Instalment warrants and super funds

Scope and purpose of this document

This document provides general guidance on the Tax Office’s current views regarding the application of the superannuation law (specifically the Superannuation Industry (Supervision) Act 1993 and related superannuation rules) to instalment warrant type arrangements, certain borrowings by self managed superannuation funds. These views have been developed in consultation with the Australian Prudential Regulatory Authority (APRA). This document does not deal with tax issues other than those relating to the application of the superannuation law.

Matters trustees should take into account

Trustees should always consider the quality of the investment they are making and whether their fund can meet all of the future obligations under the arrangement.

For more information about Trustee/Member obligations please read Role and Responsibilities of Trustees (NAT 11032).

What is an instalment warrant?

Traditionally, an instalment warrant is a marketed investment product that enables the investor to acquire an asset, normally listed securities. This is achieved through the investor paying an initial instalment together with a borrowing of money to fund the remaining amount required to acquire the asset. The borrowing is repaid by the investor making further instalment payments.

The investor obtains an interest in the underlying asset that provides an entitlement to the income from the asset (e.g. dividends in the case of shares). The investor’s interest in the asset is provided as security for the borrowing the investor has made. In the event that the investor defaults on the borrowing, the lender may only have recourse to the asset acquired. The lender has no recourse to any other asset of the investor.

Where the underlying asset is listed securities, the warrant itself is often tradeable on a stock exchange (for example, the Australian Stock Exchange). A tradeable warrant derives its value from the value of the underlying asset.

Why has the law changed?

Previously, super funds had been allowed to invest in instalment warrants consistent with longstanding administrative practice. More recently the Tax Office and APRA concluded that instalment warrant products involve a borrowing and as such were not an allowable investment. The Tax Office also considered that an investment by a super fund in the security trust holding the acquired asset is an in-house asset. The Government subsequently announced in the Minister for Revenue and Assistant Treasurer’s Press Release No. 78 of 2006 (3 November 2006) that they would legislate to allow the longstanding practice of super funds investing in instalment warrants.

From 24 September 2007, changes to the law mean that super funds can, providing that certain requirements are strictly met, invest in some instalment warrants or enter into a similarly structured and complying arrangements involving borrowing money to acquire a permitted asset. Arrangements must meet the conditions stipulated by the law.

Do the new rules apply only to Self Managed Superannuation Funds (SMSFs)?

No. The new laws apply to all regulated funds, not just SMSFs.

Is it only marketed instalment warrant products which are allowable under the new laws?

No. The new laws are not limited to only allowing traditional tradeable instalment warrant products as a means of a super fund borrowing money to acquire an asset.

Such a borrowing may be permitted under any ‘instalment warrant type arrangement’ which is structured and carried out in a way such that it satisfies all of the requirements of the new law.

Is it only instalment warrant investments over listed securities which are allowable under the new laws?

No. The new laws are not limited to investments in instalment warrants traditionally offered by financial institutions where the underlying asset is listed securities. Other arrangements or products may also be allowed if they satisfy all of the requirements of the new law.

What conditions must be met for a borrowing to be allowable?

Under the new law a super fund is not prohibited from borrowing money, or maintaining a borrowing of money, providing the arrangement entered into satisfies each of the following conditions:

• The borrowed monies are used to acquire an asset which the fund is not otherwise prohibited from acquiring.
• The asset acquired (or a replacement asset) is held on trust so that the fund receives a beneficial interest in the asset.
• The super fund has the right to acquire legal ownership of the asset (or, if applicable, the replacement asset) by making one or more payments after acquiring the beneficial interest.
• Any recourse that the lender has under the arrangement against the super fund is limited to rights relating to the asset acquired (or, if applicable, the replacement asset). That is, the lender is able to have the right to recover monies where there is a default on the borrowing by repossessing or disposing of the asset acquired, but cannot have the right to recover such monies through recourse to the fund’s other assets.

It may also be necessary for the asset to be the only property of the trust in which it is held at the times that the fund only has a beneficial interest in the asset. The Tax Office does not yet have a formal view on this matter. This publication will be updated when the Tax Office’s view is settled.

What are the consequences if the instalment warrant arrangement does not satisfy all of the required conditions?

If the required conditions are not strictly satisfied, borrowing money under an instalment warrant type arrangement will result in a breach of one or more of the super laws. Such a breach may have civil or criminal consequences.

What is the purpose of the changes made to the in-house asset rules?

Changes to the law have been made to ensure that an instalment warrant type arrangement entered into by an SMSF which meets the other requirements of the new law will not automatically result in an in-house asset arising from the investment made in the security trust.

These changes ensure that such an investment will only be an in-house asset where the underlying asset would itself be an in-house asset of the fund if held directly.

Is a fund trustee allowed to acquire the underlying asset from a related party vendor?

The laws which prohibit the acquisition of assets from related parties apply to instalment warrant type arrangements.

However, the exceptions provided for in the rules against acquisition of assets from related parties, such as those allowing for the market value acquisition of listed securities or business real property, continue to apply.

This question is different to that where the legal ownership of the asset is transferred from the security trust to the super fund on repaying the borrowing once all the instalments are paid.

Does the requirement that the asset be held on trust for the fund mean that the fund acquires an asset from a related party on repaying the borrowing?

It is a necessary feature of an arrangement contemplated by the law that the super fund be able to acquire full ownership rights over the underlying asset once the borrowing is repaid.

The security trust which holds the asset underlying an instalment warrant arrangement will be a related party of an SMSF (and possibly also of other super funds). In these circumstances, the legal interest in the asset may be considered to be acquired from the security trust when the borrowing is repaid. The Tax Office considers the intent of the new laws is that this would not of itself contravene the existing prohibition on acquiring assets from related parties.

This question is different to that where the original vendor of the asset is a related party.

Can the trust which holds the asset be a unit trust?

No. A unit trust cannot be used as the security trust holding the asset underlying an instalment warrant arrangement. The use of a unit trust will result in the fund not meeting the conditions that need to be satisfied under the new laws that allow super funds to borrow.

There are also other broader issues relating to security trust requirements which the Tax Office is considering. This publication will be updated when the Tax Office’s views on such matters are settled.

Is a fund allowed to put an existing fund asset into an instalment warrant arrangement?

