
16 minute read
COLUMNIST ARTICLES
Family Trusts in the ATO Firing Line
ACCOUNTANT
By Warren Strybosch
The ATO has released a suite of new guidance products that is set to have a major change on family trust distributions and tax arrangements.
The ATO has released new draft public advice and guidance (PAG) products relating to section 100A reimbursement agreements and division 7A of the Income Tax Assessment Act 1936.
The Draft Taxation Ruling TR 2022/D1 suite is open for consultation and clarifies the ATO’s position on reimbursement agreements under section 100A, and identifies arrangements that will not attract ATO compliance resources.
Draft Taxation Determination TD
2022/D1 outlines when “financial accommodation” arises under division 7A whilst Taxpayer Alert TA 2022/1 highlights arrangements of concern from the ATO where taxpayers are using adult-child beneficiaries of family trusts to avoid tax on income.
The draft Ruling means the ATO may charge Trusts up to 47% tax where a trust distributes funds to adult children and it is found the parents are using those funds instead of the intended beneficiaries, in this case, the adult children.
It has been common practice for family trusts to be set up and income splitting to occur between spouses and other family members e.g., adult children. The ATO is aiming to stop or at least restrict this practice by using section 100A arguing that the beneficiary never used the funds and therefore was not actually entitled to the trust money that was paid to them. If this is found to be the case, then the ATO can tax the trust at the maximum rate of 47% (45% tax + 2% Medicare levy).
“The draft guidance sets out the ATO’s preliminary but considered views on the interpretation of the relevant law, as well as guidance on how the ATO will administer the ATO view as expressed in the draft products,” the ATO said.
“We have included explanations of proposed transitional arrangements to support clients to adjust their tax affairs to comply with the draft guidance once it is finalised.”
The products address the situation when certain trust distributions may attract the operation of section 100A or division 7A of part III of the Income Tax Assessment Act 1936 (ITAA 1936), according to the ATO. The guidance will be relevant to any trustee (or controller) of a closely trust that may have concerns about whether the trust anti-avoidance provision in section 100A may apply when trust income is distributed to relatively favourably taxed beneficiaries, but the benefits of that income are enjoyed by others.
It also addresses trusts that intend to, or have in the past, made a private company beneficiary presently entitled to trust income but not paid the amount on the basis that the amount is held in a sub-trust for the benefit of the private company and the arrangement avoids the application of division 7A.
“The vast majority of small businesses operating through a trust will not be affected by this public advice and guidance,” the ATO explained.
If the ATO begins to enforce section 100A, all trustees of family trusts will need to review their income-splitting strategies and how they distribute funds to beneficiaries. It will be important for trustees to have written document in place which adequately explains the justifications as to why a beneficiary is entitled to the revenue generated by the trust. This is going to be paramount for business owners who run their business through a family trust where the main business owner is the key person generate the revenue flowing through the trust and for those who have set up trusts to pass on funds to adult children.
The ATO’s further guidance in PCG 2022/ D1 specifically calls out children-parent arrangements. It is likely these types of arrangements will be targeted resulting in future penalties applying if the ATO conducts an audit. An example might be where a beneficiary has a significant difference between their entitlement to taxable ‘net income’ and their ‘trust income’ in specific year (not that uncommon) and the ATO thinks the gap is contrived to pay less tax. Again, it will be important to have carefully documented reasons as to how the adult children are using these funds for their own personal use e.g., pay board, petrol, etc.
Another area the ATO will be looking closely at is where a trust pays money to a company in a circular way between a Trustee that holds shares in a Company and then the Company is also a beneficiary that pays dividends to the Trust. The idea being the Company becomes entitled to trust money which the Trustee is really using for its benefit (and which the Trustee should instead be accumulating and paying tax at 47%). It is advisable that these arrangements cease immediately.
Family trusts have always been in the firing by the ATO and more so since Labor limited the ability of trustees to distribute funds to minors. These new developments, whilst they might add another level of complexity for trustees, does not mean trusts hold no value. They are still a good vehicle for asset protection, and when set up correctly, with the right documentation in place, can still provide a good way of distributing funds to adultchildren, and used for income-splitting purposes.
At Find Accountant, we provide SMSF tax advice. Our senior accountant is also an award-winning financial advisor. If you require SMSF advice or are considering whether or not to wind up your SMSF, then speak to Warren Strybosch at Find Accountant Pty Ltd.
Warren Strybosch
You can call them on 1300 88 38 30 or email info@findaccountant.com.au www.findaccountant.com.au

