17 March 2020
GST + Family Law
A roadmap for professional advisers who don't want to be tax nerds.
For better or for worse, tax is a necessary and important consideration for professional advisers assisting clients with relationship breakdown.
GST is just one of the tax issues which can be overlooked in practice, with unpleasant results.
GST Ruling GSTR 2003/6 gives us some guidance about how the Commissioner thinks these things work. Unfortunately, the Tax Office position may also produce some very unexpected GST outcomes when we are looking to transfer business assets as part of a property settlement.
Whether the Tax Office position is legally correct is another question, but unless and until the law is clarified by a Court we need to have at least some idea of the GST playing field when we are advising our clients and structuring property settlements.
If you would like to know more about GST and Family Law click on the link below to read the complete article, or contact us.
GST + Family Law
A roadmap for professional advisers who don't want to be tax nerds.
For better or for worse, tax is a necessary and important consideration for professional advisers assisting clients with relationship breakdown.
GST is just one of the tax issues which can be overlooked in practice, with unpleasant results.
GST Ruling GSTR 2003/6 gives us some guidance about how the Commissioner thinks these things work. Unfortunately, the Tax Office position may also produce some very unexpected GST outcomes when we are looking to transfer business assets as part of a property settlement.
Whether the Tax Office position is legally correct is another question, but unless and until the law is clarified by a Court we need to have at least some idea of the GST playing field when we are advising our clients and structuring property settlements.
If you would like to know more about GST and Family Law click on the link below to read the complete article, or contact us.
17 June 2017
Attracting ATO attention
Some guidance about current ATO targets
(and Taxpayer Alert TA 2013/3)
The ATO have recently released a publication setting out some of the "behaviours and characteristics" that may make privately owned and wealthy groups (basically, small and medium enterprises) tax audit targets.
The ATO says it doesn't like these sorts of things:
The ATO is also excited about the property industry, and trusts and private companies being used to get away with tax mischief.
The Commissioner specifically mentions his interest in the way professional firms are structured, and his concerns about how much tax he thinks the owners of professional firms should be paying. The ATO previously issued Taxpayer Alert TA 2013/3 back in 2013, so this issue has clearly not gone off the ATO radar.
If you would like to know more about Taxpayer Alert TA 2013/3 click on this link, or contact us.
Attracting ATO attention
Some guidance about current ATO targets
(and Taxpayer Alert TA 2013/3)
The ATO have recently released a publication setting out some of the "behaviours and characteristics" that may make privately owned and wealthy groups (basically, small and medium enterprises) tax audit targets.
The ATO says it doesn't like these sorts of things:
- tax or economic performance is not comparable to similar businesses
- low transparency of your tax affairs
- large, one-off or unusual transactions, including transfer or shifting of wealth
- a history of aggressive tax planning
- tax outcomes inconsistent with the intent of tax law
- choosing not to comply or regularly taking controversial interpretations of the law
- lifestyle not supported by after-tax income
- accessing business assets for tax-free private use
- poor governance and risk-management systems.
The ATO is also excited about the property industry, and trusts and private companies being used to get away with tax mischief.
The Commissioner specifically mentions his interest in the way professional firms are structured, and his concerns about how much tax he thinks the owners of professional firms should be paying. The ATO previously issued Taxpayer Alert TA 2013/3 back in 2013, so this issue has clearly not gone off the ATO radar.
If you would like to know more about Taxpayer Alert TA 2013/3 click on this link, or contact us.
24 January 2017
Tax Disputes - Rule Number #2
Never underestimate the willingness of tax authorities to make your life miserable in unexpected ways
Payroll Tax Grouping and your Self-Managed Superannuation Fund
Commissioner of State Revenue v Can Barz Pty Ltd & Anor [2016] QCA 323 2 December 2016
The extreme complexity of taxation laws can mean that you won’t even know that you are facing unexpected tax liabilities. The payroll tax grouping rules are a classic example of the dangers.
Broadly, these rules can operate to “group” businesses and entities on the basis of specified relationships (such as the use of common employees or common directors) so that payroll tax thresholds are not separately available and the businesses and entities in the group are jointly and severally liable for the payroll tax liabilities of other group members.
The end result can be that your family trust (even if it doesn’t employ anyone) can be liable for payroll tax obligations of businesses that are only remotely related. Ignorance of these rules won’t help you if the Payroll Tax Commissioner comes knocking.
