In the lead-up to the May budget, the Albanese Government has announced a major change to taxes on superannuation earnings for balances over $3 million.
Current superannuation taxes
An individual’s retirement savings, held in a complying superannuation fund, is subject to concessional taxation on earnings of income and capital gains. The extent of the tax concession on the super fund earnings will depend on whether the individual has satisfied the conditions for release – this will generally be based on your age and whether you have retired or met a condition of release.
Individuals that are yet to satisfy their condition of release will have their superannuation fund earnings subject to tax at 15% on income. Individuals that have satisfied the super funds condition of release, and have elected to convert some or all of their super fund balance to support a pension, will not be taxed on the earnings arising on that balance.
Importantly the balance that is tax free is limited by the transfer balance cap, which is currently up to $1.7m. Earnings arising on amounts not supporting their pension, or above the transfer balance cap, are subject to 15% tax.
Proposed changes to superannuation taxes
The government is now proposing to limit the concessional 15% tax rate to member balances less than $3m.
It is proposed that, starting from 1 July 2025, for individuals with total superannuation account balances of more than $3m, an additional tax of 15% on earnings will be charged on the balance over $3m.
Earnings on the balance below $3m will continue to be taxed at 15% or 0% depending on whether the fund is in accumulation or pension phase, whereas earnings on funds over the $3m will be taxed at 30%.
For the purposes of administering the additional 15% tax, earnings are calculated as the difference in the total superannuation balance at the start and the end of the financial year, adjusting for withdrawals and contributions.
This means that earnings will include unrealised gains. It also means that any realised capital gains included in the earnings above $3m will potentially not attract the one third CGT discount which applies to superannuation funds.
Where a superannuation fund makes an earnings loss in a financial year, this can be carried forward to reduce the additional tax liability in future years.
Limited details are available on how this tax will be collected, but the announcement provides that:
- individuals will have a choice of either paying this additional tax themselves or from their superannuation funds, and
- this tax will be separate from an individual’s personal income tax, similar to the existing Division 293 tax regime.
Impact of the changes
This proposed change will impact Australians with superannuation account balances greater than $3m.
Estimates provided by the government suggest this will be around 80,000 superannuation members.
Should this change be passed into law, large and small superannuation trustees will also need to consider how their systems will operate to comply with the law.
Below is an example from the fact sheet released by the Treasury:
Carlos is 69 and retired. His SMSF has a superannuation balance of $9 million on 30 June 2025, which grows to $10 million on 30 June 2026.
He draws down $150,000 during the year and makes no additional contributions to the fund.
This means Carlos’s calculated earnings are:
$10 million – $9 million + $150,000 = $1.15 million
His proportion of earnings corresponding to funds above $3 million is:
($10 million – $3 million) ÷ $10 million = 70%
Therefore, his tax liability for 2025-26 is:
15% × $1.15 million × 70% = $120,750
How SW can help
The government is consulting the superannuation industry and other relevant stakeholders to discuss the implementation of the measure.
SW will be monitoring for new announcements and will keep you updated once more information is available.
Please reach out to your SW Partner or contact if you would like assistance determining whether you are affected by the change, or advice on structuring your superannuation account.
Contributors
Ampol Limited, formerly Caltex Australia, has settled a transfer pricing dispute with the Australian Taxation Office (ATO) for $157 million.
Ampol Group (Ampol) is an Australian energy company that operates in the fuel and convenience retail sector. Its subsidiaries in Singapore (Ampol Singapore) serve as a trading and shipping arm of the group, sourcing refined products and crude oil from outside Australia to provide secure and cost-competitive supply to Ampol’s customers. Ampol Singapore functions as an offshore procurement hub for Ampol Australia and has over 100 employees as of December 31, 2022.
On 20 February 2023, it was reported that Ampol had reached a settlement with the ATO regarding the tax treatment of earnings by Ampol Singapore from transactions with Ampol Australia.
The settlement covers the transfer pricing outcomes of refined products and crude oil between Ampol Singapore and Ampol Australia from 1 January 2014 to 31 December 2022. It also locks in the tax outcomes of the arrangement for future periods until 2033. The settlement also addresses how Australia’s Controlled Foreign Companies (CFC) regime will apply to the profits of Ampol Singapore.
Transfer pricing is the practice of setting the price for goods and services transferred between related entities within a corporate group. The ATO has been actively enforcing transfer pricing rules to ensure that related entities within a corporate group are charging each other an appropriate price for goods and services.
The CFC regime is designed to prevent Australian companies from using offshore entities to avoid paying Australian tax on foreign profits.
