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Latest News

3107, 2019

Updated Discretionary Trust Deed

By |July 31st, 2019|

As most tax advisors know when dealing with a trust the terms of the trust deed are critical.

That is why at BOS Lawyers our trust deeds are regularly updated to take into account changes to the law as well as changes to how revenue authorities and judges interpret the law.

For example, our discretionary trust deed excludes foreign persons from being beneficiaries to avoid unexpected stamp duty or land tax. This deals with recent changes to both the Duties Act and the Land Tax Act. Of course foreign beneficiaries can be included if required.

It is important to consider the issue before the trust is established to ensure the terms of the deed reflect what is wanted.

Our discretionary trust deed also provides for:

  • the trustee to have wide discretion in determining the income of the trust;
  • full streaming of different classes of income and capital gains; and
  • the addition and removal of […]
3107, 2019

Business restructuring and share buy-backs

By |July 31st, 2019|

When a shareholder in a company wishes to leave, and the remaining shareholders are happy for this to occur, basically there are two ways the separation can occur:

  • The remaining shareholders can purchase the shares from the departing shareholder; or
  • The company can buy back its shares.

The tax implications for the company, the departing shareholder and the remaining shareholders from these two approaches are very different.

 

Transfer of shares

With a transfer of shares, there is a CGT event for the departing shareholder, and the remaining shareholders must find funds for the purchase.

With the general CGT discount, the effective tax rate for the departing shareholder on the CGT event should not exceed 23.5%.

The major issue in this approach is how the remaining shareholders fund the acquisition.  Ultimately the remaining shareholders will need to fund the acquisition from after-tax funds.

If the shareholders are on the top marginal rate of tax, they will need […]

3107, 2019

Victorian State Budget – Extra taxes relating to land

By |July 31st, 2019|

The 2019 – 2020 Victorian Sate Budget was handed down on Monday 27 May 2019. It contained some tax ‘nasties’ for land owners. Below is a summary of these additional taxes.

  1. The land transfer duty surcharge on foreign purchasers of residential property will be increased from 7% to 8% for contracts entered into on or after 1 July 2019. Given the broad definition of ‘foreign trust’ great care must be taken when the purchaser of property is a discretionary trust. The terms of the trust deed may need to be amended before the property is purchased to ensure the duty surcharge does not apply.
  2. The land tax absentee owner surcharge will be increased form 1.5% to 2% from the 2020 land tax year.
  3. From 1 July 2019 the duty exemption applying to qualifying transactions of corporate reconstructions will be replaced with a duty rate of 10% of the duty otherwise […]
3107, 2019

Proposed changes to duty for property developers

By |July 31st, 2019|

Following the recent State budget, the Victorian government has introduced proposed amendments to the Duties Act 2000 that are likely to have a major impact on property developers.

The State Taxation Acts Amendment Bill 2019 contains provisions that operate so that developers will be required to pay duty where they acquire an “economic entitlement” in land in Victoria valued at more than $1 million.

There currently are such provisions where a person acquires an interest of 50% or more in such land.

Under the proposed changes, a person will be assessed to duty as if the person has acquired an interest in underlying property if the person will be directly or indirectly entitled to participate in:

  • the income, rents or profits;
  • the capital growth;
  • the proceeds of sale;

related to the property.

The duty liability also arises if the person is entitled to receive any amount determined by reference to those amounts or to is […]

3107, 2019

Let’s Talk Business

By |July 31st, 2019|

Estate planning involves identifying assets and putting in place the necessary documents to pass control of those assets.

Individuals who own and operate a business often will consider their personal estate planning by preparing a Will and powers of attorney but overlook business succession planning.

Passing control of business assets should be included in the estate planning of business owners.

Recognising the influencing factors in business succession planning and associated risks is a key starting point.

 

Some of the factors that influence business succession planning include:

  • the legal ownership and structure of the business;
  • legal consequences of transferring a business;
  • the tax implications of transferring a business;
  • the politics within the business;
  • whether it is a family business and is intended to remain a family business;
  • when and to whom control of the business is to pass;
  • the existing constituent documents and other agreements of the business;
  • key personnel and drivers of the value […]
2009, 2018

ATO gives Clarity to Certain Executors about Personal Liability

By |September 20th, 2018|

If you act as executor or administrator of a deceased estate you may be surprised to know that, in certain circumstances, you may be personally liable for the deceased’s taxation liabilities.

The ATO has now issued Practical Compliance Guideline PCG 2018/4 giving executors or administrators (called a legal personal representatives (LPRs)) of smaller and less complex estates clarity about their personal liability where assets of the estate are distributed with notice of a claim or potential claim by the ATO.

 

When does PCG 2018/4 apply?

The guideline only applies to LPRs who have obtained either probate or letters of administration in situations whereby:

  • the deceased did not carry on a business, was not assessable on a share of the net income of a discretionary trust and was not an SMSF member in the 4 years prior to death;
  • the estate assets consist only of cash, personal assets such as cars and jewellery, public […]
1709, 2018

Critical Decision Regarding Sole Purpose Test for Superannuation Funds

By |September 17th, 2018|

On 10 August the full Federal Court handed down its judgement for Aussiegolfa Pty Ltd (Trustee) v Commissioner of Taxation [2018] FCAFC 122.

This case may have significant implications for the sole purpose test under s 62 of the Superannuation Industry (Supervision) Act 1993 (SIS Act), which requires a trustee of a regulated superannuation fund to maintain it solely for the purpose of providing retirement benefits to its members.

The Court found that the leasing of a residential property owned by a father’s self managed superannuation fund (SMSF) to his daughter did not breach the sole purpose test (although the SMSF did breach the in-house asset rules).

 

The facts

Mr Benson is the sole member of the Benson Family Superannuation Fund (the Fund), of which Aussiegolfa Pty Ltd is the trustee (Aussiegolfa).

Aussiegolfa, Mr Benson’s mother and a superannuation fund of Mr Benson’s sister and her partner (the Related Parties) invested in the DomaCom Fund. […]

1409, 2018

Binding Death Benefit Nominations and Enduring Powers of Attorney: New Developments

By |September 14th, 2018|

The Supreme Court of Queensland in Re Narumon Pty Ltd [2018] QSC 185 has recently considered:

  • whether an ineffective variation to a fund’s trust deed means that a subsequent variation to that deed will also be ineffective and any resulting death benefit nomination;
  • whether lost documents establishing a reversionary pension means the pension cannot revert to the reversionary beneficiary; and
  • whether financial attorneys have the power to make, renew and/or amend a binding death benefit nomination.

 
The judgement handed down on 24 August of this year related to the John Giles Superannuation Fund (the Fund) – an SMSF of which Mr John Giles was a member.

Mr Giles passed away on 14 June 2017 leaving behind his wife Mrs Narumon Giles, their son Nicholas, four adult children from a previous relationship and a sister Mrs Roslyn Keenan. Mr Giles’ estate (over which a family provision claim was made by one of Mr […]