| Brought to you in association with Thomson Reuters | Your weekly tax update | 4 February, 2010 |
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Government should reverse super cap decision, says CPA Australia CPA Australia has called on the Federal Government to restore the super concessional contribution caps to their previous limits. In its pre-Budget submission to the government, CPA Australia's CEO Alex Malley said the government's decision last year to reduce the concessional cap on contributions from $100,000 to $50,000 (for people over 50) and $50,000 to $25,000 (for people under 50) had been imposed at a time when most investors were watching the value of their superannuation decline due to the global financial crisis. CPA Australia also recommended that the government introduce a 'lifetime' or rolling concessional contribution cap, similar to the 'bring forward' rule for non-concessional contributions. Other recommendations in CPA Australia's pre-Budget submission include:
Board of Taxation consultation meeting on its post-implementation review into certain aspects of the consolidation regime CPA Australia was represented at a consultation meeting convened by the Board of Taxation on this post-implementation review held in Melbourne Wednesday 3 February. The main areas of the current consolidation regime being considered by the board include:
The board is particularly interested in the low take-up of the regime by small business and options for how this potential problem might be addressed. While part of the reason for this may reflect the fact that company groups are less common in the small-to-medium enterprise (SME) area, we would welcome comments from members as to the type of changes that might be made (including possible ways in which the regime could be simplified for SMEs, particularly in respect to the interaction with such provisions as Division 7A and the small business CGT concession, etc) to help solve this apparent problem. CPA Australia is preparing a submission on the board's discussion paper on this topic. Any comments from members can be sent to tax@cpaaustralia.com.au by Monday 15 February.
The Tax Practitioners Board has advised that it held a preliminary consultative forum with representatives from 13 professional associations on 20 January. At the meeting, stakeholders provided input to map out consultative arrangements to ensure the successful transition to the new Tax Agent Services Regime. The board is currently preparing a draft charter to be considered at the first formal meeting of the board's consultative forum, to be held in Melbourne on Tuesday 9 March. The board has also announced the confirmation of Geoffrey Robinson as secretary of the board for a three-year term. He has held the role of interim secretary since June last year. CPA Australia is working closely with the new board to ensure a successful transition to the new regime which is scheduled to commence on Monday 1 March. Further details on the new Tax Agent Services Regime are contained in the February 2010 edition of INTHEBLACK, and answers to frequently asked questions are available from our website. Treasurer releases Intergenerational Report 2010 The Treasurer, The Hon. Wayne Swan, has released an updated Intergenerational Report 2010 highlighting the challenges over the next 40 years, including an ageing population, mounting pressures on the health system and climate change. The proportion of people aged 65 years or over is projected to increase from 13 per cent in 2010 to 23 per cent by June 2050. By 2050 there will only be 2.7 working aged people for every person aged 65 and over (down from five working aged people today). The report predicts that government spending on health, age-related pensions and aged care will increase from around 25 per cent today to 50 per cent by 2049 – 50. Ageing and rising heath costs are also expected to result in spending exceeding revenue by around 2.75 per cent of GDP in 2049 – 50. It should be noted that the potential fiscal gap
identified in the latest intergenerational report (IGR3) does not
necessarily imply future tax increases as the continuation of necessary
reforms (including in the tax area) to enhance the efficiency of the
Australian economy would be a preferred way of closing the gap. We
understand that the gap identified in IGR3 is now less than that
identified in the earlier reports. Upcoming consultations
If members have issues for any of the
abovementioned consultations, please let us know at tax@cpaaustralia.com.au
New income tax processing system: ATO updateThe ATO has provided an update on its progress in upgrading to a new income tax processing system. The ATO warns that as it tests the new system, it will progressively build up processing to normal levels, but it cannot predict exactly how long this will take. The ATO may take longer to process returns and to issue refunds, if entitled. The ATO is 'hoping to have the new system up and running from mid February 2010'. The ATO says that if it takes more than 30 days after an income tax return is lodged to issue a notice of assessment and that assessment entitles the taxpayer to a refund of tax, the ATO will pay interest. If a taxpayer lodges a tax return without all the required information, the 30 day period starts from the date the ATO receives all the information. Where such interest is payable, the taxpayer does not need to ask for it, the ATO said it will automatically pay it or apply it to any debt on the taxpayer's account. GST and second-hand goods; garnishee notices: ATO Decision Iimpact StatementsThe ATO has released Decision Impact Statements on the following cases:
ATO website updatesFrom the ATO website:
Foreign exchange rates for January 2010The ATO has released the average foreign exchange rates for January 2010. Rates for selected countries include: Europe — 0.6576; Hong Kong — 7.2399; Japan — 86.4495; NZ — 1.2859; UK — 0.5833; USA — 0.9400.