Ampol tax settlement details
The settlement is expected to resolve transfer pricing issues related to Ampol Singapore’s transactions with Ampol Australia and provide clarity on the tax treatment of these transactions going forward.
While full details of the settlement are covered by confidentiality provisions, the outcomes include:
- Ampol will pay an additional $5.6 million in Australian tax on earnings between 2014 and 2021, and $0.1 million in interest. This is on top of the $104.1 million of tax already paid on Ampol Singapore earnings.
- Ampol will pay $48.2 million in Australian tax on Ampol Singapore earnings for the 2022 financial year.
- The ATO has neither imposed penalties on Ampol nor applied anti-avoidance provisions.
- Ampol Singapore has adjusted its functions such that the majority of earnings by Ampol Singapore from transactions with Ampol Australia will be subject to corporate income tax in Australia at 30% rate (effective from 1 January 2023).
Key takeaways from the Ampol tax settlement with the ATO regarding Ampol Singapore
The ATO’s Tax Avoidance Taskforce has been focusing on offshore procurement hubs to prevent profit shifting and excessive pricing of imported goods and services in an effort to reduce tax paid in Australia.
The ATO has raised tax liabilities of $30.6 billion from large public and private groups and multinationals over the period 2016 to 2022, with the Taskforce contributing over 60% of this amount.
The number of disputes resolved via settlements has increased by nearly 10% from 2020 to 2022, with the majority of settlements occurring at pre-audit or audit stage.
The scope of ATO’s independent review in large market disputes that involve transfer pricing issues is now restricted.
Settlement can be a practical solution to reach long-term tax certainty for taxpayers, as seen in the Ampol case.
However, defensible transfer pricing policies and adequate documentation remain critical for taxpayers involving complex or material cross-border related party dealings, such as offshore procurement hubs, to mitigate potential risk of ATO’s compliance actions.
How SW can help
Taxpayers engaging in cross-border related party dealings need to ensure that their transfer pricing policies and documentation are in line with ATO’s expectations to avoid potential disputes that cost enormous time and resources of taxpayers.
With the ATO’s increasing focus on offshore procurement hubs, it is important for taxpayers to stay informed of the latest developments in transfer pricing regulations and seek expert advice where necessary.
To avoid expensive disputes and ensure your transfer pricing requirements and compliance are up to date, reach out to our global transfer pricing specialist or your SW relationship Partner.
Contributor
On 8 February 2023, the ATO released a new Taxpayer Alert sounding a warning to taxpayers seeking to access private company profits tax free via a scheme involving the interposition of a holding company to access company profits tax free.
The Taxpayer Alert notes that participants in, and promoters of these types of arrangements, may be subject to penalties, including promotor penalties under Div 290 of Sch 1 to the Taxation Administration Act 1953.
Background on Division 7A
Division 7A (Div 7A) is a far reaching set of provisions the essential purpose of which is to treat certain payments and non-commercial loans made by private companies to shareholders or their associates as a distribution of profits and therefore a deemed (unfranked) dividend.
For a deemed dividend to arise, the relevant private company must have what is referred to in the legislation as a ‘distributable surplus’ (which is very broadly profits, reserves or surplus funds from which a dividend could theoretically be declared).
What types of arrangements is the ATO looking at?
Arrangements that are flagged by Taxpayer Alert TA 2023/1 as being high risk and in the crosshairs of the Commissioner are arrangements along the following lines:
- An individual who is a shareholder and director of a private company with retained profits.
- The individual disposes of their shares in the private company to an interposed holding company (set up by the individual) and receives shares in the interposed holding company in return.
- The value of the shares received in the interposed holding company equate to the net asset value of the private company, with the result that the interposed company has no ‘distributable surplus’ available for distribution.
- The individual applies CGT roll-over to disregard, for tax purposes, any capital gain arising on the disposal of the shares in the private company.
- The private company declares a franked dividend to the interposed holding company. Whilst the TA does not explicitly state this, it is expected that the dividend received by the interposed holding company (being a dividend received from pre-acquisition profits of the private company) would be recorded for accounting purposes as a reduction in the book value of the asset, rather than a receipt of profit.
- The private company discharges its liability to pay the dividend by ways such as cash, cheque or promissory note.
- The individual receives a loan from the interposed holding company, financed by the dividend received from the private company. The terms of the loan do not comply with Division 7A (which requires loans to meet criteria such as a minimum interest rate and maximum term).
- Whilst the loan is not on complying Division 7A terms, taxpayers are taking the position that Division 7A would not apply due to the absence of a distributable surplus in both the private company and the interposed holding company.