WARREN STRYBOSCH
Find Group
The founder of the Find Group of companies draws on his diverse background, which ranges from teaching, to serving in the army, to taxation and accounting, to coach and help clients live their best financial lives. A multi-award winner, Warrens’s innovative approach in business means he was a champion of virtual financial advise long before the pandemic. Warren established the Find Foundation, which owns and operates acroos Victoria.
TOP 50 MOST INFLUENTIAL FINANCIAL ADVISER IN AUSTRALIA
The financial advisers featured in this guide are a diverse group: some specialise in responsible investment advice, some provide financial advise to specific professions, and some focus on addressing market gaps, mwith several finding themselves on the list for the very first time. But they all have one thing in common: they all wield influence that can create the blueprint for the future of financial advice in Australia. Not all of them are faniliar names but just because they are not making a lot of noise doesn’t mean they are not making waves. Meet our Power 50.
Significant Material Costs Lead To Dwelling Build Approvals Collapsing In 2022
By Warren Strybosch

With the collapse of housing construction companies like Probuild and building materials doubling in price, it is no wonder dwelling building approvals have collapsed over the last 12 months. The number of approved residential construction in Australia has plummeted, hitting its lowest figure in almost 18 months and the first decline since October last year.
We have even heard of large home building businesses offering future homeowners up to $50,000 to break their home building contracts given the significant increases in material costs. It is apparently cheaper for them to pay a large break cost than to go ahead and build the new home.
One builder stated that building materials like wood had only increased by 10 cents per metre but over the last 12 months, the price of wood has literally doubled. They stated that they would have to bear the cost of the increase if any building contracts were signed given it is illegal to pass on the increase to the consumer once a contract has already been signed.
According to the Australian Bureau of Statistics’ data on building approvals in Australia, there were a total of 12,916 total dwellings approved over the month of January, falling 27.9 per cent comparative to December and over 24 per cent compared to the same period last year.
This fall was observed almost across every state, with the decline being felt most distinctively in Victoria (-35.5 per cent), South Australia (-29.2 per cent) and NSW (-25.9 per cent).
The only state that reported monthly growth was Queensland, which saw a marginal increase of 0.5 per cent.
Driving this distinct loss in new dwellings, which is the lowest since June 2020 (12,724), was a dearth of apartments, town houses, and units, which fell 43.6 per cent month-to-month, hitting 4,007. The same category of dwelling was said to be behind the uptick of approvals reported in December.
However, housing approvals were also reported by the ABS as suffering a sudden fall, hitting 8,712 over January and marking a monthly reduction of 17.5 per cent.
This again was observed across the country, with every state reporting a diminished approval figure, with NSW reporting the smallest decline (-14 per cent) and South Australia the largest (-19.9 per cent).
Compared to January 2021, this new figure for private houses reflects a downturn of 29 per cent.
It is likely, given the large increase in building material costs, that many people will hold off building their new home or an extension, and we are likely to see further declines in new dwellings being built during 2022.
Do you get high at work?
GENERAL INSURANCE
By Craig Anderson
Many tradespeople are qualified to work at height as part of their occupation. They may use scaffold, EWP (Elevating Work Platform), rope access equipment, or even work on a high-rise rooftop with access via stairs or a lift. Regardless of how they get there, most of them will be aware of their surroundings, and will make every effort to keep themselves and those around them safe and try not to break anything in the process. Some will not have read their Public Liability Policy Wording, and will be unaware that the policy they purchased has a height limit imposed which they exceed without knowing. If they create a bodily injury to a third party or damage to third party property, and they are working above the insured height limit when the accident occurs, the policy will not respond. In other words, they become personally financially liable without the benefit of insurance that suits the activities they undertake in their business. Policies without height limitations are available. rope access technicians and height safety equipment installers are two trades that spring to mind who are constantly working at heights above those allowed for in some policies, and who require more tailored cover with fewer restrictions. Scaffolders, renderers, painters, glaziers, roofers, plant and equipment techs for example may all require cover at height, depending if they perform commercial or domestic work. For these trades, there really is no reason not to be covered properly when the solution is there waiting. For a health check of your business insurance, contact Small Business Insurance Brokers via email sales@ smallbusinessinsurancebrokers.com.au or call 0418 300 096

