administrative overpayment.
Tax Law - Tax Debts - Restrictions on Overseas Travel
Date: November 15, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
The Commissioner of Taxation has the power to stop tax debtors from leaving Australia if they have unpaid tax liabilities or have not provided a suitable arrangement to address the debt by placing them on airport watch. This applies to both Australian and foreign nationals who are liable to pay taxes to the ATO unless a deportation order under the Deportation Act 1958 is issued by the Commonwealth.
Tax Law - Companies - Late Payments - Directors Penalty Notices (DPN)
Date: November 14, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
As of recent times we have been approached by a number of taxpayers who are experiencing difficulties in meeting their tax and BAS obligations. It is apparent that the ATO has a much lower threshold of tolerance where BAS obligations are not met on time they are now insisting on 50% of the outstanding balance due when a payment arrangement is being negotiated.
Tax Law - Failure to Lodge (FTL) Penalty - Exemptions and Remissions of the Failure to Lodge (FTL) Penalty
Date: November 10, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
The Commissioner of Taxation may remit an entity's FTL penalty on the grounds that is fair and reasonable to do so if the entity is able to show and prove how a specific event(s) have directly resulted in the taxpayers inability to lodge the documents on time. One matter which the Commissioner will take into consideration when considering to grant a remission is whether the entity has a good compliance history.
Tax Law - Failure to Lodge (FTL) Penalty - Provisions and Factors for the application of the Failure to Lodge (FTL) Penalty
Date: November 10, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Even in the fast-paced world we live in today, every person who derives income, whether through employment or business, from Australia is obliged by the ATO to comply with all of their tax-related requirements on time and in its approved form. Should a taxpayer fail to lodge tax returns, statements, notices or any other document the ATO requires from a taxpayer, then they will most likely be charged with the FTL (failure to lodge) penalty.
Tax Law - Tax Assessments - Guidelines for Disputing a Tax Debt
Date: November 10, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
A taxpayer can prepare the objection themselves or have it prepared by an authorised person on their behalf (e.g. tax lawyer or tax agent provided that they have been given written authority (a signed declaration by the taxpayer certifying the details and documents provided are true) to do so.
Tax Law - Tax Assessments - Lodging an objection
Date: November 10, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
The raising of assessments by the ATO on a person or company are not absolute. There are instances where an assessment made by the ATO is unjustified. That said, taxpayers who are dissatisfied with their tax assessments and other decisions made by ATO have the right to object to some of them to ensure that any action taken to collect taxes and other tax related liabilities are in accordance with legislation.
Tax Law - Tax Debt - Disputed Debts - Legal Action
Date: November 10, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
The ATO believes that the longer a tax debt remains in dispute the harder it is to recover. Disputed debt will normally increase due to the application of penalties and interest as long as the debt remains outstanding or a suitable payment arrangement has not been made by the debtor.
Tax Law - Tax Debts - Irrecoverable Debts
Date: October 24, 2011
Author(s): Jonathan Lim B.A., LL.B. (Hons)
The ATO can sometimes seem to have boundless energy when pursuing tax debts. However, it is important for taxpayers to be aware of the situations when even the ATO will give up the chase.
Tax Law - Tax Debts - Personal Liabilities of Directors for Company Tax Debts
Date: October 24, 2011
Author(s): Jonathan Lim B.A., LL.B. (Hons)
In most situations where a company has a tax debt, the Commissioner of Taxation and the ATO will respect the “corporate veil” and not touch the assets or money of the individual directors or shareholders.
Tax Law - Tax Debts - Writs and Warrants of Execution
Date: October 24, 2011
Author(s): Jonathan Lim B.A., LL.B. (Hons)
A writ or warrant of execution (hereafter “warrant”) is issued by a court to authorise its sheriff or bailiff to seize assets of the judgment debtor and sell it to pay the judgment debt amount.
Tax Law - General Interest Charge or GIC
Date: October 19, 2011
Author(s): Jonathan Lim B.A., LL.B. (Hons)
The ATO has several means of discouraging the late payment of tax liabilities. Of these, the most basic and universally applied is the general interest charge (GIC).
Tax Law - Tax Debts - Bankruptcy and Liquidation Factors
Date: October 19, 2011
Author(s): Jonathan Lim B.A., LL.B. (Hons)
In our companion articles Tax debt recovery: bankruptcy and Tax debt recovery: liquidation, we already discussed the basics of when the Commissioner will impose these harsh measures. However, an important issue for a taxpayer who is subject to these measures is what factors the Commissioner takes, or should take, into account when deciding to impose them.