No. The requirement that the money borrowed must be applied for the acquisition of an asset (or any replacement) means that instalment warrant investments by way of ‘shareholder application’ or ‘cash extraction’ arrangements are not allowed. The giving of a charge over an existing asset of the fund, as would generally occur under such arrangements, would also result in a contravention of the operating standards that apply to the trustees of super funds.

Is a fund allowed to borrow from a related party?

The new law does not of itself prohibit the lender from being a related party.

However, super funds must continue to comply with other legislative requirements. For example, the super fund must satisfy the sole purpose test and comply with existing investment restrictions such as those applying to in-house assets and acquiring certain assets from a related party of the fund.

Does interest on a borrowing from a related party need to be at commercial rates?

A borrowing by a trustee of a super fund from a related party at zero or less than commercial rates of interest may raise concerns as to whether the payment received is not a borrowing but is in fact a contribution.

Further, a borrowing from a related party at a rate of interest exceeding commercial rates may raise concerns as to whether the fund is being maintained solely for the purpose of providing superannuation benefits.

Does the arrangement entered into by the fund trustee actually involve a borrowing?

It is essential that appropriate documentation clearly reflect that the trustee of a super fund has made a genuine borrowing to acquire an asset.

This is particularly the case where the monies provided to acquire the asset are from a related party. Without adequate documentation to substantiate monies provided by a related party as being by way of a borrowing, it is likely that the monies will to be treated as a contribution received by the fund. This could lead to significant tax consequences should it result in a contributions cap being exceeded.

Will granting the lender a right of recourse over the underlying asset lead to a breach of the prohibition against charging a fund asset?

The granting to the lender of a right of recourse to the underlying asset at the same time that the trustee of a super fund acquires the beneficial interest in the asset is a necessary feature of an arrangement contemplated by the changes to the law.

The Tax Office and APRA are of the common view that the granting of such a right in these circumstances will not of itself contravene the existing prohibition in the law against giving a charge over a fund asset provided that the arrangement complies with all the conditions of the new law.

Can a fund trustee enter into an instalment warrant arrangement if its governing rules do not allow the fund to borrow?

No. The governing rules of a super fund must allow the trustee of the fund to borrow before any instalment warrant type arrangement can be entered into.

Can a fund trustee enter into an instalment warrant arrangement if it is not consistent with the fund’s investment strategy?

No. A trustee of a super fund can only enter into such an arrangement where this is consistent with the investment strategy formulated in relation to the fund.

Other issues under consideration

There are issues, listed below, in respect of which the Tax Office does not yet have a formal view. To the extent that these issues arise under a given arrangement, there may be concerns whether the arrangement complies with the law. These issues are:

• Does an arrangement where a borrowing is guaranteed by a third party satisfy the new laws, particularly where the personal guarantee is provided by a member or a related party?
• Does an arrangement that permits re-financing satisfy the new laws?
• Does an arrangement that permits capitalisation of interest satisfy the new laws?
• Can multiple drawdowns from a single loan facility satisfy the new laws?

Other issues that are still being considered include:

• What constitutes an ‘original asset’ and a ‘replacement asset’ for the purposes of the new law?
• What constitutes ‘maintaining a borrowing of money’?

This publication will be updated when the Tax Office’s view is settled.

How is the Tax Office dealing with those SMSFs that invested in instalment warrant products before 24 September 2007?

If you are a trustee or director of a SMSF and you invested before 24 September 2007 in an instalment warrant that the new law allows, we will not issue a notice stating your fund is a non-complying fund solely on the basis of this investment.

However, if you invested in an instalment warrant product before 24 September 2007 that breaches the new law, we will decide on a case-by-case basis what you must do to become compliant. For example, we may impose a penalty, or where possible, require you to rectify the contravention.

What Tax Office assistance is available to clarify the law?

This question and answer publication deals with issues that have presently been identified in relation to the application of the Superannuation Industry (Supervision) Act 1993 and other related superannuation laws to instalment warrant type arrangements.

The identification and prioritisation of other technical issues for further clarification by the Tax Office will occur in consultation with the NTLG Superannuation Technical Sub-group. The Tax Office will continue to consult with members of this forum in resolving these issues, including determining the most appropriate manner of publicising the Tax Office view.

Turning 60 - what does it mean for super fund members?

What happens to my super interest when I turn 60?

Your super fund will determine the proportion of tax-free and taxable components of your super:

• just before a benefit is paid to you in the case of a lump sum payout, and
• when your super income stream commences, for a super income stream benefit.

The same proportion of tax-free and taxable components will then apply to any benefits, whether lump sum or income stream, that your super fund pays you from then on.

How will my super benefits be taxed when I am aged 60 or over?

If you are paid a super benefit, whether a lump sum or income stream (such as a pension), and this benefit has a taxable component that consists wholly of an taxed element in the fund, the benefit will be tax-free.

If the taxable component of the super benefit contains an untaxed element in the fund (as in certain public sector super funds), the untaxed element of the taxable component of the lump sum will be subject to tax at special rates. The taxable component of an income stream is subject to ordinary rates of tax. However, a tax offset will be available to reduce the tax payable on the benefit.

For further information on untaxed and taxed elements in the fund, please refer to How your super payout is taxed.

Can I still claim a tax offset for a super income stream?

You will be eligible to claim a tax offset equal to 10% of the element untaxed in the fund if:

• you are aged 60 or over
• you receive an income stream benefit, and
• the taxable component of the benefit has an element untaxed in the fund.

Can I still claim a deductible amount (or tax-free component) for an income stream?

You may be eligible to claim a deductible amount – which is now referred to as the tax-free component – if you:

• are aged 60 or over, and
• receive a super income stream benefit which contains an element untaxed in the fund.

Generally, your super fund will calculate the deductible amount for you.

Is there a cap if I take a super lump sum?

You can receive concessional rates of tax up to $1 million (for 2007-2008) on the element untaxed in the fund if you:

• are aged 60 or over, and
• receive a super lump sum that includes or consists of an untaxed element in the fund.

This untaxed plan cap is subject to indexation.

Will I still receive a payment summary?

There will be no tax withheld from the benefit and you will not receive an annual payment summary if you:

• are aged 60 or over throughout the year, and
• receive a super income stream benefit that does not include an untaxed element in the fund.

