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Boosting Housing Supply: WA Introduces Off-the-Plan Concession and Foreign Persons Exemptions Bill

The Western Australian housing market is set to experience a significant boost as the state government introduces the Duties Amendment (Off-the-Plan Concession and Foreign Persons Exemptions) Bill 2023. This legislation aims to enhance housing supply, incentivize off-the-plan property purchases, and promote urban infill. Here's an overview of what the Bill entails and how it could impact potential homebuyers.

In: Housing

ATO Gives 'Green Light' to Lodge Tax Returns: Key Tips for Tax Time 2023

The Australian Taxation Office (ATO) has announced that it's time for taxpayers with straightforward financial situations to get ready to file their annual income tax returns. In a recent media release, Assistant Commissioner Tim Loh highlighted the ease with which taxpayers can now lodge their returns, thanks to the pre-filled information provided by the ATO. Whether individuals choose to work with registered tax agents or file their returns via myTax, pre-filled data will be automatically available for a smoother filing process.

In: Tax Time

New Bill Proposes Significant Penalties for Tax Information Confidentiality Breaches in NSW

Introduction: The New South Wales (NSW) parliament has recently introduced a groundbreaking Bill, the Revenue, Fines, and Other Legislation Amendment Bill 2023, aimed at imposing substantial penalties for certain confidentiality breaches of tax information. The Bill encompasses a range of tax-related amendments, targeting the Taxation Administration Act 1996 (TAA), the Duties Act 1997, the Land Tax Management Act 1956, and the Payroll Tax Act 2007. This comprehensive legislation seeks to bolster the protection of confidential tax information, streamline tax processes, and uphold the principles of fair taxation practices.

Key Highlights of the Proposed Amendments:

  1. Strengthened Offences for Tax Information Breaches: The Bill introduces new offences targeting individuals or corporations who knowingly or recklessly disclose or use confidential tax information. Concealing or attempting to conceal such unlawful disclosure will also attract severe penalties. The maximum fines for these offences will be significantly increased to up to $1,109,900 for individuals and $5,549,500 for corporations.

  2. Extended Reassessment Limit: The proposed amendments aim to extend the reassessment limit for a person's tax liability beyond the current 5-year period. This extension will not only apply to the initial assessment but also cover decisions related to objections or reviews of any assessment.

  3. Tougher Penalties for Impeding Tax Assessment: The Bill seeks to discourage activities that hinder the proper assessment of tax liabilities. To achieve this, the proposed amendments increase penalties for offences related to taxpayer activities that obstruct the assessment process.

  4. Enhanced Powers to Require Property Valuation: The Chief Commissioner of State Revenue will be granted enhanced powers to demand taxpayers to provide property valuations for the purpose of tax assessments. In specific circumstances, the taxpayer will be liable for the valuation costs.

  5. Enhanced Information Disclosure: The proposed amendments will allow tax officers under the TAA to share information obtained in relation to taxation law administration with the Chief Executive Officer of Service NSW and the Secretary of the Treasury, fostering a more coordinated approach to tax-related matters.

  6. Combatting Tax Evasion: The Bill introduces a new offence targeting tax evasion with a maximum penalty of 500 penalty units or 2 years imprisonment, or both, to bolster efforts in combating tax-related fraud and non-compliance.

  7. Extended Objection Lodging Period: The Chief Commissioner may allow objections to assessments or decisions to be lodged for up to 5 years after the initial assessment, extending beyond the current 60-day period.

  8. Addressing Tax Avoidance Schemes: The scope of offences related to promoting tax avoidance schemes will be expanded to include "phoenix operations." These operations may lead to the creation of groups under section 74A of the Payroll Tax Act 2007 (NSW).

  9. Flexible Tax Payment Methods: The Chief Commissioner will be granted general power to determine various tax payment methods, allowing for more flexibility in tax compliance.

Amendments to the Duties Act 1997:

The proposed amendments to the Duties Act 1997 (NSW) will have a profound impact on various aspects of taxation:

  1. Corporation Division as Dutiable Transaction: The Bill will consider the division of a corporation, resulting in a new corporation holding previously owned land, as a dutiable transaction.

  2. Time Limit Removal for Dutiable Transactions: The time limit for dutiable transactions to be treated as a single transaction for aggregation purposes will be removed.

  3. Applicable Duty Rate for Change in Consideration: The Bill stipulates that the applicable rate of duty will be based on the rate at the time an agreement was first executed, even if the Chief Commissioner assesses or reassesses the duty due to a change in consideration before the property transfer.

  4. Concessions for Managed Investment Schemes: The proposed amendments extend duty concessions for property vested in an apparent or real purchaser of dutiable property to the legal personal representative of an apparent or real purchaser. Transfer concessions will also apply to deregistered managed investment schemes.

  5. Clarification on Electronic Signature: Electronic instruments lodged under the Electronic Conveyancing National Law (NSW) without digital signatures will be deemed executed when the Chief Commissioner receives related information.

