AX UPDATES • SMSF Penalties for Underreported Expenses Legislated
Announcement (28-Jul-2019)
Non-arm’s length income (NALI) rules are bring strengthened. In particular, the NALI provisions are bring re-written to include situations where expenses of the fund are reduced in order to obtain a non-commercial benefit. This new law will strengthen rules which were previously only part of guidance released by the ATO for SMSFs. Specifically, an income tax liability will be enforced as opposed to previous interpretations of tax and super regulations in relation to super fund borrowings. Draft ATO guidance has provided further situations where an SMSF may have underreported nonarm’s length expenditure, including where it may apply to all income.
Introduced (24-July-2019)
Consultation (24-May-2018) Passed (19-Sep-2019) Royal Assent (2-Oct-2019) Date of Effect (30-June-2019)
• Instant Assets Stimulus Package for 2020 Purchase The instant asset write-off will be available for the majority of businesses during some part of the 2019/20 and 2020/21 income years. Between 12 March 2020 to 31 December 2020, businesses with up to $500m in turnover will get an instant asset write-off for assets first installed and ready for use under $150k. In the legislation, the update also extends to the low value pool. Where a small business pool has a closing balance of less than $150k will be able to write off the entire balance (also up from $30k). The Government stimulus package, announced to prevent a large national economic downturn, includes this boost to instant asset write-offs. However, the stimulus will not be received until lodgement of the tax return.
Announcement (11-Mar-2020)
• Testamentary Trust Minor’s Distribution to be Limited
Announcement (18-Jun-2018)
Minors may only receive concessional tax treatment on testamentary trust income that is derived directly from assets originally transferred from a deceased estate. This will take effect for assets transferred into a testamentary trust after 1 July 2019. The legislation provides trustees of a testamentary trust with a clear understanding of when minor’s income will not be taxed at regular rates. This is part of a crackdown on the misuse of testamentary trusts by some. This includes “injecting” unrelated property into the testamentary trust vehicle for tax minimisation purposes.
Introduced (05-Dec-2019)
• Director Identification Number
Announcement (03-Dec-2019)
The Director Identification Number (DIN) regime has been passed by parliament and become law. Under the new law, all director of companies registered under the Corporations Act will need to have a unique identifier. The DIN will be a measure that will limit the opportunities for a company and its directors to engage in phoenixing activities. One such new measure will require all directors to confirm their identity before receiving a DIN, as well as civil and criminal penalties for system misuse. A registrar is yet to be appointed (or created) to develop the regime. However, under the legislation it must be in effect within two years of Royal Assent, being 22 June 2022. If the registry is created prior to this time, we will receive notifications to the new start date.
Introduced (04-Dec-2019)
Updated: 12-Jun-2020
Consultation (30-Oct-2019) Passed (17-Jun-2020) Royal Assent (22-Jun-2020) Date of Effect (1-Jul-2019)
Consultation (03-Dec-2019) Passed (12-Jun-2020) Royal Assent (22-Jun-2020) Date of Effect (22-Jun-2022)
• Large Forestry Holding Deemed Carrying on a Business A decision impact statement in response to the AAT ruling in SWPD and FCT was issued by the ATO. In the case, the taxpayer was held to have carried on a “forestry business” by holding onto a property with forests of native trees in it. This entitled the taxpayer to utilise the CGT small business concessions on sale of the property as it was an active asset. The ATO, through the decision impact statement, found that the Tribunal had correctly applied the legal test outlined in Spriggs v FCT. However, in their view the facts of the case are “extreme”. Along with other considerations, the Commissioner accepted that the taxpayer was indeed carrying on a forestry business.
Announcement (22-Jul-2020) Consultation Period Released
SEPTEMBER 2020 | FIND CASEY
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