Tax Law - Tax Debts - Company Arrangements in Lieu of Liquidation
Date: October 19, 2011
Author(s): Jonathan Lim B.A., LL.B. (Hons)
As may be seen in our companion articles Tax debt recovery: liquidation and Tax debt recovery: bankruptcy and liquidation factors, the Commissioner of Taxation will only seek liquidation of a debtor company in extreme circumstances. This article deals with ATO policy when choosing to enter a deed of company arrangement with a debtor company, as an alternative to imposing liquidation.
Tax Law - Tax Debts - Compromise of Tax Debts
Date: October 19, 2011
Author(s): Jonathan Lim B.A., LL.B. (Hons)
If the Commissioner accepts an application from a tax debtor to compromise their tax debt, then the Commonwealth will accept a payment that is lower than the full tax debt. Applying for a compromise is often the first thing a tax debtor will think of if an outstanding tax debt cannot be paid. However, as will be seen, it is not a very desirable solution.
Tax Law - Tax Debts - Indemnity Requests upon Liquidation or Bankruptcy
Date: October 19, 2011
Author(s): Jonathan Lim B.A., LL.B. (Hons)
When a tax debtor is subject to bankruptcy or liquidation, either a trustee or liquidator will take over the taxpayer’s assets and undertake to pay the debts of the taxpayer as best as possible. These debts include debts to the ATO as well as other debts. The trustee or liquidator will often find itself in a situation where a certain action, such as litigation, will result in more funds being available to pay creditors.
Tax Law - Tax Debts - Liquidation
Date: October 19, 2011
Author(s): Jonathan Lim B.A., LL.B. (Hons)
When the ATO and Commissioner of Taxation decide to impose measures upon a company taxpayer with a tax debt, the most extreme sanction available is that of liquidation. As can be imagined, this harsh measure is not imposed lightly.
Tax Law - Tax Debts - Paying by Installments
Date: October 19, 2011
Author(s): Jonathan Lim B.A., LL.B. (Hons)
The ATO expects taxpayers to pay taxes when they fall due. Ordinarily this puts the onus on the taxpayer to ensure that their cash flow is always adequate to their tax related responsibilities.
Tax Law - Tax Debts - The ATO can Bankrupt you
Date: October 19, 2011
Author(s): Jonathan Lim B.A., LL.B. (Hons)
There are many ways in which the ATO and the Commissioner of Taxation can impose sanctions upon individual taxpayers who are late in paying tax liabilities. Of these, the most severe sanction is that of bankruptcy under the Bankruptcy Act 1966 (Cth).
Tax Law - Trusts - Misconceptions
Date: October 19, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Tax Law - Trusts - Resettlement
Date: October 19, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Trusts are being utilised more and more by a wide range of businesses and individuals in our community. Listed unit trusts are being extensively used for either the development and/or acquisition of various property interests. Their popularity continues to grow because accountants promote them as the most effective taxation and asset protection structure currently available in Australia as well as producing substantial fees for them.
Tax Law - Tax Debts - Installment Arrangements
Date: October 17, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Unfortunately there are circumstances that arise which impede a taxpayer’s ability to pay taxes. It could be said that in tough times like the present this is one of those times. As the saying goes “the only things that are certain in life are death and taxes”. Where finances are short there are some options which need to be considered.
Tax Law - Tax Debts - The role of the ATO in Recovering Tax Debts
Date: October 17, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Tax revenue is the biggest revenue stream for most countries. It is what funds roads, highways and bridges for trade and travel, it funds schools, hospitals and other institutions in service of the public; it is what finances the majority of the arenas, courts, stadiums or recreational centres; it makes relief efforts possible and delivers relief to those stricken by disaster.
Tax Law - Tax Debts - The value of security
Date: October 17, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Security is the most effective way for an entity to prove to the ATO that the taxpayer has the financial capacity to pay the debt owed. The existence of securities allows the ATO to hold the debtor’s asset to effectively recover the debt.
Tax Law - Debt Recovery
Date: October 12, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Over the last several months there has been a significant increase in the number of taxpayers who have approached us with respect to either actual or threatened debt recovery proceedings from the ATO. In a number of these cases the ATO is threatening to make taxpayers bankrupt or wind up their companies where they have been tax non-compliant over a period of time.
Tax Law - The ATO and Debt Recovery
Date: October 12, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
The current economic environment has meant that there are a number of people and/or businesses who are suffering financially. There is much commentary about the existence of a two-speed economy in Australia as we saw with GFC 1 and now with GFC 2. There will be an increase in the number of taxpayers whether company or individual who will be unable to meet their ongoing obligations.
Tax Law - Trusts - Bamfords Case - Part 2
Date: August 15, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
It is well-settled proposition in trust law that trust deeds can define what income is, provided there is an adequate definition of income and the trustee has the discretion to determine what is or is not income allowing the trustee to include in income what might otherwise not be income, such as capital gains in Bamford.