You will receive an annual payment summary if:

• you are aged 60 or over, and
• your super income stream benefit includes or consists of an untaxed element in the fund.

The payment summary will show the taxed and untaxed elements of the taxable component, the tax-free component and any applicable tax offset amount.

Tax will be withheld and from the taxable component of any benefits you receive before you turn 60 and you will receive payment summaries for those benefits.

Excessive RBL determination upheld for superannuation pension

In AAT Case [2007] AATA 1732, Re Kerr and FCT the AAT held that a taxpayer was not entitled to a 15 per cent pension tax offset in respect of a non-complying superannuation pension as he did not qualify for the higher pension RBL. The taxpayer argued that the Commissioner should exercise his discretion to find 'special circumstances' under s 140ZB of the ITAA 1936 as he had allegedly relied on incorrect advice from a financial planner to the effect that more than 50 per cent of his various benefits were in the form of a complying pension.

Tax-free lump sum super for those terminally ill

The Assistant Treasurer has announced that the Government will amend the law exempt people with a terminal illness who access their superannuation under the age of 60 from the tax on their lump sum benefit. Amendments to the legislation will have effect for payments received after 11 September 2007. Until the legislation passes into law, Mr Dutton said the Government has asked the Commissioner of Taxation to consider changing the rate at which superannuation funds are required to withhold from payments to people in these situations.

NSW: abolition of mortgage duty

The NSW Office of State Revenue has advised that NSW mortgage duty for owner-occupied housing was abolished from 1 September 2007.

Super concessional contributions

The Tax Office has responded to concerns raised by the Institute of Actuaries of Australia (IAA) in relation to the treatment of superannuation concessional contributions and allocations from reserves. The Institute had expressed concerns to Treasury about when an allocation from a superannuation fund reserve will be counted against a member's concessional contributions cap.

Preparation of SMSF trust deed by tax agent company

In Legal Practice Board v Computer Accounting and Tax Pty Ltd, the Supreme Court of Western Australia has dismissed a statutory contempt charge against a tax agent company for allegedly engaging in unauthorised legal practice by obtaining and acting on instructions for the preparation of a trust deed for a self-managed superannuation fund.

Super Industry working party Q and A

Are non-concessional contributions and government co- contributions made after 05/04/2007 (to superannuation funds) and 30/04/2007 (to retirement savings accounts) no longer able to be split?

Regulations passed at the end of March 2007 and the end of April 2007 prevent splitting of non-concessional contributions and government co contributions made to a superannuation fund after 5 April 2007 and to an retirement savings account after 30 April 2007.

ATO reminder of key changes to small business tax concessions

The Tax Office has reminded small businesses with less than $2 million turnover that they may be eligible for various concessions from 1 July 2007 including: GST concessions; simplified trading stock rules; simpler depreciation rules; entrepreneurs' tax offset; CGT concessions; PAYG instalments based on GDP-adjusted notional tax; two-year period for amending assessments (exceptions may apply); immediate deductions for certain prepaid business expenses; FBT car parking exemption (from 1 April 2007).

Commissioner on SMSF trustee responsibilities

The Commissioner has urged investors who are thinking about setting up a self-managed superannuation fund (SMSF) to consider the time, cost and responsibility involved. Mr D'Ascenzo said that it has come to the Tax Office's attention that some trustees have made inappropriate investments such as acquiring a residential property from a fund member.

APRA quarterly superannuation returns

APRA has written to trustees and administrators for superannuation entities to remind them that submission of their June 2007 quarterly returns to APRA are due by 3 August 2007. APRA has also reminded trustees and administrators of reporting requirements affected by the reclassification of Employer Eligible Termination Payments (Employer ETPs), now known as Directed Termination Payments (DTPs). APRA has asked that this item be reported correctly in all future returns, including the June 2007 quarterly return.

Partial penalty remission for GST shortfall

The Tax Office has released a Decision Impact Statement on the decision in AAT Case [2007] AATA 1026, Re Keitac Pty Ltd ATF McNamara Property Development Trust and FCT. The case was concerned with whether an administrative penalty for lack of reasonable care was properly imposed and whether the penalty should have been remitted in full or in part. The Tax Office said the commissioner accepted that the decision to partially remit the penalty was one that was open to the Tribunal on the facts of the case.

Div 7A: one-off opportunity to correct past mistakes

The Tax Office has released Practice Statement Law Administration PS LA 2007/20. It provides guidance to Tax Office staff on how to treat specific 'corrective action' taken by taxpayers in respect of the 2001-02 to 2006-07 income years when considering whether or not to exercise the commissioner's discretion to disregard a deemed dividend where that 'corrective action' was taken prior to 1 July 2008. Corrective action requires any prior year exposure to be converted into an 'excluded loan' where prior year interest and capital payments are made by 30 June 2008 to ensure that affected taxpayers are Division 7A compliant by that date. CPA Australia and the other tax and accounting bodies have been lobbying for the above reforms since 1998 and believe that the Practice Statement offers some taxpayers a unique opportunity for significant tax relief.

Tax Office SMSF independent auditor's report form

The Tax Office has released its self-managed superannuation fund independent auditor's report (NAT 11466) for use by approved auditors of SMSFs from 1 July 2007. An approved auditor must give the SMSF trustee a copy of this report on the operation of the SMSF. It does not need to be sent to the Tax Office.

ATO SMSF compliance focus for 2007-08

Assistant Deputy Commissioner of Taxation, Ian Read, recently gave a speech on the Tax Office's compliance activities in relation to self-managed superannuation funds (SMSFs) and approved auditors. Mr Read revealed that the Tax Office compliance program for the 2007-08 year is being finalised and will be published and released by the Commissioner early in the new financial year. The compliance coverage of SMSFs will increase to around 10,000 cases for 2007-08 (up from around 3,600 the previous year).