TA 2023/1 also indicates that the Commissioner would be equally concerned should a similar arrangement be entered into where the relevant shareholder is a trust, rather than an individual.
Grounds to challenge
On the basis that arrangements such as the above exhibit a high degree of contrivance and would appear to be motivated by an objective of avoiding the application of Division 7A, TA 2023/1 notes that the Commissioner would be likely to challenge the arrangement on the following alternative bases:
- the Commissioner may assert that the loan is not a genuine loan, but a payment that is assessable as an unfranked dividend under the deemed dividend rules in Division 7A
- the arrangement may be challenged as a ‘dividend stripping’ scheme resulting in the loan amount being included in assessable income of the original shareholder and the franking credit on the dividend paid to the interposed holding company being cancelled
- under the general anti avoidance rules in Part IVA.
How SW can help
While the circumstances at which TA 2023/1 are directed are quite specific and may not affect many of our clients, the Taxpayer Alert highlights the efforts that the ATO are applying to enforce Division 7A.
Should you have any queries in relation to this Taxpayer Alert or Division 7A more generally, please reach out to your SW contact or Key Contacts here.
Contributors
Developing tomorrow’s leaders today
For the sixth year, we deliver an interactive 5-part seminar series to aspiring and emerging leaders in the Property Fund Management sector, with direct access to leading industry experts and their experience, strategic industry insights and pitfalls, and key issues ranging from structuring, debt and equity through to legal and compliance.
Facilitated by our property funds specialists, featuring content developed alongside industry, each session features practical working considerations and discussions with market leaders.
Who should attend?
- Emerging leaders in property fund management
- Professionals involved in the property funds industry
- Property developers looking to move into funds management
Benefits
- Learn how to protect your business & personal assets
- Different approaches to structuring a product
- Identifying methods to raise debt and equity capital
- Market trends in the different asset classes
- Tax issues arising from different structures
- Effective exit strategies for your investors
- How COVID has changed the landscape
Series Program
Session 1 | Fundamentals for Success – Part 1
11 October 2022 | Melbourne
The introductory session provides a brief overview of the series structure before hearing first-hand from industry specialists the key lessons they’ve learnt, what challenged them the most, what worked, what didn’t and tips on building the right team.
Session 2 | Fundamentals for Success – Part 2
10 November 2022 | Melbourne
How do you separate your business fund from your personal assets? Learn how to protect yourself, your funds and the appropriate ownership structures recommended to protect your investment and maximise your return.
Session 3 | Fund Structuring
8 December 2022 | Sydney
You may have a plan, but do you know which fund structure will give you the best competitive advantage? The industry experts will talk you through the fund structure matrix which covers local and international equity, fee structure and more.
Session 4 | Debt & Equity
9 February 2023 | Melbourne
Everything you need to consider and what to avoid in modern-day financing. Identify both the traditional and alternative methods for obtaining funding, how to strike a deal with the banks and how best to raise your debt and equity.
Session 5 | Legal, Regulatory & Compliance
9 March 2023 | Sydney
Ensuring your i’s are dotted and t’s are crossed are important for the property funds management industry. Our experts will talk you through the documentation and practical application involved in your fund set-up and provide tips on avoiding common pit-falls to ensure you stay compliant.
Event details
Location
Hybrid event
- In-person: delivered in either Sydney or Melbourne SW offices
- Online nationally – for attendees outside host city via Zoom meetings
Time
4 – 6pm, mid-month, minimising disruption to your day, week and month
Cost (exc. GST)
- $500 per person for the series
- $1,000 group booking for up to 3 people
Series speakers
Industry speakers
- David Southon | Aliro Group
- Howard Brenchley | APN Property Group
- David Omond | KM Property Funds
- Chris Langford | Newmark Capital
- Emma Donaghue | McMahon Clarke
- Georgia Liu | Commonwealth Bank of Australia
SW speakers
Simon Tucker
Director, Tax
SW
Rami Eltchelebi
Partner, Assurance and Advisory Services
SW
Stephen O’Flynn
Director, Tax
SW
Sejla Kadric
Director, Business & Private Client Advisory
SW
Matthew Schofield
Director, Corporate Finance
SW
Contact us
If you have any queries or would like more information, please contact the Marketing team via [email protected].
We are pleased to announce that, for the 5th consecutive year, SW is a finalist in the beaton Client Choice Awards Best Accounting & Consulting Firm ($50m – $200m revenue) category.
We are also finalists again for Most Innovative Firm and, in recognition of the value we place on client service, a finalist for Best CX Firm.
