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December 30, 2013

The regulatory schedule for 2014

2014 begins with some uncertainty: in addition to its legislation repealing the carbon tax and the mining tax, the Government has indicated it will be changing FOFA and conducting a Financial System Inquiry. Its charities changes have also been held up in the Senate.

It will also be "cleaning up" announced but unimplemented tax and superannuation changes. The Superannuation Guarantee charge percentage increase from 9.25% to 9.5% scheduled for 1 July 2014 has been postponed. The rate will remain at 9.25% until 30 June 2016.

But some significant changes will definitely commence in 2014, particularly the privacy changes commencing on 12 March.

1 January 2014

Anti-bullying law: anti-bullying legislation comes into effect on 1 January 2014 and will enable victims of workplace bullying to apply directly to the Fair Work Commission for an order that the bullying stop.

Small businesses will be apply to apply for External Dispute Resolution for disputes on loans up to $2 million

Risk management: New APRA standards for ADIs requiring a chief risk officer commence.

The Financial Claims Scheme single customer view commences.

The National Regulatory Scheme for Community Housing will also start in January.

The new statutory definition of charities will commence, notwithstanding the Government's proposed changes to the sector.

Other key dates

Personal Property Securities Act transition ends on 31 January 2014: pre-30 January 2012 securities must be registered on the PPS Register to retain priority.

National Gambling Reforms (including daily ATM limits in gambling venues) commence on 1 February 2014.

The Co-operatives National Law commences in NSW and Victoria on 3 March and later in the year in other States and Territories.

The Privacy Amendment Act commences on 12 March 2014 including changes to credit reporting.

Gender equality: from 1 April 2014 businesses with 100 or more employees will be required to lodge reports each year containing information relating to various gender equality indicators.

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Posted 30th December 2013 by David Jacobson in Charities, Compliance, Corporations Act, Financial Services, Privacy, Superannuation, Tax, Workplace

December 20, 2013

ATO clarifies SMSF limited recourse borrowing arrangements

The ATO has released a draft legislative instrument regarding trusts formed to hold property for limited recourse borrowing arrangements.

The legislative instrument will potentially exclude an investment in a related trust held by an SMSF as a required part of an Limited Recourse Borrowing Arrangement from being an in-house asset of the SMSF.

If formalised, the instrument will apply retrospectively, from 24 September 2007 – the date from which SMSF Limited Recourse Borrowing Arrangements were permitted.

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Posted 20th December 2013 by David Jacobson in Financial Services, Superannuation, Tax

December 17, 2013

Tax review update

The Assistant Treasurer has announced the outcome of consultations over the backlog of 92 announced but unlegislated tax and superannuation measures. (Background)

The Government previously announced that 18 measures would proceed, 3 would be amended and seven would not go ahead including motor vehicle FBT changes and the cap on self-education expenses.

Of the 64 measures that were considered further, 16 will proceed and 48 measures will not proceed (including Not-for-profit sector reforms ).

Those that are proceeding include:
•Capital gains tax treatment of earn out arrangements;
•Income tax treatment of instalment warrants;
•GST reverse charge for going concerns.

Those that are not proceeding include:
•Research and development tax incentive – quarterly credits;
•Capital gains tax relief for taxpayers affected by natural disasters;
•Symmetric treatment of bad debts.

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Posted 17th December 2013 by David Jacobson in Tax

November 20, 2013

Financial System Inquiry details released

The Treasurer Joe Hockey has announced the appointment of Mr David Murray AO to head an inquiry into Australia’s financial system and the draft Terms of Reference of the inquiry.

Amongst other things, the Inquiry will recommend policy options that:

  • promote a competitive and stable financial system that contributes to Australia’s productivity growth;
  • promote the efficient allocation of capital and cost efficient access and services for users;
  • support individuals and businesses to be reasonably able to manage their finances by understanding risks and rewards in the financial sector;
  • foster dynamic and innovative financial service providers.

The Inquiry will take account of the regulation of the general operation of companies through corporations law to the extent these impinge on the efficiency and effective allocation of capital within the financial system.

It will also examine the taxation of financial arrangements, products or institutions to the extent these impinge on the efficient and effective allocation of capital by the financial system.

The Inquiry will take account of, but not make recommendations on the objectives and procedures of the Reserve Bank in its conduct of monetary policy.

Mr Murray will head a Committee of four eminent Australians drawn from the finance, business and academic sectors.

The Committee will draw on the expertise of a Special External Council comprising five international business people to specifically advise on matters relating to international competitiveness and offshore regulatory frameworks and related issues.

Following feedback, final terms of reference and the final composition of the inquiry will be announced in mid-December, with the inquiry to publish an interim report by September 2014 and deliver a final report by November 2014.

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Posted 20th November 2013 by David Jacobson in Corporations Act, Financial Services, Tax

November 8, 2013

Government tax and superannuation update

Treasurer Joe Hockey has announced how the Government will deal with 92 measures of announced but unlegislated tax and superannuation measures.

Of the 92 unlegislated and unresolved tax and superannuation changes, the Government will proceed with 18 initiatives. A further three initiatives will be significantly amended.

The Government will not proceed with seven initiatives.

Assistant Treasurer Arthur Sinodinos, with assistance from the Board of Taxation will undertake consultation with tax experts, including a number drawn from the Board's advisory panel over the next two weeks with a disposition not to proceed with the remaining 64 measures.

There will be legislated protection for any taxpayer who has self‑assessed with announced changes that the Government will not proceed with.

Taxpayers that have complied with previous announcements that will no longer proceed, and have paid additional taxation, will be entitled to a refund.