Superannuation reforms starting from 1 July

The 1 July 2007 commencement for the Government's Simplified Superannuation reforms marks a significant milestone for the superannuation industry. Most of the urgency surrounding the changes has focused on taking advantage of the one-off opportunity to make a $1m non-concessional contribution before 1 July 2007. However, it is important to revisit all of the changes. The key changes, effective from 1 July 2007 (except where otherwise indicated), include:

• tax free benefits from age 60 - no tax is payable on superannuation benefits paid from a taxed source to people aged 60 and over, either as a lump sum or pension

• simplified tax for under 60s - tax is still payable on benefits paid to someone under age 60, although simplified rules apply

• untaxed schemes - benefits paid from untaxed superannuation schemes (mainly public sector schemes) are still subject to tax at concessional rates according to the recipient's age and amount

• reasonable Benefit Limits (RBLs) - no longer apply

• aged-based deduction limits - have been removed so that employers and the self-employed receive a full tax deduction for contributions until age 75

• Government co-contribution - extended to after-tax contributions by the self-employed

• contribution limits - contributions are subject to annual limits to curtail the accumulation of excessive benefits in the concessionally-taxed superannuation environment

• concessional contributions cap - concessional contributions (eg tax deductible contributions) above the annual $50,000 cap ($100,000 for those aged 50-74 until 30 June 2012) are subject to excess concessional contributions tax of 31.5 per cent (on top of the 15 per cent contributions tax paid by the fund). The excess contributions tax is levied on the individual who can apply to withdraw from their fund an amount to meet the liability

• non-concessional contributions cap - non-concessional contributions (eg personal undeducted contributions from the member's after-tax income) are capped at $150,000 per year (or $450,000 every 3 years for those under age 65). A $1m transitional cap applies for non-concessional contributions between 10 May 2006 and 30 June 2007. Non-concessional contributions in excess of a person's cap are taxed at 46.5 per cent and levied on the individual who must withdraw the amount from the fund to pay the tax liability

• no-TFN contributions taxed at 46.5 per cent - where a member's TFN has not been quoted to a superannuation fund by 30 June each year, this 'no-TFN contributions income' is taxed at 46.5 per cent in the hands of the receiving fund

• contributions returned if no TFN - a superannuation fund must return non-concessional contributions within 30 days where the member has not quoted a TFN

• employers to pass on TFNs - an employer must pass on an employee's TFN to his or her superannuation fund within 14 days of receiving a TFN declaration form, or when the first/next contribution is made on the employee's behalf, whichever is the later

• compulsory cashing rules - abolished from 10 March 2006 so that people no longer working after age 65 are not forced to take out their superannuation

• flexible benefits - greater flexibility over how superannuation can be drawn down in retirement, either as a pension or lump sum, including leaving some money in superannuation or working part-time and continuing to add to it

• pension rules - minimum standards for pensions and annuities have been simplified

• employment termination payments - (eg golden handshakes) cannot be rolled over to superannuation and must be paid within 12 months of termination of employment. Separate transitional rules and tax treatment apply where the entitlement to a termination payment was established as at 9 May 2006 and the payment is made before 30 June 2012

• social security assets test - from 20 September 2007, the pension assets test taper rate will be halved to $1.50 per fortnight for every $1,000 of assets above the assets test free area

• portability - the maximum period for funds to process a request to transfer benefits between superannuation funds has been reduced from 90 days to 30 days

• lost super - the Federal Government will take full responsibility for the management of unclaimed superannuation

• SMSF regulation - streamlined reporting arrangements apply to self-managed superannuation funds (SMSFs) while the Tax Office's SMSF regulatory powers have been enhanced to ensure the integrity of this important sector. SMSF supervisory levy up to $150pa

• SMSF trustee declaration - all new trustees of a SMSF must sign an ATO approved form stating that they understand their obligations and responsibilities. The form must be signed within 21 days of becoming a trustee a declaration. It does not need to be sent to the Tax Office but kept with their other records for inspection by the ATO or an approved auditor.

Tax Office reminder that tax time is here

The Tax Office has reminded taxpayers to start thinking about preparing and lodging their tax return by the 31 October 2007 deadline. The Tax Office will again focus on deductions for work-related expenses, rental property expenses and capital gains from the sale of property and other assets. The Tax Office said it will also focus on:

• the compliance behaviour of high income earning executives; and
  
  

• capital gains from assets sold to contribute to superannuation before the new super changes came into affect on 1 July

Classification of superannuation contributions: APRA update

In its Superannuation Circular I.A.1 Contributions and Benefit Accrual Standards for Regulated Superannuation Funds, APRA classified 'Employer Eligible Termination Payments' (Employer ETPs) as non-mandated employer contributions for the purposes of the contribution standards in the SIS Regulations. APRA says it has now reviewed this classification in consultation with the Tax Office and considers that Employer ETPs (and Directed Termination Payments after 1 July 2007) are appropriately regarded as member contributions made by the member rather than as non-mandated employer contributions.

Variation of PAYG withholding for certain superannuation beneficiaries

An instrument varying the rate of withholding for certain superannuation income stream beneficiaries who turn 60 during the financial year has been registered on the Federal Register of Legislative Instruments. It applies from 1 July 2007 and prescribes reduced rates of withholding from payments made from a taxed element of a superannuation income stream benefit to a payee who:

• is 59 years of age
  

• will turn 60 in the financial year in which the payment is made

What are the key changes for employers?

From 1 July 2007:

• when an employee gives an employer a Tax file number declaration form, the employer must pass the tax file number onto the employee’s super fund
• employers can claim a full deduction for all contributions to super funds they make on behalf of their employees provided certain conditions are met, and
• ‘eligible termination payments’ will change to ‘employment termination payments’ and generally can no longer be rolled over into super funds.

Super co-contribution: ATO payment arrangement

The Tax Office has provided an update on its payment arrangements in relation to the 2007-08 Federal Budget announcement to provide one-off additional super co-contribution payment for people who were, or will be, eligible to receive a co-contribution for the 2005-06 financial year. The Tax Office says that due to the large number of payments, the exact date for release of electronic commerce interface (ECI) files, mail out of cheques and remittance advices are not known, but the expected dates should be shortly after the 12 June 2007 for ECI files and after the 15 June for mail out of cheques to super funds.

Family Tax Benefit and child care rates to increase

The Minister for Family & Community Services has announced that the rates for Family Tax Benefit (FTB) and Child Care Benefit (CCB) will be increased from 1 July 2007 . Under the changes, families on a single income of $50,000 with two young children will receive $10,768pa in FTB. The FTB family income threshold to still receive the maximum rate will be increased to $41,318. In addition, the Child Care Benefit will increase 13 per cent from 1 July so that a low income family with one child in full-time care will receive an extra $20.50 per week.