Given that a SMSF is legally just a trust, albeit one that has to operate within a very strict legislative environment, and payroll tax is a major source of state and territory money, it should not come as too big a surprise that revenue authorities have attempted to “group” non-employer SMSFs with related employing businesses, and to use private superannuation savings to fill government coffers.
1 August 2016
Death, Taxes & Pokemon Go
Maybe Pikachu would benefit from a little estate planning
Melbourne accountant and lawyer Ken Ang has published a short note on the benefits of making sure your will is up to date, especially if you are engaging in potentially hazardous pastimes.
Ken's article can be accessed by clicking the following link:
13 April 2016
Tax Disputes - Rule Number #1
Establishing the "correct" tax amount
14ZZK TAA 1953 Burden of Proof
Is it enough to point out the Tax Commissioner's mistakes?
We know that tax laws are extremely complicated, but many dealings with tax authorities are about the facts, not some complex tax interpretation question that needs High Court clarification. Unlike ordinary legal disputes, the Tax Commissioner does not have to prove his case – a notice of assessment is prima facie evidence that an assessment has been properly made.
Section 14ZZK of the Taxation Administration Act 1953 shifts the onus of proving their case to the taxpayer who “… has the burden of proving … that the assessment is excessive or otherwise incorrect and what the assessment should have been”
As the cases show, Tribunals and Courts consistently reinforce that taxpayers must show what the “true” assessment should have been in order to win a case against the Tax Commissioner. Taxpayers must provide evidence which satisfactorily establishes their actual or true taxable incomes.
There is no “off the rack” formula for how a taxpayer can prove what their “true” income is. It may be as simple as producing documents showing that a particular deposit represents the proceeds of the tax free sale of the family home (for example) or as complicated as reconstructing business records covering a number of years. As with most dealings with the Tax Commissioner credibility may be a factor in determining whether taxpayer submissions are likely to be accepted.
Taxpayers (and their advisors) who simply focus on the Commissioner’s failings and are unwilling or unable to produce evidence showing that the Commissioner’s assessments are excessive will not be doing themselves any favours.
Tax Disputes - Rule Number #1
Establishing the "correct" tax amount
14ZZK TAA 1953 Burden of Proof
Is it enough to point out the Tax Commissioner's mistakes?
We know that tax laws are extremely complicated, but many dealings with tax authorities are about the facts, not some complex tax interpretation question that needs High Court clarification. Unlike ordinary legal disputes, the Tax Commissioner does not have to prove his case – a notice of assessment is prima facie evidence that an assessment has been properly made.
Section 14ZZK of the Taxation Administration Act 1953 shifts the onus of proving their case to the taxpayer who “… has the burden of proving … that the assessment is excessive or otherwise incorrect and what the assessment should have been”
As the cases show, Tribunals and Courts consistently reinforce that taxpayers must show what the “true” assessment should have been in order to win a case against the Tax Commissioner. Taxpayers must provide evidence which satisfactorily establishes their actual or true taxable incomes.
There is no “off the rack” formula for how a taxpayer can prove what their “true” income is. It may be as simple as producing documents showing that a particular deposit represents the proceeds of the tax free sale of the family home (for example) or as complicated as reconstructing business records covering a number of years. As with most dealings with the Tax Commissioner credibility may be a factor in determining whether taxpayer submissions are likely to be accepted.
Taxpayers (and their advisors) who simply focus on the Commissioner’s failings and are unwilling or unable to produce evidence showing that the Commissioner’s assessments are excessive will not be doing themselves any favours.
17 April 2015
Management of Tax Disputes
Inspector General of Taxation Report
Has the ATO got it right, or does it need to start playing fair?
Most dealings with revenue authorities are undertaken in a professional way. The ATO rightly sees itself as a world leader in tax administration and is continually looking to improve the way it engages with taxpayers and advisers. The Tax Commissioner and other senior officials have had impressive careers in private enterprise, and are looking to bring about cultural change in the way ATO officers go about their business. Given that tax collectors have been derided since the beginning of history, and taxpayers have always been motivated to pay the least amount of tax and not a cent more, there is a lot of sensitive scar tissue on both sides of the fence and any change in entrenched attitudes will likely be gradual.
17 February 2015
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