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Dear Member                                                                                         Member ID:

                                                                                          Issue 122: 2 Nov 2007

In This Issue

  Enrol now in 2008 NIA Program - applications close                Hedge accounting may become more
  soon                                                              widely available

  Labor unveils multi-billion tax package                           ATO publishes new FBT guide

                                                                    FBT change means triple the
  Tax consolidation regime modified
                                                                    workplace Christmas cheer!

  ATO announces external debt collection services                   SMSF auditors included in ATO’s
  panel                                                             compliance program

  AASB invites comment on proposed omnibus AAS                      Peak bodies split on pension age
  improvements                                                      issue

NIA Program

Enrol now in 2008 NIA Program - applications close soon

Act now to set your career on the ‘fast-track’ by enrolling in the NIA
Program for 2008.

The NIA Program is the right education balance; Graduates exit with a globally
recognised postgraduate qualification combined with the mentored experience
that will help you achieve your career goals.

There have been some changes made to the NIA Program for 2008 including:

• The program administration has recently transferred to the Graduate School of
Business (GSB) at the University of New England. The GSB has a dedicated
administrative staff who understand the needs of students juggling work, family
and study commitments.
• The program is now offered in a trimester system with three semester-long
teaching periods each year. This will enable members to fast track their study by
completing either one subject per trimester (three per year) or two subjects per
trimester (six subjects per year).

• Non-compulsory weekend schools are held in Sydney and other cities where
numbers permit.

• The unit numbers and some unit names have changed slightly and a couple of
minor changes have been made to the Program.

         Applications for Trimester 1, 2008 close 30 November 2007

              NIA Program 2008


Labor unveils multi-billion tax package

The release of Labor’s $31 billion tax policy for the 24 November federal election
means it is now certain that whichever party is elected there will be tax changes
from 1 July 2008 affecting at least those on incomes up to $180,000 – and all
higher income earners if the Coalition wins.

(Details of the Coalition’s tax policy were reported in NIA Technical Advantage
Issue 121.)

Labor said it would reshape the tax system over a six-year period and by mid-
2013, there would be only three tax rates – of 15 cents, 30 cents and 40 cents
in the dollar.

This compares with the Coalition's goals of tax rates at 15 cents, 30 cents, 35
cents and 40 cents by mid-2012.

Under Labor, the 30 per cent rate would apply to incomes between $37,000 and
$180,000 and 40 per cent would come in after that.

The reduction in the top tax rate for those on more than $180,000 would not
take effect for three years, saving around $3 billion over the Forward Estimates.

Labor said it would direct $2.3 billion of this amount (saved by deferring cuts on
incomes above $180,000) to an Education Tax Refund for all families receiving
Family Tax Benefit A with children at school.

              Kevin Rudd and Wayne Swan statement: A Tax Plan for Australia’s

Tax consolidation regime modified

The Government has announced it will modify the tax consolidation regime to
prevent groups from inappropriately reducing capital gains.
The modifications are designed to ensure that, when an entity joins a
consolidated group or multiple entry consolidated group (MEC group) following a
capital gains tax (CGT) rollover affecting the membership interests of the joining
entity, the tax cost setting rules do not apply to uplift the tax costs of the joining
entity’s assets.

The change was announced shortly before the start of the Government
Caretaker Period. The measures will require legislation and whether they
proceed as announced will be a matter for the Government following the

The CGT rollovers to which the measure applies are:
• a scrip-for-scrip rollover (Subdivision 124-M of the Income Tax Assessment Act
• a CGT rollover that applies when an individual, trustee or partnership transfers
assets to a wholly-owned company (Subdivisions 122-A and 122-B);
• a CGT rollover that applies when pre-CGT shares are exchanged for shares in
another company (Subdivision 124-G); and
• a CGT rollover that applies when pre-CGT interests in a trust are exchanged
for shares in a company (Subdivision 124-H).

The Minister for Revenue and Assistant Treasurer, Peter Dutton, said the
measure would not affect a de-merger transaction, unless that de-merger
happened as part of the arrangement that involved an entity joining a
consolidated group or MEC group following a relevant CGT rollover.