CGT rollover on ending of a statutory licence

The Assistant Treasurer has announced that the Government will amend the CGT provisions in the ITAA 1997 that apply to holders of statutory licences to allow a partial CGT roll-over where a statutory licence ends and is replaced by one or more new licences and the licensee is offered non-licence capital proceeds such as money. Partial roll-over will be available to the extent that the original licence is replaced by a new statutory licence or licences. The amendment will apply to CGT events that happen in the 2006-07 income year and later income years.

Court finds super switching advice misleading: ASIC

ASIC has announced that the NSW Supreme Court has found that super switching advice given by First Capital Financial Planning Pty Ltd (First Capital) was misleading or deceptive, and did not have a reasonable basis. According to ASIC, between December 2004 and September 2005, First Capital advised 170 NSW Government teachers to switch from their State government superannuation fund, First State Super, to a superannuation fund recommended by First Capital. ASIC said the fees payable in the recommended fund were significantly higher than the fees payable in First State Super.

Government launches 'Better Super' information initiative

The Treasurer and Assistant Treasurer have jointly launched the Government's 'Better Super' initiative aimed at informing people on how to plan for their financial future under the simplified super reforms. All households will shortly receive an information booklet which will explain the benefits and opportunities for workers and retirees under the simplified super system from 1 July 2007.

Superannuation co-contribution: 2007 Budget measure Bill

The Superannuation Laws Amendment (2007 Budget Co-contribution Measure) Bill 2007 has passed all stages without amendment and received Royal Assent on 15 May 2007 as Act No 67 of 2007. The Bill gives effect to the Government's 2007-08 Budget announcement to provide an additional one-off superannuation co-contribution to double the amount received by eligible persons for personal contributions made in the 2005-06 income year. The Tax Office said it expects to make the majority of additional co-contribution payments to superannuation funds before 30 June 2007 with additional remaining payments to be paid during 2007-08.

Government pays financial assistance to WA super fund

The Assistant Treasurer has announced that the Government has paid a financial assistance grant of $1,483,983 to benefit members of the Strategic Capital Superannuation Fund (SCSF). Mr Dutton said that under Pt 23 of the Superannuation Industry (Supervision) Act 1993, he had made a determination that it was in the public interest to make a grant of assistance to those people who lost money when the fund was allegedly defrauded.

Super funds allowed to invest in instalment warrants

The Assistant Treasurer has announced the outcome of consultation on the scope of amendments required to allow superannuation funds to continue investing in instalment warrants. Mr Dutton said the Government has decided to legislate to allow super funds to invest in instalment warrants of a limited recourse nature over any asset a fund would be permitted to invest in directly.

2007-08 Federal Budget: substantial tax cuts and more

• small business: the GST registration threshold will be increased to $75,000; the threshold for an approved tax invoice will increase to $75; availability of simplified accounting methods for GST will be extended
• company losses: the $100m cap on the same business test will be abolished, with effect from 1 July 2005
• consolidation: a number of changes eg re authorised deposit-taking institutions
• super: the Government will provide a one-off doubling of the superannuation co-contribution
• venture capital: eligibility requirements will be relaxed
• MIS: trading of interests in forestry managed investment schemes will be allowed
• films: new tax incentives for film production are provided

NSW stamp duty: partitions of land

The NSW Office of State Revenue (OSR) has released Revenue Ruling DUT 35 (Partitions of Land), which replaces Revenue Ruling SD 178. It states that s 30 of the Duties Act 1997 (NSW) provides a concessional basis for assessing duty on a dutiable transaction that constitutes a partition of property comprised of land in NSW. It says this Ruling details how the concession applies and relates to partitions effected on or after 27 June 2005

Simplified super: Tax Office Q&A guidance on implementation issues

The Tax Office has released a list of answers to questions raised by the Simple Super Stakeholder Working Groups in relation to various aspects of the simplified superannuation reforms. The ATO's answers cover practical questions raised by superannuation funds and other industry stakeholders on what is a valid TFN for the purposes of determining whether a fund is liable for no-TFN contributions tax for an income year.

Tax cuts for all but battlers first (MAIN POINTS) from Smh

Economy

• Longest period of expansion
• GDP growth tipped to be 3.75%
• $13.6b surplus this fiscal year
• Inflation and unemployment to stay low

Tax

• $31.5b tax cuts over 4 years
• Cuts for low earners this year
• Cuts for higher earners next year
• Low/middle earners: weekly cuts $10-$21
• Low-income tax offset up to $750 a year
• 30% threshold up to $30,000
• 40% threshold up to $80,000
• 45% threshold up to $180,000

Education

• $5b fund for universities
• $843m to boost teacher quality
• $700 vouchers for literacy
• $549m for apprentice training

Child care

• 10% rise for Child Care Benefit
• Child Care Tax Rebate paid directly
• 70,000 families to benefit

Elderly

• $500 payment to older Australians
• $1000 carer payment bonus
• $600 carer allowance bonus
• $1.6b for aged care

Environment

• $741m for climate change
• $8000 home solar panel rebate
• $10b for water supplies
• $2b for National Heritage Trust

Other key spending

• Defence: $2.1 for recruitment
• Terrorism: $702m for national security
• Health: $772m for complex conditions
• Medical research: $486m for infrastructure
• Farmers: $314m for drought relief
• Transport: 22.3b for road and rail

NSW: first home buyer stamp duty concessions

The NSW Office of State Revenue (OSR) has released information on the new First Home Plus One scheme. From 1 May 2007, the First Home Plus One scheme will allow eligible purchasers to buy property with other parties and still receive a concession.

ASIC warns on large super contribution strategies

ASIC has offered a number of tips to investors planning to contribute large sums of money into their superannuation funds. ASIC's Executive Director of Consumer Protection, Mr Greg Tanzer, said ASIC has recently heard of some contribution strategies which he said could be expensive, speculative and even risky. Mr Tanzer said strategies like selling or transferring an investment property, shares or other assets into a super fund require particular care and attention.