Any advice in this article has been prepared without taking into account your objectives, financial situation or needs. Because of that, before acting on the above advice, you should consider its appropriateness (having regard to your objectives, needs and financial situation).
Craig Anderson
If you are working at heights, and have no idea if you are really covered, the time to act is now. A review of your policy could ensure you are not exposing yourself to unnecessary financial risk.
GENERAL INSURANCE Small Business Insurance Brokers www. heightsafetyinsurancebrokers.com.au 0418 300 096
Gone up in smoke - $42m worth of illicit tobacco ceased and destroyed
By Warren Strybosch
The ATO via “Operation Greyhound”, they have uncovered a large source of illicit tobacco in Koraleigh, New South Wales. The amount covering 24 acres, was estimated to be over 250,000 kilograms in weight, and worth a staggering $42m on the open market.

The ATO undertook significant warrant activity with assistance from officers attached to the Murray River PD Rural Crime Team and the Proactive Crime Team from NSW Police Force. The ATO said that this outcome demonstrates their commitment to detecting, disrupting, and dismantling crime syndicates that grow illicit tobacco.
Australia Set to be Reunited as WA Reopens 11: 59pm Wednesday
Andrew Brown (Australian Associated Press)
Australia is just hours away from returning to pre-pandemic interstate travel arrangements, with Western Australia set to bring down its hard border with the rest of the country.
WA will reopen to eastern states from 11.59pm on Wednesday, making travel freely permitted again between all states and territories.
Hard border measures have been in place in Western Australia for several months following COVID-19 outbreaks in other jurisdictions.
The reopening comes after Premier Mark McGowan delayed the easing border regulations earlier this year due to rising Omicron cases across the nation.
Travellers into Western Australia – including returning residents – will need to be triple-vaccinated against COVID-19 and have a completed travel pass to enter the state.
WA Police Commissioner Chris Dawson said he expected an influx of travellers after months of being closed off to the rest of the country.
“We’ve had almost 23,000 applications (for travel passes), so we’re expecting tomorrow will be busy,” he told Perth radio station 6PR.
“It takes between 15 and 25 minutes to basically process passengers off large aircraft.”
The border relaxation comes as Prime Minister Scott Morrison and WA-based federal minister Ben Morton tested positive to COVID-19.
In a late-night statement, the prime minister said he was experiencing flu-like symptoms and would be recovering over the next week while working from home in Sydney.
“I had tested myself daily since Sunday, including (Tuesday) morning, with all tests returning a negative result,” he said.
“I took a further test (on Tuesday) evening after developing a fever. The test was inconclusive so I took a PCR test which returned a positive result.”
Meanwhile, the Australian Technical Advisory Group on Immunisation has recommended the Novavax COVID-19 vaccine be used as a booster.
The advisory group said Novavax was recommended for those over 18 when an mRNA vaccine, such as Pfizer, was not suitable.
Health Minister Greg Hunt said since Novavax was first approved by the country’s medical regulator, more than 25,000 doses of the vaccine have been administered as a first dose.
“The Therapeutic Goods Administration is currently considering an application for whole-of-population use of the Novavax COVID-19 vaccine as a booster,” Mr Hunt said.
“The TGA and ATAGI continue to review emerging evidence on all COVID-19 vaccines.”
While vaccines are not yet approved for children under five in Australia, US President Joe Biden indicated in his State of the Union address American scientists were working on such an approval.
The head of the TGA previously said approval for under-fives vaccines had been “put on ice” in the US, meaning approvals would not take place in Australia until at least after Easter.
There have been 59 deaths reported from COVID-19 on Wednesday, including 28 from Victoria, 24 in Queensland, five in NSW and two in the Northern Territory.
More than 25,000 new infections were detected across the country, of which 10,650 were in NSW, 7126 in Victoria, 5011 in Queensland, 1053 in the ACT, 624 in the NT, and 868 in Tasmania.



