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.
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