Tax Commissioner's super myths, facts and tips

The Tax Office says it has identified some areas of confusion about the new superannuation reforms. It has published several myths, facts and tips (which will be regularly updated) to help taxpayers better understand the changes to super. One myth is that, until 30 June 2007, individuals can borrow $1 million to put into their super and claim the interest as a deduction. But the ATO says the fact is that interest is not deductible for individuals.

Large companies: ATO flags tax risk areas for 2007-08

In a recent address on building competitive advantage, the Tax Commissioner said the Tax Office's primary emphasis in the large corporate sector is on supporting voluntary compliance and reducing compliance costs, rather than on revenue collection activities. The Commissioner said the following issues are on the Tax Office radar for 2007-08:

• corporate restructures, mergers and acquisitions
  
  

• financing arrangements including the use of hybrid securities
  
  

• companies whose tax performance is at odds with economic performance
  
  

• transfer pricing issues

Labor promises to simplify business regulation, including GST

In an address in Canberra, Labor Leader Kevin Rudd promised to streamline and simplify regulation affecting business. Among other things, he said Labor would implement BAS Simplification as outlined in the Banks Report, and, in consultation with small business, develop a new policy called "BAS Easy". Mr Rudd said Labor was also currently considering giving relief to independent contractors and home-based businesses by raising the threshold for mandatory completion of the BAS from $50,000 to $75,000.

Removing the part-year tax-free threshold

The measure changes the tax rules for resident taxpayers who cease full-time education for the first time.

Students who cease full-time education for the first time will be entitled to the standard tax-free threshold of $6,000 that applies to all resident taxpayers. The measure will be applicable to assessments for income years commencing on or after 1 July 2006.

Taxation of benefits from 1 July 2007

How will superannuation benefits be taxed from 1 July 2007?

For most people aged 60 or over who receive super benefits from a taxed source (this is most funds) that payment of a benefit as a lump sum, or income stream (such as a pension) will be tax-free.

I am a retired public servant. Will my superannuation pension be tax-free?

No. The benefits of many retired public servants are paid from superannuation schemes that don’t pay tax or from a Government’s revenue. These sources are sometime called untaxed sources. If your super benefit comes from an untaxed source, it will be taxed when you receive it regardless of your age. However, if you are aged 60 or over when you receive a superannuation pension, you may be entitled to a 10% tax offset that will reduce the tax payable.

The regulations explaining how these changes will work are not yet law. Our information will be updated after the regulations are made.

Will I have to lodge an income tax return?

When you are 60 years or over, you don’t have to declare tax-free income paid from taxed sources of superannuation. If your only source of income is superannuation benefits from a taxed source you won’t need to lodge an income tax return.

You will have to lodge an income tax return if you have income from other sources, including from investments or untaxed superannuation sources, such as some public service super funds.

Is there a minimum or maximum amount I have to withdraw from super each year?

Your fund may allow you to choose the amount of your superannuation income each year. Once you start a pension, a minimum amount is required to be paid as a benefit each year to ensure your capital is generally drawn down over time. There is no maximum amount other than the balance of your super account.

The following table shows minimum annual pension for each age group:

Age	Minimum withdrawal as a % of the account balance
Under 65	4%
65–74	5%
75–79	6%
80–84	7%
85–89	9%
90–94	11%
95 or more	14%

The regulations explaining how these changes will work are not yet law. Our information will be updated after the regulations are made.

Do I have to cash out my super when I reach a certain age?

No. The superannuation law will no longer require your benefit to be paid at a certain age. However, your payments are subject to the rules of your particular fund. The requirements for compulsory payment of benefits to members over age 65 who do not meet the work test, and compulsory payment from age 75 have been removed from the law.

The regulations explaining how these changes will work are not yet law. Our information will be updated after the regulations are made.

What is happening to reasonable benefit limits?

Reasonable benefit limits will be abolished from 1 July 2007. You will still need to include amounts exceeding your reasonable benefit limit as excessive amounts in your tax return for benefits received before 1 July 2007.

Do “transition to retirement“ measures still apply?

Since 1 July 2005 people at ‘preservation age’ have been able to take their benefits as a non-commutable income stream while they are still working.

The transition to retirement rules will be amended to include pensions meeting the new minimum standards. From 1 July 2007 transition to retirement income streams will allow no more than 10% of the account balance (at the start of each year) to be withdrawn in any one year. The existing non-commutability rules for income streams commenced under the transition to retirement measure will continue to apply. Income streams started before 1 July which comply with the transition to retirement rules at the time, will satisfy the new requirements.

The regulations explaining how these changes will work are not yet law. Our information will be updated after the regulations are made.

When can I start taking my superannuation?

When you reach preservation age and retire, or turn 65, even if you have not retired from the workforce, you can access your superannuation. The ‘preservation age’, however, will increase from 55 to 60 between the years 2015 and 2025.

Will the new rules affect complying income streams started before 1 July 2007?

No, you still won’t be able to commute them into a lump sum. The payments will be tax-free when paid from a taxed source to a person aged 60 or over.

Moving to the new arrangements

There are a number of issues and opportunities you might need to consider during the transitional period between 10 May 2006 and 30 June 2007.

What is the $1 million transitional cap on non –concessional contributions?

There is a cap of $1 million on non-concessional contributions during the transitional period. This transitional cap includes all non-concessional contributions made between 10 May 2006 and 30 June 2007.

What if I exceed the $1 million cap during the transitional period?

The rules about excess transitional non-concessional contributions and what you need to do are explained in the fact sheet - Simpler super – transitional cap of $1 million on non-concessional contributions.

Do I have to pay capital gains tax (CGT) if I sell my investment property and put the money into super?

If the sale of your investment property returns a capital gain you will need to take into account the possibility of paying CGT.

Can I transfer my investment property into my self managed super fund?

No. You cannot transfer or sell your residential investment property to your self managed super fund.

In some circumstances you may be able to transfer real property used exclusively in a business to your self managed super fund. The property must be acquired by the self managed super fund at market value. You may have to pay CGT and the fund may have to pay stamp duty on the transfer of ownership.

Do I have to pay CGT if I sell my managed funds or shares and put the money into super?

If the sale of your managed funds or shares returns a capital gain you will need to take into account the possibility of paying CGT.