List Your Aged Care Facilities with Find Aged Care Accommodation Today.
Help the local community know you exist and what sets you a part compared to other aged care facilities,
Financial Planners and other providers in the local area.
We have developed Find Aged Care Accommodation (www.findagedcareaccommodation.com.au)
so you can promote your facilities and services to the general public. You can also place any job
vacancies on our website that is available in your facilities.
For more information, please contact us at 1300 88 38 30 or email info@findaccommodation.com.au.


COVID-19 $450 payments to cease.
By Warren Strybosch
The Andrew’s government will cease paying the $450 payment to Victorians whilst they await their PCR test results, as rapid swabs make the system obsolete.
The state government announced its test isolation payment will end with demand reducing as rapid antigen tests become more widely available. Industry Support and Recovery Minister Martin Pakula said Victoria was entering a new phase of managing the pandemic and the program was no longer necessary.
“The recommended testing method has changed with rapid antigen tests providing results within minutes and eliminating the need to miss work while waiting for test results,” Mr Pakula said.
More than 1.2 million payments worth about $545 million have been approved since the system began in July 2020 during the state’s devastating second wave of COVID-19 infections.
Payments will still be available for Victorians who have to self-isolate, quarantine or need to care for someone in self-isolation or quarantine under the federal government’s pandemic leave disaster payment.

Mind the gap for women on property ladder

Maria Rae (Australian Associated Press)
Australian women are taking longer than men to get on the property ladder, and are more likely to get a smaller share of the gains, new data shows.
Further, soaring property prices in the past year could widen the gender wealth gap, the report released on Tuesday said.
The CoreLogic report said women are more likely to buy units than houses, which have had a smaller rate of gains and put them at a disadvantage for longer-term wealth accumulation. Australia’s residential property market is now worth $9.7 trillion, with dwellings up a median 22.4 per cent or $130,000 in the past year amid record low interest rates.
But 10-year growth rates are 6.2 per cent per year for houses, and 4.1 per cent per year for units.
“Men are not only accumulating greater wealth from a higher proportion of existing property ownership, but they’re also able to get into the market sooner than women,” CoreLogic spokeswoman Milena Malev said. “If you don’t own property, that’s a big source of household wealth and security you don’t have access to.”
Despite a tight labour market, the pay gap between men and women has widened, the report found.
This means men, on average, can accumulate a home loan deposit more quickly – taking 79 months to save a 20 per cent deposit compared to 91 months for women.
The report found male ownership is generally higher in markets dominated by detached houses, such as in resourcebased markets like Perth.
But even in markets with more gender parity, such as Greater Melbourne, men still owned a higher portion of houses (29.9 per cent) than women (25.7 per cent).
Rates of female home ownership were highest in Greater Sydney (31.9 per cent) and lowest in regional WA (21.7 per cent) and Greater Darwin (24.0 per cent).
The smallest differences in home ownership between men and women were across regional Victoria.