  6. Duty Exemption for Indigenous Land Use Agreements: Property transfers to registered native title body corporations in accordance with indigenous land use agreements will be exempt from duty charges.

  7. Removal of Duplicate Provision: Section 305 of the Duties Act 1997 (NSW) will be omitted as a similar provision will be inserted into the TAA by the Bill.

Amendments to the Payroll Tax Act 2007:

The proposed amendments to the Payroll Tax Act 2007 (NSW) aim to improve tax enforcement:

  1. Payroll Tax Recovery from Influenced Entities: Entities, including corporations in administration, winding up, or deregistration, and their successors, will be considered a group if they were or are sufficiently influenced by the same third party. This measure enables the recovery of payroll tax from these groups, often referred to as phoenix operators or corporations.

Amendments to the Land Tax Management Act 1956:

The proposed amendments to the Land Tax Management Act 1956 (NSW) address exemptions:

  1. Exemption for School Land: The Bill introduces a provision that grants land tax exemption for land used as a school site, even if the land is not owned by the school.

Conclusion:

The Revenue, Fines, and Other Legislation Amendment Bill 2023 (NSW) heralds a significant step by the NSW government towards safeguarding confidential tax information and streamlining tax processes. The proposed amendments emphasize the government's commitment to maintaining the integrity of the tax system and ensuring fair taxation practices. As the Bill progresses through the legislative process, taxpayers and businesses in NSW should stay updated on the proposed amendments to ensure compliance with the new provisions when they come into effect.

In: Penalties

Proposed Amendments to GST Input Tax Credits: Ensuring Clarity and Compliance

The Australian Treasury has recently released a draft legislation proposing amendments to the Goods and Services Tax (GST) input tax credits to ensure that the tax law operates as intended. These proposed changes aim to address certain complexities and provide greater clarity for taxpayers. In this blog post, we will delve into the key aspects of the proposed amendments and their implications for businesses.

Consultation on Modernizing Individual Tax Residency Rules

In a bid to modernize the individual tax residency rules, the Australian Treasury is seeking public input on a proposed framework based on recommendations from the Board of Taxation's 2019 report. This initiative aims to establish a more robust and contemporary system that aligns with the evolving needs and circumstances of taxpayers. The consultation offers a unique opportunity to contribute to shaping the future of tax residency regulations. In this blog post, we will explore the proposed model, its key features, and the aspects for which Treasury seeks public input.

Land Tax Exemption in NSW: Supporting Childcare and Education Services

When it comes to land tax exemptions in New South Wales (NSW), there are specific provisions that cater to the needs of approved childcare and education services. These exemptions play a crucial role in encouraging and supporting the provision of quality education and care for children. In a recent case, Mourched v Chief Commissioner of State Revenue (NSW) 2023 ATC ¶20-873; [2023] NSWSC 668, the Supreme Court shed light on the exemptions applicable to land used for childcare services, including ancillary services. Let's delve deeper into the details of this case and its implications.

Under section 10(1)(u) of the Land Tax Management Act 1956 (NSW), land used solely for the purpose of providing childcare services may be eligible for exemption from land tax. To qualify, the land must serve as the place where children are educated or cared for by the service. The case in question revolved around the interpretation and application of this exemption.

In: Land Tax

Enhancing Transparency in Government Contracts: Residency Disclosure for Tenderers

In an effort to promote transparency and fairness in government procurement processes, a new measure has been introduced that requires tenderers for large government contracts to disclose their country of tax residency. Effective from 1st July 2023, this measure, which aligns with the Buy Australia Plan, aims to create a level playing field and ensure open competition.This will provide an overview of the residency disclosure requirement and its key implications for businesses tendering for Commonwealth Government contracts valued at over $200,000.

What to Do When There's No Clearance Certificate: Navigating Foreign Resident Capital Gains Withholding

As a provider of taxation services, it's essential to stay informed about the intricacies of tax regulations to assist your clients effectively. One such area of concern is the requirement for a foreign resident capital gains withholding (FRCGW) clearance certificate during property settlements. In this blog post, we will explore the implications of not obtaining a clearance certificate and guide you through the necessary steps to rectify the situation.

Understanding the FRCGW Clearance Certificate: When a property valued at $750,000 or more is sold by an Australian resident for tax purposes, they must provide an FRCGW clearance certificate to the purchaser before or at settlement. Failure to provide this certificate results in a withholding of 12.5% of the property purchase price, which is then remitted to the Australian Taxation Office (ATO).

Reasons for Not Obtaining a Clearance Certificate: There are several reasons why clients may not have obtained a clearance certificate before the settlement date. Some common reasons include:

  1. Outdated Tax Records: Clients may have neglected to keep their tax records up to date, resulting in delays or difficulties in obtaining the necessary clearance certificate.

  2. Non-Filing of Tax Returns: If clients haven't been required to lodge tax returns for several years due to their income falling below the threshold, they may not have prioritized obtaining a clearance certificate.

  3. Insufficient Time for Application: Obtaining a clearance certificate can be a time-consuming process, taking up to 28 days for the ATO to process. Clients who haven't allowed sufficient time before settlement may find themselves without the required certificate.