Can I transfer my managed funds or shares into my self managed super fund?

Yes, in some cases. For example, you can transfer listed shares and units in managed funds to your self managed super fund if they are listed on the Australian stock exchange (or the stock exchanges of some other countries), or if your investment is in a widely held unit trust. The units or shares must be acquired by the self managed super fund at market value. You may have to pay CGT and the fund may have to pay stamp duty on the transfer of ownership.

Can I claim a tax deduction for interest on a loan if I borrow money to contribute to superannuation?

No. Interest on money borrowed to make personal superannuation contributions is not tax deductible.

I am an employer. Can I claim a tax deduction for interest on a loan if I borrow money to make super contributions for my employees?

Yes. You can claim a deduction for interest on money you’ve borrowed to make superannuation contributions for your employees.

I own a small business. How much can I put into super now?

Under transitional arrangements you can contribute up to $1 million of non-concessional contributions to your super fund between 10 May 2006 and 30 June 2007.

Contributions of up to $1 million derived from the disposal of certain small business assets can be excluded from the $1 million transitional non-concessional contributions cap,so you may be able to contribute a further $1 million in the transitional period.

Simpler Super - What you need to know

General information about the changes to super coming into effect from 1 July 2007. There are some changes that take effect from 10 May 2006.

Will there be a limit on the amount of contributions that can be made to my super funds?

Strictly speaking there are no limits to the amounts that can be contributed but practically the change in tax rates above a certain amount creates a limit. It is this practical limit which is referred to in these questions and answers.

About concessional contributions

Will there be a limit on the amount of concessional contributions that can be made to my super funds?

From 1 July 2007 the limit on concessional contributions is $50,000 a year for those less than 50 years of age. This limit is called the concessional contributions cap.

You will be taxed on concessional contributions over the $50,000 cap at a rate of 31.5%. You can ask your super fund to release money to pay this excess contributions tax.

What are concessional contributions?

Concessional contributions include employer contributions (including contributions made under a salary sacrifice arrangement) and personal contributions claimed as a tax deduction by a self-employed person.

Concessional contributions are usually included in your fund’s assessable income. Concessional contributions and the earnings on them are assessable to the fund. The fund generally pays tax on its taxable income at 15%.

I’m over 50, what is my limit for concessional contributions?

The limit on concessional contributions is $100,000 a year between 1 July 2007 and 30 June 2012 for those aged 50 or more.

You will be taxed on concessional contributions over the $100,000 cap at a rate of 31.5%. You can ask your super fund to release money to pay this excess contributions tax.

What happens if I turn 50 during the transition period?

If you turn 50 between 1 July 2007 and 30 June 2012 you can also make use of the $100,000 cap. For example, a person turning 50 on 1 February 2011 will be able to contribute $100,000 in the 2010–11 and 2011–12 financial years.

Will the concessional contributions cap be indexed?

Yes. Indexation of the $50,000 concessional contributions cap will be based on Average Weekly Ordinary Time Earnings (AWOTE), but will increase in $5,000 increments for simplicity. The cap of $100,000 that applies for those aged 50 or more will not be indexed.

About contribution deductions

Will employers still be able to claim a tax deduction for superannuation contributions?

Employers will still be able to claim a tax deduction for contributions made on behalf of their employees. From 1 July 2007 there is no limit on the amount an employer can deduct as the age based limits on deductions for these contributions will no longer apply.

They will now be able to claim the deduction for employees who are under the age of 75 (increased from the previous age of 70).

Employers will only be able to claim a tax deduction for contributions made on behalf of employees aged 75 and over, if those contributions are required under an industrial award, determination or notional agreement preserving state awards.

I am self employed. Will I still be able to claim a tax deduction for superannuation contributions?

Yes. From 1 July 2007 you will be able to claim a full tax deduction for superannuation contributions made until you turn 75 as long as you meet the eligibility criteria. The age based limits on deductions that currently exist for these contributions will no longer apply.

About non-concessional contributions

What will be the limit on non-concessional contributions?

From 1 July 2007, non-concessional contributions made to super will be limited to $150,000 a year. This is called the non-concessional contributions cap.

You will be taxed on non-concessional contributions over the limit at the rate of 46.5%. You must ask your super fund to release money to pay this tax.

People under 65 can make non-concessional contributions of up to $450,000 over a three-year period.

The non-concessional contributions cap will always be three times the concessional contributions cap.

What are non-concessional contributions?

Most commonly, non-concessional contributions are the contributions you make for which a tax deduction is not claimed. Unlike employer contributions, the person who makes the contribution is generally not entitled to a tax deduction for that contribution. They are often referred to as undeducted or ‘after-tax’ contributions. The contributions listed below are non-concessional contributions. They include, but are not limited to:

• personal contributions for which an income tax deduction is not claimed
• contributions a person’s spouse makes to their super fund account, and
• transfers from foreign superannuation funds (excluding amounts included in the fund’s assessable income).

About eligible termination payments

Will there be changes to eligible termination payments?

Yes. From 1 July 2007, eligible termination payments will either be employment termination payments or superannuation benefits. Superannuation benefits are payments from superannuation funds. An employment termination payment is a lump sum payment made in consequence of the termination of employment. The income tax treatment of both types of payments will change. Employment termination payments made on or after 1 July 2007 won’t be able to be rolled over into super unless you meet the requirements of the transitional arrangements.

Simplified super: ASIC disclosure requirements for trustees

ASIC has announced that it expects superannuation trustees to disclose the simpler superannuation changes to fund members within a timeframe that allows members to act on the changes. ASIC said it expects trustees to implement good practices and disclose the simpler super changes so that fund members are in a position to use this information and determine whether they need to make any changes to their superannuation arrangements.

Tax Office outlines immediate impact for super funds

n a recent speech, Raelene Vivian, Deputy Commissioner of Taxation, outlined the implications for superannuation funds flowing from the simplified super reforms. Ms Vivian said there are several immediate administrative impacts that must be implemented by all superannuation funds in terms of updating information systems and procedures. From 1 July 2007, Ms Vivian said superannuation funds will need to pay tax at 46.5 per cent on contributions received in the income year for member accounts where no TFN has been quoted.