              Peter Dutton statement: Tax consolidation rules following CGT

ATO announces external debt collection services panel

The Australian Taxation Office (ATO) has announced the appointment of a panel
of external collection agencies to assist with the collection of debt, including tax
debts over two years old and employer superannuation guarantee charge debt.

The four agencies selected are:
• Dun & Bradstreet
• Baycorp Collection Services Pty Ltd
• National Credit Management Limited, and
• Recoveries Corporation Group Limited.

Acting Tax Commissioner Jennie Granger said the appointments followed a
successful three-month trial conducted in 2006, which resulted in $21 million in
outstanding debt being collected.

She said the panel was required to adhere to strict privacy and professionalism
guidelines and will have to report back to the ATO monthly on their progress and
adherence to these guidelines. They would also need to meet all Commonwealth
secrecy and privacy requirements.

             ATO statement: Tax Office announces external debt collection
services panel
AASB invites comment on proposed omnibus AAS

Amendments may be made to 27 Australian Accounting Standards, if proposals
in an International Accounting Standards Board (IASB) exposure draft (ED),
released for comment by the Australian Accounting Standards Board (AASB), are

The ED, Proposed Improvements to Australian Accounting Standards
incorporates the IASB’s ED, Proposed Improvements to International Financial
Reporting Standards (IFRS), which was released in October 2007 under its first
annual improvements project.

The IASB’s proposed changes include a restructuring of IFRS 1 First-time
Adoption of International Financial Reporting Standards, mainly to remove
redundant transitional provisions, and wording changes that clarify the meaning
and remove unintended inconsistencies between IFRSs, most of which would
have a minor impact.

AASB chairman, Professor David Boymal, said that the Board would consider any
amendments made by the IASB for inclusion in the equivalent Australian

“The IASB has included a number of proposals in a single ED to streamline the
standard-setting process. Some of the proposed amendments, such as those
relating to the definition of a derivative, the sale of assets held for rental and the
measurement in separate financial statements of a subsidiary held for sale, may
potentially affect current Australian practice,” Professor Boymal said.

NIA Policy Adviser on Technical Activities, Tom Ravlic PNA said, “This omnibus
exposure draft is a good example of how the International Accounting Standards
Board will amend standards in the future. It amends a raft of accounting
standards in one hit. Members affected by the application of accounting
standards are strongly encouraged to respond to the AASB within the comment

The AASB is seeking comments by 30 November 2007.

              AASB statement: Comments invited on proposed improvements to

Hedge accounting may become more widely available

Hedge accounting may become available in more circumstances, according to an
International Accounting Standards Board (IASB) exposure draft (ED), released
for comment by the Australian Accounting Standards Board (AASB).

The ED proposes amendments to AASB 139 Financial Instruments: Recognition
and Measurement, in relation to exposures qualifying for hedge accounting. The
proposed changes would clarify what can be designated as a hedged item in a
hedge accounting relationship.

AASB chairman, Professor David Boymal, said the ED identified the risks within a
financial instrument, such as interest rate risk, foreign currency risk, credit risk
and pre-payment risk that could be designated as a hedged item.

Additionally, the exposure draft clarified the portions of cash flows in a financial
instrument that could be designated as a hedged risk.

“The proposed amendments to AASB 139 should help clarify the intended
meaning of the International Accounting Standards Board’s (IASB) hedging
requirements,” Professor Boymal said.

The AASB is seeking comments by 30 November 2007.

            AASB statement: Comments invited on proposed amendments to
hedge accounting

Small Business

ATO publishes new FBT guide

The Australian Taxation Office (ATO) has published a new guide to help small
business employers to understand how the tax on fringe benefits and
entertainment works, and to decide whether or not they may have to pay Fringe
Benefit Tax (FBT).

The guide is intended for use by small business employers who sometimes
provide their employees and/or their associates with food and drink, gifts or
leisure activities.

Depending on the circumstances, the provision of such items may be classified
as providing entertainment, and employers may therefore have to pay FBT.