Carbon Pollution Reduction Scheme Bills re-introducedThe government has re-introduced into the House of Representatives its package of 11 Bills to implement its proposed Carbon Pollution Reduction Scheme (CPRS). They had been defeated in the senate on 2 December 2009. The government said the re-introduced Bills include the amendments negotiated with the Liberal Party late last year. The Bills are:
Legislation proposed for introduction in federal parliament early in 2010 The following Bills are proposed for introduction in federal parliament in its 2010 Autumn Sittings. Bills marked # are proposed for introduction and passage in the Autumn sittings, by Thursday 18 March.
ATO website updates on superannuation From the ATO website:
The following rulings were released by the ATO on 3 February:
No deduction for misappropriated moneys by adviser In Lean v FCT, the Full Federal Court dismissed a taxpayer's appeal against the denial of his claimed deduction for $2.3 million in misappropriated moneys. In doing so, the Full Court upheld the decision in FCT v Lean [2009] FCA 490 that the taxpayer was not entitled to a deduction of $2.3 million under s 25-45 of the ITAA 1997 for the misappropriated moneys that had been included in his assessable income as a capital gain. GST: no further reduction of penalties for ITCs incorrectly claimed In AAT Case [2010] AATA 57, Re Intevox Pty Ltd and FCT, the AAT affirmed a decision of the Commissioner of Taxation to deny a further reduction of a five per cent shortfall penalty imposed on a corporate taxpayer who incorrectly claimed input tax credits (ITCs). Registration as tax agent denied In AAT Case [2009] AATA 981, Re Surana and Tax Agents' Board of New South Wales, the AAT affirmed a decision of the Tax Agents' Board of New South Wales refusing an applicant's application for registration as a tax agent, on the ground that the applicant was not a fit and proper person. In the board's view, the applicant's employment experience did not have a substantial involvement in income tax matters. Appeals update The Commissioner of Taxation has appealed to the Full Federal Court against the decision in Ashwick (Qld) No 127 Pty Ltd & Ors v FCT [2009] FCA 1388. The Federal Court had upheld claims by companies in the Foster's Group for bad debt and interest deductions totalling just over $2.8 billion. The taxpayer has appealed to the Full Federal Court against the decision in Russell v FCT (No 2) [2009] FCA 1469. The Federal Court had left unanswered the question of whether a court has the power to remit a matter to the commissioner to increase a disputed assessment.
Victorian land tax: updated land tax amendment form The Victorian State Revenue Office (SRO) has updated Land tax amendment form (LTX Form 11). The SRO says the updates reflect recent changes to Victorian taxation law which require taxpayers to notify the SRO of certain errors or omissions in their land tax assessment notices. The notification requirement applies to all assessments issued on or after 1 January. South Australian Government proposes land tax relief from 1 July The South Australian Government has announced changes to land tax rates and thresholds to provide broad-based relief to taxpayer. The South Australian Government proposes the following land tax relief from 1 July:
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Sydney Sample audit programs for small to medium entities Utilise this valuable online resource to create well documented audit plans that meet current legislative requirements. Save yourself time and effort with CPA Australia's 2009 revised, updated and extended 'Sample audit programs' online learning manual downloaded directly to your desktop. More training and events For information on other CPA CPD activities being held throughout Australia please visit the training and events section on our website and use the search facility. To register click onto the activity you wish to
attend and follow the prompts.
