sep 07 by panniuniu

VIEWS: 3 PAGES: 3

									DBriefing Newsletter
September 2007
                                                                     as their own, and so there are provisions in the
         CPI FOR JUNE QUARTER                                        tax laws (called Div.7A) which can deem these
                                                                     amounts to be unfranked dividends.
The CPI for the June 2007 quarter is 157.5
                                                                     These rules have typically been very harsh, and
(up from 155.6 for the March 2007
                                                                     operated automatically.
quarter).
                                                                     The Government has recently amended Div.7A so
                                                                     that it is not so harsh, and the ATO has also taken
   SELF MANAGED SUPER FUNDS                                          steps to allow companies and shareholders to get
 (SMSFS): TRUSTEE DECLARATION                                        their affairs in order without being penalised.
                                                                     Background
From 1 July 2007, all new trustees (and
directors of corporate trustees) of an                               Div.7A ensures that any loans or payments
SMSF must sign a declaration, within 21                              by private companies to shareholders or
days of taking up their post, stating that                           their associates are treated as assessable
they understand their duties as a trustee                            unless repaid or placed on arm's length
(or director of the corporate trustee).                              terms.    This includes debts owed by
                                                                     shareholders that are forgiven by the
The declaration, which is available from                             private company.
the Tax Office's (ATO's) website, must be
retained by the fund’s trustees for as long                          Where a taxpayer breaches Div.7A, the
as the person is a trustee (or director of                           amount of the loan, payment or debt
the corporate trustee). If this period is                            forgiven is deemed to be taxable as an
less than 10 years, it must be retained for                          unfranked dividend.
at least 10 years.                                                   The offer
Failure to sign and retain the declaration,                          Under recent changes, the Commissioner
or make it available when requested, may                             of Taxation now has a discretion to ignore
result in penalties being imposed.                                   the operation of Div.7A where an honest
Note that it does not need to be lodged with the                     mistake or inadvertent omission has been
ATO.                                                                 made.
The fund's complying status may be                                   The ATO has issued a practice statement
removed if trustees fail to meet their                               to set out how taxpayers can take
obligations in relation to the declaration                           corrective action to fix such mistakes made
and there have been other serious                                    between 2001/02 and 2006/07.
breaches of the superannuation laws                                  The Commissioner has said: “People who
(which can result in the fund's assets                               follow the practice statement and include
being taxed at 45%).                                                 any outstanding interest or previously
The    ATO      recommends  that   their                             undeclared payments in their 2007/08
publication "Self managed super funds –                              return can take advantage of the new
Key messages for trustees" be read with                              changes to the law, without being
the declaration.                                                     concerned about further enquiries.”
                                                                     From 1 July 2008, the ATO will resume
                                                                     audit work to ensure payments made by
     TAX OFFICE PROVIDES DIV.7A                                      private companies are correctly accounted
     RELIEF UNTIL END OF 2007/08                                     for and company loans are not used to
                                                                     distribute profits tax-free.
The Government doesn't like it when shareholders
of private companies use the company's money

Disclaimer: This newsletter has been prepared by Dennis Ballestrin & Co. Neither Dennis Ballestrin & Co. nor its principal or
employees warrant the accuracy of any information or forecast. The information in this document has been prepared from sources
believed to be accurate and reliable. No liability is accepted for any error or omission that may have occurred therein.
Dennis Ballestrin & Co                                                                                            Page 2

  BUILDERS' TAX RETURNS UNDER                                             the business norms method;
         THE SPOTLIGHT                                                    the stock purchases method; and
The Child Support Agency (CSA) is                                         the snapshot method.
focusing extra attention on the building                             The determination covers these methods in
industry to identify builders who haven’t                            detail, and commences on 1 October 2007.
been paying the correct amount of child
support.                                                             It applies to most food retailers who meet
                                                                     the following eligibility requirements:
The CSA will look at parents in the building
trade where there is evidence a customer                                  the taxpayer is a retailer that sells taxable and
has reduced their income in order to                                      GST-free food; and
reduce their child support liability. The                                 they have a SAM turnover of not more than $2
CSA can adjust a parent’s child support                                   million; and
obligation based on their true financial
situation.                                                                they do not have adequate point-of-sale
                                                                          equipment.
The CSA and the ATO will take a joint
approach to parents who don’t lodge tax                              Eligible food retailers may include such
returns and are urging all builders with                             businesses    as    cake   shops,   delis,
outstanding tax returns to contact the ATO                           convenience stores, fresh fish shops,
on 13 11 42.                                                         health food shops, and pharmacies.


          OFFSHORE VOLUNTARY                                          ROLLING OVER ETPS FROM 1 JULY
              DISCLOSURE                                                          2007
The jailing of celebrity Glenn Wheatley has                          Most       employer    termination  payments
highlighted the ATO's offshore compliance                            (ETPs)      made from 1 July 2007 can no
activities. And it looks like this is only the                       longer     be rolled-over into superannuation
beginning...                                                         funds,      unlike pre-July 2007 employer
                                                                     ETPs.
The ATO has announced that it will
increase its focus on Australian taxpayers                           Therefore, such an ETP contributed into a
who have used offshore bank accounts,                                fund from 1 July 2007 will simply be
offshore financial products, offshore tax                            counted towards one of the taxpayer's
arrangements and/or offshore structures.                             contributions caps.
It has begun an offshore compliance                                  Exception
program, including more audits, to ensure
that taxpayers have fully complied with                              However, as an exception, a 'transitional
their Australian tax responsibilities.                               termination payment' can be rolled-over
                                                                     into a superannuation fund up until 30
However, taxpayers can make an 'offshore                             June 2012.
voluntary disclosure' and cap the shortfall
penalty to 5%, or even receive no shortfall                          Anyone in      receipt of an ETP on or after 1
penalty, depending on the sums involved.                             July 2007      should contact us to see if they
                                                                     can take         advantage of the exception
To    qualify   for   this  concessionary                            relating        to   transitional   termination
treatment, they need to submit a voluntary                           payments,      as generally:
disclosure in writing on the 'Offshore
voluntary disclosure statement form', which                               only the amount (if any) of the 'taxable
can be obtained from the ATO.                                             component' in excess of $1 million will be
                                                                          counted towards the $50,000 concessional
                                                                          contributions cap; and
     GST SIMPLIFIED ACCOUNTING                                            any 'tax-free component' (e.g., pre-July 83
             METHODS                                                      amount) will not be taxed in the fund, and will
                                                                          be excluded from the $150,000 non-
The ATO has issued a new determination                                    concessional contributions cap.
setting out simplified GST accounting
methods (SAMs) available to eligible food
retailers, being:
Disclaimer: This newsletter has been prepared by Dennis Ballestrin & Co. Neither Dennis Ballestrin & Co. nor its principal or
employees warrant the accuracy of any information or forecast. The information in this document has been prepared from sources
believed to be accurate and reliable. No liability is accepted for any error or omission that may have occurred therein.

								
To top