The guide is broken down into several sections, which help employers to: decide
whether they are providing entertainment, to calculate the taxable value of
entertainment benefits using the actual method, and keep records so that they
can calculate FBT payable.

It also explains how employers can reduce FBT liability, possibly to nil, and also
provides many examples of the most common situations in which entertainment
is provided by small businesses.

             ATO statement: Fringe benefits tax (FBT) and entertainment for
small business

FBT change means triple the workplace Christmas cheer!

The National Institute of Accountants (NIA) is expecting workplaces across
Australia to have a little extra Christmas cheer this year thanks to an increase in
the threshold on FBT exemption.

NIA Chief Executive Officer Roger Cotton said, “A Christmas party is generally
classified as a minor workplace benefit and therefore may be exempt from
Fringe Benefits Tax given certain circumstances.
“Right now the pressure is on for small and large organisations to lock in their
Christmas function arrangements. NIA members are constantly receiving
questions from all sorts of organisations about what can be provided for
employees before being liable for Fringe Benefits Tax.

“The FBT Assessment Act can be a complex document at times and there are
criteria in the Act pertinent to events such as a Christmas party. We recommend
employers consult an authority, such as an NIA member, to ensure they are
doing the right thing by their employees and themselves,” Mr Cotton said.

             NIA Media Release


SMSF auditors included in ATO’s compliance program

The Australian Taxation Office (ATO) has warned that it will consider referring
Self Managed Superannuation Fund (SMSF) auditors to their professional
associations where there is evidence they are not carrying out their duties

Assistant Tax Commissioner, Stuart Forsyth, said approved auditors were part of
the ATO’s compliance program for 2007-08. The ATO would look for:
• funds with an unqualified audit report where the ATO identified a single
• low fee audits,
• lack of independence,
• small numbers of funds audited by a single auditor, and
• a large number of funds audited by a single auditor.

“In the very large majority of cases, auditors are doing a good job of identifying
breaches, but there are some that require development and education,
particularly around the compliance part of the audit,” he said.

“We will consider referring an auditor where we have evidence the auditor is not
performing their role in accordance with their association’s guidelines and the
Australian Auditing Standards.”

In the first half of 2007, the ATO referred five auditors to their professional
association for missing significant contraventions of the SIS Act, he said. In all
cases, the auditor had limited, or no working papers to support their audit.

“Two auditors have been publicly censured by their association, one by the
National Institute of Accountants (NIA) and the second by the National Taxation
Accountants Association (NTAA),” Mr Forsyth said. “Both associations required
the auditor to undertake remedial training in the conduct of approved audits.
The remaining three referrals are still in progress.”

            Stuart Forsyth, Assistant Tax Commissioner speech: Simplified
Superannuation in practise

Peak bodies split on pension age issue
Superannuation industry bodies are divided over calls made by a leading
Australian think tank, the Committee for Economic Development of Australia
(CEDA), to raise the pension age from 65 to 67.

CEDA actuarial expert, Dr David Knox, said the rise should be gradual, between
2015 and 2022.
Age-based superannuation rules should also be reformed, he said.

He said that when the national age pension was established in 1909, the
average life expectancy for males was 56; for females, 60. Only around four per
cent of Australians were 65 or over. But by 2047, Treasury projected this figure
would rise to around 25 per cent.

“Without appropriate policy reform, the increase in life expectancy, decreasing
birth rates and Australia’s ageing ‘baby boomers’ will impact the economy,” Dr
Knox said.

“A comprehensive policy package is required to alleviate future fiscal pressures
and ensure that all Australians enjoy an adequate standard of living in

The Association of Superannuation Funds of Australia (ASFA) welcomed the
measure, but the Investment and Financial Services Association (IFSA) and the
Australian Institute of Superannuation Trustees (AIST) said that blue-collar
workers would be disadvantaged.

The Council of the Ageing (COTA) agreed the report should be debated, while
pensioners lobby groups the Combined Pensioners and Superannuants
Association (CPSA) and the Australian Pensioners Superannuants League (APSL)
rejected the proposal. The APSL said an increase in pension age could only be
justified by a massive increase in welfare and pension payments.

                CEDA statement: Pensions for longer life

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