“A special thank you to our clients for their ongoing support and to our people, who are dedicated to delivering consistent and outstanding service and outcomes, “ said Mr Duane Rogers, CEO of SW.
“As a values-led culture, we place great emphasis on building strong and trusted relationships with our clients that aim to add value. For the past two years, our people and our clients have had to overcome many challenges together, so it’s very pleasing to receive this independent recognition of our client-first thinking and dedication to supporting our clients.
“Over the past 12 months the economy has faced shock after shock, but these results tell us professional services firms have been there every step of the way for their clients,” said Dr George Beaton, Executive Chairman of beaton.
“The calibre of entrants this year was very high, but by reviewing over 15,000 pieces of client feedback we were able to determine who is the best of the best. It is those firms who can differentiate themselves and offer superior client experience who achieve success in the Client Choice Awards.”
The Client Choice Awards recognise best practice in the professional services sector and are based on client feedback for professional services firms in Australia and New Zealand. There are no panels, judges or self-nominations, only client ratings that are independently researched by Beaton Consulting + Research (‘beaton’).
The Awards reward firms and professional practitioners for excellent client service, expertise in clients’ areas of need, innovation and superior client experience. These are the only multi-profession and fully client-judged Awards anywhere in the world. The Client Choice Awards is now in it’s 18th year, with 250+ firms entering in 2022. Over 15,000 pieces of client feedback were used to adjudicate the awards.
“We are honoured to again be part of this highly regarded independent annual research undertaken for professional services firms across Australia and New Zealand, and wish all finalists the best for the award announcements,” said Mr Rogers.
The beaton team is dedicated to providing professional services firms with insights and advice related to their clients and business performance.
“Every firm that enters the Client Choice Awards is to be commended for their commitment to client feedback. These objective and independent Awards reward firms that have a culture of client-centricity and continuous improvement,” said Dr Beaton.
With the Federal election around the corner, how will the Federal Budget support Australia’s economic recovery and encourage sustainable growth?
Covid-19 continues to present significant challenges with labour shortages, supply chain issues and inflationary pressures. Australian businesses want to know how Treasurer Josh Frydenberg will tackle our economic recovery.
Join us for the 2022/23 Federal Budget Webinar where we will bring you expert insights into challenges and potential opportunities, tailored for your industry or business sector.
We will once again welcome back Catherine Birch, ANZ Senior Economist and our panel of experts hosted by Matt Birrell to share their insights and key takeaways from the Budget.
Register via the link below to find out what the budget means for you and your business.
Online registration details
Date
Time
Wednesday, 30 March 2022
9.30am – 11.30am
Expert speakers
 Catherine Birch ANZ Senior Economist |  Matt Birrell SW Director, Tax |
The Board and Partners of SW (formerly ShineWing Australia) have endorsed the appointment of Partner and current Chief Operating Officer, Mr Duane Rogers, to the newly formed role of CEO effective from 1 January 2022.
Current Managing Partner, Danny Armstrong, will continue with the firm as the leader of SW’s Banking Industry Group.
A chartered accountant by training, Mr Rogers has been with SW since 2014. He was previously an audit partner with one of Australia’s leading mid-tier firms.
“I’m excited to lead the firm through the next phase of its evolution. There will be a focus on national growth and building on our existing areas of strength, to continue to deliver value to our clients, whilst providing an engaging and flexible environment for our people,” said Mr Rogers.
“I look forward to working with the Board and our teams in bringing this strategy to life.
“It has been a privilege to work with Danny during his tenure as Managing Partner and we are extremely fortunate he will continue providing key advisory services for our clients given his strong background and experience in the Australian and Asian banking sectors and deep knowledge of export and trade,” said Mr Rogers.
Said Mr Armstrong: “Since joining SW, Duane has been an integral leader on the SW Executive Committee as Chief Operating Officer and has supported the firm’s growth agenda.
“He has been recognised by Partners and SW teams alike for his exceptional leadership through a global pandemic and he has been instrumental in helping design and implement measures to support the development of the firm’s new new workplace strategy as we work towards the launch of new working environments nationally.”
SW also announced the appointment of Stephen O’Flynn as the Chair of SW. Stephen has been with the firm for 25 years. He has led the National Tax team, is a member of the firm’s Executive Committee and chairs the Financial Services Industry Group.
He looks forward to working with Duane as he implements the firm’s strategy and will continue as a Director within the Tax group, supporting clients across the Property Funds, Education and Government sectors.