Tax basics DVD Tax offsets for individuals is the topic covered in this Tax basics DVD. It reviews the eight tax offsets available to individual taxpayers. Reserve a copy from CPA Library.
'Car buyers may lose tax break' (Claim that vehicles bought under the temporary investment allowance rules may fall foul of the proposed non-commercial loan rules) AFR [p 3], Wed 3.2.2010 'Robinson on board' (Secretary to Tax Practitioners Board announced) AFR [p 6], Wed 3.2.2010 'Frosty outlook for investment in tax row' (Claim that the Tax Office's move to tax private equity profits as ordinary income will affect foreign investment in Australia) AFR [p 7], Wed 3.2.2010 'Bid to table tax review' (Coalition moves to compel Govt to table the Henry report this week) AFR [p 10], Wed 3.2.2010 'We'll buy stolen Swiss bank files, says Merkel' (Report that German Chancellor says her government will buy stolen Swiss bank data to help fight tax evasion) AFR [p 18], Wed 3.2.2010 'Mop up before the ATO gets dirty' (Common mistakes being made by DIY super funds) AFR [p 29], Wed 3.2.2010 'ATO "backflip" threatens to raise tax for 200,000' (Concerns about Tax Office draft ruling on unpaid present entitlements of certain trusts) AFR [p 3], Tue 2.2.2010 'Nobody's talking about higher taxes' (Comment on intergenerational report consequence that taxes may have to be increased at some stage) AFR [p 8], Tue 2.2.2010 'National nest-egg needs to grow' (Comment that increased retirement savings are needed) AFR [p 10], Tue 2.2.2010 'ACTU calls for more from bosses' (ACTU calls for compulsory super to be raised to 15 per cent) AFR [p 10], Tue 2.2.2010 'Swan in no rush to remove tariffs or assistance' (Report that Treasurer says tariff protection would not be abolished as part of the Govt's productivity drive) AFR [p 10], Tue 2.2.2010 'Push to support older workers' (Claim the Govt will be urged to consider tax incentives and additional super for older people) AFR [p 11], Tue 2.2.2010 'Henry review to back alcohol flat tax' (Report that the Henry review is expected to recommend a single, fixed-price volumetric tax on alcoholic beverages) AFR [p 18], Tue 2.2.2010 'Industry fights R&D tax proposals' (Report of industry criticisms of the Govt's proposed new R&D tax credit) AFR [p 31], Tue 2.2.2010 'Rudd draws $100bn battle line in health debate' (Suggestion that release of intergenerational report will change Government focus to health) AFR [p 1], Mon 1.2.2010 'Tax bodies call for more pre-budget consultation' (Report on pre-budget submissions calling for more consultation on budget tax changes - also calls for reforms re trusts, private companies, GST and superannuation) AFR [p 3], Mon 1.2.2010 'Request to slash taxes' (Calls to reduce Victorian payroll tax, land tax, and WorkCover premium) AFR [p 4], Mon 1.2.2010 'Sifting for clues on super' (Industry will look at intergenerational report for clues on Government long-term thinking on superannuation) AFR [p 45], Mon 1.2.2010 'It's a double-cross for R&D' (Claim that proposals to tighten R&D tax concession eligibility will reduce innovation) AFR [p 53], Mon 1.2.2010 'Private equity fights for tax exemption' (Industry response to the Tax Office's draft tax determinations re private equity transactions) AFR [p 5], 30-31 January 2010 'Super tax breaks cost budget $22bn' (According to Treasury statistics, super tax concessions costed more than $22 billion last year) AFR [p 6], 30-31 January 2010 'Push to ease up on penalty taxes' (Opinion that penalty taxes re exceeding super contributions limits can often be out of proportion with the 'crime') AFR [p 43], 30-31 January 2010 'Accumulation accounts are first port of call' (Report on contributing amounts into an accumulation account) AFR [p 43], 30-31 January 2010 'Swans plays down budget tax changes' (Report that the Treasurer has played down the possibility of the next Budget containing significant measures from the Henry tax review) AFR [p 1], Fri 29.1.2010 'SA cuts land tax before election' (Report that the SA Government has announced land tax relief for individual property