Latest News

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 […]

606, 2018

ATO Attack on Rental Property Expense Claims

By |June 6th, 2018|

We have recently helped a number of taxpayers who have had their rental property deduction claims queried, and often disallowed, by the ATO.

The property is usually in a ‘holiday town’ and is advertised as being available for rent all year but is also occasionally used by the taxpayer and their family to stay in. The taxpayer’s use is usually only a couple of weeks each year.

The ATO argues that the taxpayer is only allowed to claim deductions for interest etc. up to an amount equal to the actual income derived. So if the property is actually only rented out for 6 weeks and derives rent of $3,000 then the ATO says the taxpayer is only allowed to claim deductions of $3,000. This is despite the fact that the property was available for rent for 50 weeks of the year (the taxpayer staying in it the other two weeks).

The ATO argues […]

2405, 2018

Changes to Small Business CGT Concessions

By |May 24th, 2018|

A bill containing changes to the Small Business CGT Concessions (‘SBC’) has now been introduced into Parliament. It is Treasury Laws Amendment (Tax Integrity and Other Measures) Bill 2018 (Cth) (‘the Bill’). According to the Bill, when passed, the changes will apply in relation to CGT events happening on or after 1 July 2017. That is, the changes are retrospective.

The first thing to note is that the changes only apply where the asset being sold, or in respect of which the CGT event happens, is a share in a company or an interest in a trust (e.g. a unit in a unit trust). If the CGT event happens in relation to some other type of asset the changes do not apply.

The changes were introduced to stop taxpayers accessing the SBC in certain unintended circumstances. Below you will find examples demonstrating the operation of these changes.


Example 1:

Bob owns 20% of the […]

1903, 2018

The ATO’s concern over SMSFs using reserves

By |March 19th, 2018|

The recent release of regulatory bulletin SMSFRB 2018/1 highlights what will spark the ATO’s interest where an SMSF is using reserves. The bulletin was issued in light of the 2017 super reform and the ATO’s concern that some SMSFs are implementing reserving strategies designed to circumvent restrictions imposed under the new law.

Overall, the Commissioner considers that the small membership nature of SMSFs means that the need to maintain reserves in SMSFs is distinct from the need to maintain reserves in APRA regulated superannuation funds. Consequently, the Commissioner expects the use of reserves by SMSFs to be extremely limited and, where an SMSF does hold reserves outside of such limited circumstances, the Commissioner will consider whether the trustee is acting in accordance with their obligations under the […]

1903, 2018

When is a Memorandum of Understanding or a Heads of Agreement Legally Binding?

By |March 19th, 2018|

We often see matters where clients have negotiated the terms of a business deal with another person and the parties then sign a short form document (usually called a Heads of Agreement or Memorandum of Understanding) that embodies the terms of the deal with the intention of executing a more formal agreement later.

What happens if the parties cannot agree on the terms of the formal agreement?  Can a party that wants to proceed with the deal force the other party to go ahead? Or can the party that doesn’t want to proceed walk away?

The answer to this question is the lawyer’s standard answer: “It depends”.

The document needs to be clear about the parties’ intentions as that will determine the issue.


Masters v Cameron

The leading decision in this area is the High Court case of Masters v Cameron (1954) 91 CLR 353.

That case established that there are 3 possible scenarios:

  • The parties have […]
1903, 2018

More Certainty for Victorians over their Medical Treatment Decisions

By |March 19th, 2018|

More Certainty for Victorians over their Medical Treatment Decisions

The law surrounding advance care directives and medical treatment decision-making has drastically changed with the introduction of the Medical Treatment Planning and Decisions Act 2016 (Vic) (“the Act”). The Act came into effect on 12 March 2018.

The Act repeals the Medical Treatment Act 1988 (Vic) and implements a single framework regarding medical treatment decision-making for people without decision-making capacity. This overhaul aims to ensure that people receive medical treatment that is consistent with their preferences and values. It is focused on personal autonomy.

The Act is in response to past legislative complexity and inconsistency. Previously, Victoria had four different Acts governing this area, each with their own definitions, tests for capacity and obligations. Now, medical treatment decision-making is solely governed by the Act.

The Act does not cover unlawful medical treatment, such as physician assisted dying.


What’s different?

Advance care directive (“ACD”)

The Act will […]