For the eighth year, we are delivering an interactive 5-part seminar series to aspiring and emerging leaders in the Property and Real Estate Credit Funds Management sectors, 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 featured practical working considerations and discussions with market leaders.

Series speakers

Industry speakers

• David Omond | KM Property Funds
• Charlie Renney | Hall & Wilcox
• Greg Sugars | Preston Rowe Paterson
• Bruce Corrin | CDC Property Consultancy
• Tim Slattery | ASA Real Estate Partners
• Adam Murchie | Forza Capital
• Georgia Liu | CBA
• Kevin Said | AUS Finance Group

SW speakers

Simon Tucker
Director, Tax 
SW

Rami Eltchelebi
Partner, Assurance and Advisory Services
SW 

Stephen O’Flynn
Director, Tax
SW

Abi Chellapen
Director, Tax 
SW

Sejla Kadric
Director, Business & Private Client Advisory 
SW

Luke Fernandes
Director, Tax
SW

Shaneel Kumar
Associate Director, Corporate Finance
SW

James Serpell
Associate Director, Assurance and Advisory Services 
SW

Contact us

If you have any queries or would like more information, please contact the Marketing team via marketing@sw-au.com.

The post Emerging Property Fund Managers’ Series appeared first on SW Accountants & Advisors.

He has extensive experience in international tax matters, helping clients navigate complex global tax structures to achieve the best worldwide tax results. Darren also supports small to medium-sized businesses with accounting, taxation, and broader business needs, including structuring, budgeting, forecasting, and financial modelling.

His industry expertise spans property and construction, primary production, trades, not-for-profits, professional sports, and professional and legal services.

Darren is a Fellow of the Taxation Institute of Australia and a Registered Self-Managed Superannuation Fund Auditor.

The post Darren O’Malley, Consulting Director appeared first on SW Accountants & Advisors.

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

Tanya Bester

The post ATO targets Division 7A avoidance scheme appeared first on SW Accountants & Advisors.

Compliance obligations apply from a wide range of bodies at various times in the year, including:

• Australian Taxation Office
• income tax returns
• FBT returns
• GST returns
• superannuation payments and reporting
• Australian Securities and Investments Commission (ASIC)
• Australian Securities Exchange (ASX)
• financial Institutions
• industry bodies and regulators
• State Revenue Offices(s)
• Land Titles Offices(s)
• Australian Charities and Not For Profits Commission.

Our team has both the experience and adaptability to deal with your evolving needs as compliance becomes more complex.

We work with you to help you understand your requirements and establish lodgement deadlines. We then provide the accounting and taxation services to ensure you meet your reporting obligations.

Our compliance services are designed to work with you efficiently so that you can continue focusing on your business while we take care of the back office requirements.

We also utilise the latest technology where appropriate to make compiling your documents as pain free as possible. Our team provides advice to maximise your position while ensuring you meet your obligations.

The post Accounting & compliance appeared first on SW Accountants & Advisors.

The Bill was flagged in last year’s Budget announcements and proposes to remove the Capital Gains Tax (CGT) exemption on the sale of a main residence for foreign residents. This will affect Australian citizens, permanent residents and New Zealand citizens who are not residents of Australia for tax purposes.

When do changes take effect?

The proposed law will apply immediately to properties acquired after 9 May 2017, however properties acquired on or before this date will not have the new law applied until after 30 June 2019. This gives foreign residents a grace period to take advantage of the main residence exemption.

The date of disposal will generally be the date that the contract for sale is entered into. If the seller is a foreign resident for Australian tax purposes on this date they will not be eligible for the exemption.

The proposed legislation does not allow for the apportionment of the main residence exemption for the days that the dwelling was owned as an Australian tax resident. It is essentially all or nothing depending on tax residence status at the time of the CGT event.

Does absence rule still apply?

Individuals can still rely on the main residence ‘absence rule’ allowing them to continue treating a dwelling as their main residence while they are foreign residents, to the extent that they are once again tax residents of Australia when they sell the property.

The ‘absence rule’ cannot be relied upon by foreign residents who meet the conditions if they sell their property before they become an Australian tax resident again.

Current delay in legislation

The government has agreed to delay implementation and review the proposed changes.

What next?

Individuals who are foreign residents or expecting to become foreign residents should:

• Be aware of the Australian tax implications and the 30 June 2019 deadline to apply the transitional rules and how this impacts you (before May 9 2017).
• Consider Australian tax residency status and the impact on the proposed legislation.
• Formulate a tax strategy on any proposed or upcoming property acquisition or sale.

As with any Bill this still needs to pass through Parliament before becoming law and is currently being delayed by the government while it reviews the proposed changes.

For more information about how these changes may affect you or your business, please contact Justin Batticciotto or your ShineWing Australia representative.

Justin Batticciotto
E jbatticciotto@sw-au.com

The post ALERT: Change to CGT Implications for Foreign Residents – Legislation to be delayed appeared first on SW Accountants & Advisors.