Tax Director and Chair of the Agribusiness Industry Group, Sam Morris, steps into the role as National Tax Leader.
Each session in the series will be focusing on topics that are expected to be of particular importance for financial reporting in 2021.
Webinar 1 (18 March 2021): Removal of special purpose financial reporting
- Moving from Special Purpose to General Purpose Financial Statements
- Exempt entities
- Requirements of AASB 1060 i.e. New tier 2 General Purpose Financial Statements – Simplified Disclosures
- Applying AASB 1 First-time Adoption of Australian Accounting Standards
Webinar 2 (29 April 2021): Valuation of assets
- Identifying impairment indicators
- Fair valuing assets in accordance with accounting standards
- Estimating key inputs
- Accounting for impairment of assets
Webinar 3 (27 May 2021): Financial Reporting update for 30 June 2021
- Accounting standard changes
- Key focus areas for 30 June 2021 reporting
- ASIC update and focus areas
- Corporate governance update
- Other regulatory changes
Webinar 4 (11 November 2021): Financial Reporting update for 31 December 2021
- Accounting standard changes
- Key focus areas for 31 December 2021 reporting
- ASIC update and focus areas
- Corporate governance update
- Other regulatory changes
- Not-for-profit update
- Employee share schemes update
Series speakers
Brent Sheers
Senior Manager
Trent Godden-Minette
Senior Manager
Contact us
If you have any queries or would like more information, please contact the Marketing team via [email protected]
Our team of experts discussed the latest changes to Australian reporting requirements and their potential implications for preparers of financial statements.
In this webinar recording Bessie Zhang, Jimmy Cao, Tom Mullarkey, Callum Murray and Kerry McGoldrick covered the following topics:
- ASIC update and other regulatory changes
- Removal of Special Purpose Financial Reporting
- Asset valuation and impairment
- Financial reporting in a COVID environment
- Modern slavery statements
Contact us
| Bessie Zhang | Kerry McGoldrick | Tom Mullarkey |
| Jimmy Cao | Callum Murray |
A number of recent articles in the Australian press have discussed the liquidation or voluntary administration of several large funds that were specifically created as complying funds for the Significant Investor Visa (SIV) program.
This is devastating news for many, and has caused a variety of issues for those SIV holders who have been impacted by these investments which that need to be considered and actioned in a timely manner. In some instances, there is little time to reorganise these affairs, and many clients have shared with us that they have limited time to find a solution.
In response to these concerns, ShineWing Australia has put together a panel of experts to assist impacted individuals to help provide them with a ‘full-circle’ solution comprising legal, migration and financial help in one place.
Seeking out qualified, registered and independent migration and investment advice is particularly important at all times. This will ensure that any conflict of interest on the advisor side is removed, and that you are being informed of options that are right for your situation before making investment choices.
Migration
ShineWing Australia has highly experienced migration agents with particular expertise in assisting clients from the Asia-Pacific region to obtain an Australian visa. We advise on many different visa classes according to individual circumstances and personal needs, including SIVs.
As Registered Migration Agents (RMA) we act independently, and we also adhere to the Code of Conduct set out by the Office of the Migration Agents Registration Authority.
If you are a current SIV holder and have been affected by breaches of complying funds, and you think it may have jeopardised your visa status, we will be able to offer you a free consultation on your visa and investment status. Our services areas are listed below but we are happy to assist in other visa matters as appropriate.
Financial Services
ShineWing Australia’s Financial Planning and Debt Advisory services are provided by Authorised Representatives of ShineWing Australia Wealth Pty Ltd AFSL/ACL 236556.
When investing as an SIV or otherwise, it is important to perform sound due diligence on your intended investment target and ensure:
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there are no conflicts of interest
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the investment vehicle has a proven track record of underlying managed funds
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it has a strict compliance regime
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it has the correct diversification per section of the SIV framework
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the fund or investment vehicle is registered and compliant with ASIC
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that the fund is backed by independent advice and focused on asset quality, as opposed to a focus on the sale of a particular product.
Managing the wealth and private affairs of business owners, families and high net worth individuals requires a deep appreciation of individual circumstances, and a detailed understanding of immediate needs and future financial objectives.
Private Clients and Wealth covers the following services:
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For an immediate response and for the services below, our panel members will be able to help you with the following:
Migration Law services
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Legal Services
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Tax advisory
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Investment Services
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If you require assistance with one or more of the above areas, and would like to discuss your options in a private, confidential and free of charge consultation with one of our panel experts, please get in touch in one of the following ways.
SIV enquiries
Click here to contact our experts today.
Email us via [email protected].
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