The 7 measures the Government will not proceed with include:

  • Self‑Education Expenses Cap of $2000
  • Change to Fringe Benefits Tax on cars
  • Tax on Superannuation Pensions above $100,000

The Government will proceed with Tobacco Tax Changes and increasing the non‑primary production income eligibility threshold for Farm Management Deposits from $65,000 to $100,000.

The Government has not yet considered changing the low value import threshold for imposition of GST.

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Posted 8th November 2013 by David Jacobson in Superannuation, Tax

July 19, 2013

Car FBT changes announced

The Treasurer announced on 16 July 2013 that car fringe benefits tax was being changed to remove the statutory formula method for both salary-sacrificed and employer-provided cars (Fact Sheet).

Subject to the change being legislated it will apply from 16 July 2013 for new contracts entered into after announcement, with effect from 1 April 2014 and to existing contracts materially varied after 16 July 2013.

All car fringe benefits for new leases will be calculated using the operating cost method from 1 April 2014.

The operating cost method is based on the actual business use of the car as recorded in a log book. Tax is payable on the portion of operating costs attributable to private use.

The statutory formula method accepted personal use at 20 per cent, regardless of actual personal use of the car.

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Posted 19th July 2013 by David Jacobson in Financial Services, Tax

June 21, 2013

Superannuation contributions update

The Superannuation (Excess Concessional Contributions Charge) Bill 2013 and the Tax Laws Amendment (Fairer Taxation of Excess Concessional Contributions) Bill 2013 have both been passed by the House of Representatives and will now be considered by the Senate.

UPDATE 24 June: Bills passed by Senate. Awaiting Royal Assent.

The Tax Laws Amendment (Fairer Taxation of Excess Concessional Contributions) Bill 2013 amends the Income Tax Assessment Act 1997 and the Taxation Administration Act 1953 to establish a new system for the taxation of individuals with concessional contributions in excess of their annual cap. This Bill also allows individuals to elect to release an amount of excess concessional contributions from their superannuation interests. Any released amounts proportionately reduce their non-concessional contributions.

The Superannuation (Excess Concessional Contributions Charge) Bill 2013 imposes a charge on taxpayers who have concessional contributions in excess of their annual cap to ensure that they do not receive an advantage over those taxpayers who do not exceed their annual cap.

If passed, the Bills the amendments will apply in the 2013-14 income year.

From 1 July 2013, the concessional cap for individuals aged 59 and over will be raised to $35,000 and from 1 July 2014, the concessional cap for individuals aged 49 and over will be increased to the same level.

Currently individuals must pay excess concessional contributions tax at a rate of 31.5 per cent on their excess concessional contributions (in addition to the tax on contributions paid by the super fund). The Bill repeals the excess contributions tax in relation to excess concessional contributions and instead provides for excess concessional contributions to be included in an individual’s assessable income and subject to a charge to account for the deferral of tax.

Individuals may choose to pay the liability from their own sources, or use their superannuation monies. A non-refundable tax offset of 15 per cent is provided to individuals to account for the income tax paid by the fund.

Individuals who exceed their concessional cap are also liable to a new interest charge, the excess concessional contributions charge, which is designed to account for the income tax that would otherwise have been paid earlier on these amounts had they been taken as salary, wages or profits.

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Posted 21st June 2013 by David Jacobson in Superannuation, Tax

Regulatory framework for tax (financial) advice services

The Tax Laws Amendment (2013 Measures No. 3) Bill 2013 has been passed by the House of Representatives and will now be considered by the Senate.

The Bill, if passed, amends the Tax Agent Services Act 2009 to bring entities that give tax advice in the course of giving advice that is usually provided by financial services licensees within the regulatory regime administered by the Tax Practitioners Board.

The amendments mostly commence from 1 July 2014 with a three-year transitional period before the new regime commences in full on 1 July 2017.

Tax agent services provided by financial services licensees and their authorised representatives were previously exempt from the TASA 2009 regulatory regime.

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Posted 21st June 2013 by David Jacobson in Financial Services, Future of Financial Advice Reforms, Tax

NSW retains state taxes

The NSW Budget has announced that the taxes not already abolished under the Intergovernmental Agreement on Federal Financial Relations (IGA), will now be retained (rather than further deferred).

The remaining taxes, being stamp duty on business mortgages, non-quoted marketable securities and transfer duty on non-real business transfers (goodwill, patents and intellectual property), will now be retained to partly fund commitments under the National Education Reform Agreement. The need to retain these taxes will be reassessed when the low value GST import threshold is lowered.

Background

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Posted 21st June 2013 by David Jacobson in Financial Services, Tax

June 19, 2013

Registration of financial advisers as tax agents

The Parliamentary Joint Committee on Corporations and Financial Services has recommended that, subject to transitional provisions, the proposed amendments contained in schedules 3 and 4 to the Tax Laws Amendment (2013 Measures No. 2) Bill 2013 be reintroduced and passed.

Schedules 3 and 4 contained proposed amendments that would bring financial advisers who provide tax advice into the tax agent regulatory regime overseen by the Tax Practitioners Board (TPB).

The Committee recommended that transitional arrangements be amended to stipulate that, from 1 July 2013 until 31 December 2014 , unregistered financial services licensees and representatives may provide tax (financial) advice services on condition that they accompany such a service with a disclaimer.

Treasury has published a paper outlining the proposed educational and experience requirements for tax (financial) advisers an individual would need to meet to be registered as a tax (financial) adviser as envisaged in the amendments.

Background

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Posted 19th June 2013 by David Jacobson in Financial Services, Future of Financial Advice Reforms, Tax
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