Steps to Take When No Clearance Certificate Is Available: If any of your clients find themselves in a situation where a clearance certificate wasn't obtained before settlement, it's crucial to take the following steps:

  1. Lodge a Tax Return: Even if the client's income falls below the threshold requiring them to lodge a tax return, it is necessary to file one in order to claim the credit that was withheld during the property transaction.

  2. Declare Australian Assessable Income: When completing the tax return, ensure that the client declares their Australian assessable income, including any capital gain or loss resulting from the property disposal.

  3. Claim Credit for Withholding Amount: Clients should claim a 'Credit for any withholding amount' taken from the sale proceeds. This will enable them to receive a refund of the withheld amount if no capital gains tax (CGT) is payable on the property sale, provided there are no outstanding tax debts.

Navigating the requirements of foreign resident capital gains withholding can be complex, particularly when a clearance certificate is not obtained before property settlement. As a provider of taxation services, it is crucial to educate your clients about the importance of obtaining the necessary documentation to avoid withholding complications. In cases where a clearance certificate was not obtained, guiding clients to lodge a tax return and claim the withheld amount as a credit is essential to ensure a timely refund if CGT is not applicable. By proactively addressing this issue, you can help your clients rectify the situation and maintain compliance with tax regulations.

Disclaimer: The information provided in this blog post is for general informational purposes only and should not be considered professional advice. It is recommended to consult with a qualified tax professional regarding specific tax situations and requirements.

Got questions? Reach out to Tax Ideas Accountants & Advisersat +61 2 83181545 or book an appointment on our live calendar.

Tax Time 2023: Top 5 Topics to Discuss with Your Tax Practitioner

  1. Record-keeping requirements for working-from-home deductions have changed. Clients must maintain accurate records regardless of the deduction method chosen.

  2. The ATO has introduced a streamlined lodgment deferral function in Online Services for Agents. This new feature allows us to request deferrals conveniently and should be utilized once the old process is phased out.

  3. Understanding why tax refunds may be lower or why clients might receive unexpected tax bills is crucial. Factors such as the end of the Low and Middle-Income Tax Offset (LMITO) and offsetting credits or refunds against other debts could affect the final amount.

  4. Reporting capital gains, losses, and main residence exemptions for property transactions is essential. This includes situations where clients used their homes for income-generating activities or when applying the 6-year rule for main residence exemptions. Pre-filling reports in Online Services for Agents can assist in this reporting process.

  5. Clients should ensure that all sources of income, including additional employment, government payments, rental income, and income from partnerships, trusts, and units, are declared accurately. If clients have a side hustle, determining if they are classified as running a business and fulfilling associated tax obligations is vital.

By discussing these topics with us, clients can effectively navigate the complexities of Tax Time 2023 and ensure accurate and compliant tax reporting.

Got questions? Reach out to Tax Ideas Accountants & Advisers at +61 2 83181545 or book an appointment on our live calendar .
 

 

 



 

Trust Dividend

Q: The family trust receives an $80,000 unfranked dividend from Company A at the end of the year. The trustee of the trust is a company. Can all the income of the family trust, minus any expenses, be directed to one beneficiary who happens to be the director of both the trustee company and Company A?

In: Trust

When the juices are GST-free

Q: The ATO says bottled water is GST-free, and fruit/vegetable juices are GST-free if they're over 90% pure. Peggy sells bottled juices in her café, where most customers dine in, but some also take away drinks. She wants to know if she should charge GST on bottled drinks.

Is GST required for foreign services?

Q: M company, jointly owned by Australian and UK shareholders, does similar business in both countries under the same brand. M company, based in Australia, hires a digital marketing agency for advertising design. It then passes on some of the design costs to the UK company. Does the UK company need to pay GST for the design services?

Small business tax rate requirements

Q: A client has a few different businesses. One has a turnover above $2 million, while another has a turnover below $2 million. When preparing the tax return for the smaller entity, can the accountant apply the 28.5% company tax rate, or does she need to consider the entire group, which has a turnover above $2 million?

Distributable surplus within Div 7A

Q: A client borrowed $30,000 from his company last year, and the company had no net assets at the end of the year due to offsetting losses. How should this be handled in the accounts? Does it need to declare a dividend for the loan, apply it to the balance sheet, or mark it for Div 7A purposes? Also, the client made another $5,000 loan to himself in the following year, during which the company incurred a loss of $32,000. How is the distributable surplus calculated considering the $30,000 loan from last year?

GST Adjustments

Q: Fiona Wilkes bought a car for $33,000 in October 2011 for her delivery business, with plans to use it 90% for business and 10% for personal use. Over the years, the car's usage changed. How does this affect the net amount of GST?

Fringe benefit tax exemption

Here's a simpler version:

GST relates to the sale of commercial property

Q: A client wants to know about the GST implications of selling commercial property as a going concern. Since there's no GST on the property sale itself, what about other expenses like commission and legal fees that do have GST? Can the GST on these be claimed?

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