Tax Law - Trusts - Bamfords Case - Part 1
Date: August 08, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Bamford’s case has settled how the definition of “income” in trust deeds is to be construed. Prior to this case there was a raging controversy as to whether the proportional or quantum approach was to be applied.
Tax Law - Foreign Exchange Losses (Forex Losses)
Date: August 05, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
In all taxation matters where clients have funds deposited overseas with a foreign bank account there can be issues where there are foreign exchange gains or losses. Many taxpayers who hold offshore funds need to be careful about how they manage these funds as foreign exchange gains and losses may or may not be deductible.
Tax Law - Money Laundering
Date: August 05, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Money laundering is considered by all organs of the government to be hard-core criminal activity which must be rigidly controlled. It is regulated under the Anti-Money Laundering & Counter Terrorism Financing Act 2006 (Cwlth) (AMLF) which became effective in December 2006 and criminalised under others. The Cwlth Government wishes to ensure that businesses and/or individuals do not engage in money laundering.
Tax Law - Legal Professional Privilege - Protection For Clients
Date: April 11, 2011
Author(s): Tony Anamourlis B.A., LL.B., MTaxLaw, GradDipLegPrac, SJD Candidate (La Trobe); ATIA
The legal professional privilege attaches to communications for the purpose of giving and receiving legal advice or for use in existing or anticipating litigation. It is will accepted that if a person prepares and then make a documentary communication to a legal advisor for the dominant purpose of obtaining legal advice, that documentary communication attracts legal professional privilege.
Tax Law - The Reach of Legal Professional Privilege
Date: April 11, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary), Tony Anamourlis B.A., LL.B., MTaxLaw, GradDipLegPrac, SJD Candidate (La Trobe); ATIA
These propositions make it clear that any document being prepared with a view in order to obtain legal advice or to aid in the conduct of litigation even if it is only an aide-memoire has privilege attached to it from the time of creation.
Tax Law - Anti-Avoidance Rules - Income Tax, GST, FBT
Date: March 28, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
There are a number of anti-avoidance provisions in the Tax Acts, their purpose being to nullify schemes or arrangements which are damaging the revenue. Whenever any such schemes or scams are identified by the Tax Office they not only look at their legal advisers but at all promoters, professionals and participants.
Tax Law - Fringe Benefit Tax (FBT) - Exemptions
Date: March 28, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Fringe Benefits Tax is not normally an area which is referred to tax lawyers except where there has been fringe benefits tax non-compliance. Section 67 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) provides the Tax Office with broad anti-avoidance powers which are similar to those that operate under Part IVA of the ITAA 1936 for income tax purposes.
Tax Law - Fringe Benefits Tax (FBT) - Exempt Motor Vehicles
Date: March 28, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Tax Law - Income Tax - Part IVA ITAA 1936 - General Anti-Avoidance Rules
Date: March 28, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Part IVA is extremely dangerous as it has far reaching consequences and could potentially cover anything or everything done by the taxpayer(s) or their advisers. It was devised to address arrangements devised for the sole or dominant purpose of obtaining a tax benefit. Although a number of commentators construe this differently we consider “dominant” to mean “principal” but this is subject to some exceptions. Part IVA is provision of last resort and only applies where the taxpayer’s claim is otherwise allowable.
Tax Law - Objections
Date: March 27, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Normally where a taxpayer does not agree with an assessment, determination, notice, position paper or decision they may object, but this is not always available e.g. as in the case of GIC. A person’s right to lodge an objection is to be found in Part IVC of the Taxation Administration Act 1953(TAA53). Basically, an objection should focus on the subject matter of concern to the ATO disputing that part of it relating to the exercise of the Commissioner’s discretion.
Tax Law - Be wary of what you affirm in your Tax Objection to the Commissioner
Date: March 25, 2011
Author(s): Tony Anamourlis B.A., LL.B., MTaxLaw, GradDipLegPrac, SJD Candidate (La Trobe); ATIA
This is the first reported case where the Commissioner has successfully prosecuted a taxpayer for making a false statement. The reality of the matter is, not only does the taxpayer still have to pay the tax owing to the Commissioner; he has a criminal conviction and was sent to jail.
Tax Law - The Commissioner of Taxation will reinstate companies to recover tax debts
Date: March 25, 2011
Author(s): Tony Anamourlis B.A., LL.B., MTaxLaw, GradDipLegPrac, SJD Candidate (La Trobe); ATIA
The Federal Court, finding for the Commissioner, held that the taxpayer should be reinstated. It held that there would be no injustice or prejudice caused by the reinstatement, whereas, injustice might be occasioned if there was not reinstatement.