investors) AFR [p 4], Fri 29.1.2010 'Parliament to take bills by the horns' (Report on Parliament's legislative agenda - covers reforms to GST compliance costs) AFR [p 13], Fri 29.1.2010 'Black ink warns economy may lead to red ink' (According to a report, SMEs will face cash flow problems - comment that the Tax Office will likely tighten its SME debt collecting activities this year) AFR [p 47], Fri 29.1.2010 'R&D change warning' (Opinion that proposed R&D tax concession changes could jeopardise Government's plans re future digital economy) AFR [p 54], Fri 29.1.2010 'Leadership lacking on tax' (Opinion on the Government and pending Henry tax review report) AFR [p 58], Fri 29.1.2010 'Crisis compliance on ATO's radar' (Tax Commissioner says businesses involved in more aggressive tax practices can expect 'intense' scrutiny) AFR [p 5], Thur 28.1.2010 'Tax office seeks efficiency upgrade' (Report that Tax Office says it will return to normal capacity on 15 Feb after implementing its latest computer system upgrade) AFR [p 5], Thur 28.1.2010 'No shelter from tax now' (Report that the US IRS says it will require large companies to reveal basic information about their tax transactions) AFR [p 15], Thur 28.1.2010 'Tax could gouge deep hole in profits' (Claim that mining company earnings could fall sharply if the Government introduced a resources rent tax) AFR [p 16], Thur 28.1.2010 'Swan gives regulators pat on the back' (Report that the Treasurer has played down the likelihood of a bank transaction tax to recoup the cost of bank bail-outs) AFR [p 43], Thur 28.1.2010 'Hogan prosecution rests on "critical documents"' (Report that the ACC is waiting to see if it can use 'critical documents' in its investigation into offshore financial dealings of taxpayers) AUSTRALIAN [p 7], Wed 3.2.2010 'Resources rent tax fears a storm in a teacup: Citi analyst' (According to an analyst, the tax landscape for the mining industry would not dramatically change even if the Government introduces a new rent tax) AUSTRALIAN [p 19], Wed 3.2.2010 'Unclear tax laws to chill investment' (Opinion that future investment in Australia will 'chill' until private equity tax laws are clarified) AUSTRALIAN [p 21], Wed 3.2.2010 'With super, a little knowledge is a dangerous thing' (Article on proposals to introduce competency standards for SMSF trustees) AUSTRALIAN [Wealth, p 8], Wed 3.2.2010 'Aggressive trading can cost investors' (Opinion that 'aggressive' trading could cost investors ie capital gains tax and loss of franking credits) AUSTRALIAN [Wealth, p 9], Wed 3.2.2010 'Call for super cap reform' (Calls for the Government to restore the super contributions caps to their previous limits) AUSTRALIAN [p 23], Tue 2.2.2010 'Swan told to consult on budget tax shocks' (According to national accountants groups, industry should be consulted before budget announcements are made) AUSTRALIAN [p 23], Mon 1.2.2010 'Wealthy get $55bn in tax breaks' (According to Treasury figures, home owners and super investors received more than $55bn in tax breaks last year) AUSTRALIAN [p 4], 30-31 January 2010 'TPG taxation ruling slammed' (Industry response to the Tax Office's draft taxation determination re private equity transactions) AUSTRALIAN [p 27], 30-31 January 2010 'ERA concerned at resources tax plan' (Further debate re rumoured new resource rent tax) AUSTRALIAN [p 27], 30-31 January 2010 'Foley plays it sweet with land tax relief' (Report the SA Government will increase the land tax threshold to $300,000) AUSTRALIAN [p 8] Fri 29.1.2010 'BHP ready to bury rent tax' (Opinion a national tax on mining will be met with resistance from the mining industry) AUSTRALIAN [p 28] Fri 29.1.2010 'Tax changes could cost miners $5bn' (Comment on possible impact of suggested scrapping of state-based mining royalties for a national tax on mining companies) AUSTRALIAN [p 19], Thur 28.1.2010
CPA Australia seeks your input on issues it should take up on the members' behalf. If you would like to contact us please email us at tax@cpaaustralia.com.au.
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