Trusts - Special Disability Trusts
Date: March 08, 2011
If you have children, relatives or friends who suffer from a disability it is possible to set up a trust (either in your will or during your lifetime). These types of trusts are known as "Special Disability Trusts".
Taxation Law - Resident or Non-Resident for Taxation Purposes
Date: March 07, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary), Scott Gray LPAB, Grad. Dip. Legal Practice
Australian residents must declare all ordinary and statutory income no matter where in the world it is derived while non residents are only assessed on Australian sourced income.
Estate Planning, Asset Protection and Taxation Law - An Overview of Testamentary Trusts - Part 1
Date: March 02, 2011
Author(s): Tony Anamourlis B.A., LL.B., MTaxLaw, GradDipLegPrac, SJD Candidate (La Trobe); ATIA
A testamentary trust is a trust created in a will. There are four parties involved in a testamentary trust...
Estate Planning, Asset Protection and Taxation Law - An Overview of Testamentary Trusts - Part 2
Date: March 02, 2011
Author(s): Tony Anamourlis B.A., LL.B., MTaxLaw, GradDipLegPrac, SJD Candidate (La Trobe); ATIA
A well drafted testamentary trust can also provide an opening for beneficiaries to minimize Capital Gains Tax which arises from the sale of your assets. Capital Gains Tax is not triggered when an asset belonging to you passes via your Will to your executor or the trustee of a testamentary trust. There is no Capital Gains Tax when your assets are transferred from the trustee of a testamentary trust to a beneficiary...
Taxation Law - Trusts - Types of Trusts
Date: March 01, 2011
Accountants and lawyers will tout the benefits of having a trust, but there is often confusion about the kind of trusts that the client would obtain the most benefit from. Advisors should understand the client’s personal situation before recommending any type of trust structure. This article will review some of the most common trusts that are available and the benefits of each of these different trust structures will be discussed.
Taxation Law - An Introduction to the Taxation of Trusts
Date: February 20, 2011
Author(s): Scott Gray LPAB, Grad. Dip. Legal Practice
While the declaration of a trust does not create a separate legal entity, common law does recognise the consequent fiduciary obligations imposed upon the trustee. Among those is the obligation to exercise control in accordance with the terms of the trust. It follows then that the trust, although not a separate legal entity, will be notionally treated as if it were for the purpose of determining the net income of the trust estate.
Taxation Law - Onshore and Offshore Voluntary Disclosure - Going it Alone - Traps and Pitfalls
Date: February 11, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
LAC Lawyers is one of the leaders in onshore and offshore voluntary disclosure. Currently initiatives have been announced in both South Africa and the USA offering reduced penalties and interest where a person comes forward for specified periods including the full extent of their tax non-compliance. In many cases taxpayers are prompted to prepare their own voluntary disclosure in order to save on professional fees.
Taxation Law - Cash Sales - New Benchmarks
Date: February 09, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
The ATO is becoming more and more concerned about the level of tax non-compliance in the cash economy and for this reason they have focused on cash sales and developed new benchmarks. This is particularly a problem with small business as major enterprises dealing with cash such as retailers, have proper systems in place to ensure monies received are properly dealt with and the correct amount of tax in all but a few cases is properly returned to the revenue.
Taxation Law - Tax Information Exchange Agreements - Part 1
Date: February 08, 2011
Author(s): Tony Anamourlis B.A., LL.B., MTaxLaw, GradDipLegPrac, SJD Candidate (La Trobe); ATIA
Recently at both a national and international level there has been increasing attention given to the issue of tax evasion and the use of tax havens. In a foreword to an ATO booklet titled “Tax Havens and Administration”[1] released by the ATO, the Commissioner of Taxation Michael D’Ascenzo commented that the use of tax havens.
Taxation Law - Tax Information Exchange Agreements - Part 2
Date: February 08, 2011
Author(s): Tony Anamourlis B.A., LL.B., MTaxLaw, GradDipLegPrac, SJD Candidate (La Trobe); ATIA
Double Taxation Agreements (“DTA’s”) are bilateral agreements between two countries which prevent double taxation and fiscal evasion . DTA’s are designed to foster cooperation between international tax authorities by enforcing their respective tax laws.
Taxation Law - Tax Information Exchange Agreements - Part 3
Date: February 08, 2011
Author(s): Tony Anamourlis B.A., LL.B., MTaxLaw, GradDipLegPrac, SJD Candidate (La Trobe); ATIA
With the increased attention being given by the ATO and other government agencies to the issue of tax evasion in tax havens taxpayers need to be aware of current developments. The ATO has indicated that as a result of project Wickenby the ATO will focus on taxpayers engaged in tax evasion and will use new approaches (including the use of promoter penalty legislation) to target offenders.