ASFA: Death benefits best practice paper released

In response to rising trustee concern, ASFA has produced a Best Practice Paper on Death Benefits in conjunction with the Superannuation Complaints Tribunal. It says the Paper offers trustees a comprehensive and practicable guide to this sometimes vexed area of super fund stewardship.

Cents per km car expense rates for 2006-07 year

Regulations have been made to prescribe the 'cents per kilometre' rates for calculating deductions for car expenses for the 2006-07 income year. The rates for non-rotary engines are:

• 0 – 1,600cc – 58c/km

• 1,601 – 2,600cc – 69c/km

• 2,601cc + - 70c/km

Jail sentence for lodging false activity statements

The Tax Office says an Adelaide man has been sentenced by the Adelaide District Court to two years and 10 months jail for tax fraud of $323,912. According to the Tax Office, the man pleaded guilty to 18 counts of obtaining a financial advantage by deception, and 6 counts of attempting to obtain a financial advantage by deception. The Tax Office said that, between July 2001 and March 2003, Paterson lodged personal and company activity statements containing inflated GST credits to claim $233,187 in fraudulent refunds.

12-month transitional period for tax treatment of agribusiness MISs

The Tax Commissioner has announced a 12-month transitional period before application of the Tax Office's reconsidered view of the tax treatment of agribusiness managed investment schemes (MISs). The reconsidered view will apply to arrangements entered into from 1 July 2008. Mr D'Ascenzo said the Tax Office will be writing to industry to seek assistance to identify a suitable case to test in the courts, which it aims to expedite it through the courts.

What Simplified Superannuation is bringing

Australia’s superannuation system’s objective is to assist and encourage people to achieve a higher standard of living in retirement than would be possible from the age pension alone.

With an ageing population, the effective operation of retirement income strategies is critically important to Australia’s future.

In regulating and administering the self managed superannuation funds, the Tax Office is contributing to a retirement income policy that has enduring social impacts.

Encouraging taxpayers to direct their savings into superannuation together with the Super Guarantee from employers has seen total superannuation assets rise from $519 billion in 2001 to over $945 billion by September 2006 ².

Not only are Australian superannuation assets approaching a trillion dollars in value but the aspirations and security of many Australians are similarly committed.

It behoves the Tax Office to be innovative in designing new business processes and investing in new technologies to support the new measures and to do so in a way that adds public value.

Over $600 million paid in latest super co-contribution payments

The Assistant Treasurer has announced that 799,156 Superannuation Co-contribution payments worth more than $631 million were made to Australian workers during the period 1 October 2006 to 31 December 2006 (all refer to after-tax superannuation contributions made during the 2005-06 Financial Year).

Simplified super: APRA reminds trustees of prudential implications

APRA has reminded superannuation trustees of the additional risk management implications flowing from the expected surge of money into the superannuation system as a result of the 'simpler super' reforms. In a recent speech the APRA General Manager of Specialised Institutions Division said trustees will need to address the implications of additional investment risks, operational risk, management, governance and self-regulation issues.

Simplified super: additional draft regs and standard portability form released

The Assistant Treasurer has announced the release of further draft regulations and a standard portability form to support the simplified superannuation reforms. The standard portability form and instructions are for use by members to request a transfer of the whole balance of superannuation benefits between funds. The draft regulations also make amendments to support the concessional and non-concessional contributions caps, and provide guidance to funds on the handling of member contributions made without a TFN.

Proposed removal of dividend tainting rules: ATO administrative treatment

In November 2006, the Government announced that it would remove both the dividend tainting rules and the rules that deny franking credits when additional tax is paid because of a transfer pricing adjustment. Legislation has not yet been introduced to implement this announcement and the Tax Office has now released details of its proposed administrative treatment of the law pending enactment of the necessary legislation.

Procedures for lodging family trust and interposed entity elections

Family entities have a one-off opportunity to lodge, by 31 May 2007, a family trust election (FTE) and/or an interposed entity election (IEE) that should have been lodged in a year before the 2004 income year. FTEs and IEEs for 2004 and earlier income years may be lodged up to that date, even if the entity's 2004 income tax return has already been lodged. The extension also applies to entities that were not required to lodge a 2004 tax return. The Tax Office has now re-released the procedures for lodging those FTEs and IEEs.

Mixed views stir pot on corporate tax

Assumptions drawn by the Business Council of Australia (BCA) in its Corporate Taxation: An International Comparison – 2006 Update, prepared in conjunction with KPMG, have been labeled ‘misleading’ by Treasurer Peter Costello.

The corporate taxation update compared the overall burden of taxes on Australian companies with those in competitor countries, such as trading partners, the OECD and the European Union.

The report alleges Australia’s corporate tax burden – up from 5.1 per cent of GDP a year ago to 5.7 per cent – is unfairly high compared to countries such as the United States and United Kingdom.

It also points out that in the past 12 months Australia’s corporate tax rate has remained at 30 per cent, while in the same period there have been falls in the average rates in the OECD from 29.1 per cent to 28.4 per cent, 25.3 per cent to 24.8 per cent in the European Union and 30.4 per cent to 30.1 per cent in the Asia-Pacific region.

Treasurer Costello says as corporate tax is levied on profits, the BCA’s approach perversely rates countries with more profitable corporate sectors as less internationally competitive. He says the results do not really illustrate tax comparisons, and what they actually show is how profitable Australian companies have been in recent years.

According to Treasurer Costello, growth in company taxes is explained by growth in profitability rather than any tax increases. He says profits have gone up by 69 per cent over this period while company taxes have increased by 65 per cent.

In-house GST advisers 'underpaid and undervalued': survey

In-house good and services tax (GST) advisers in Australia believe they are underpaid and that their role is undervalued, according to a survey conducted by Deloitte with the support of the Corporate Tax Association (CTA) at the CTA annual ‘GST Big Day & A Half Out’ in October 2006.

The investigation into the role of the Australian in-house GST adviser, in which 80 advisers participated, found that half of those surveyed were of the view that their peers in in-house income tax roles were more highly paid than those in GST advisory.

Sixty per cent said they believed that their organisation’s chief financial officer (CFO) considers GST to be either not very important, of little importance or of no importance to the organisation’s business today.

On the other hand, the vast majority – 86 per cent – perceived that their head of tax considered GST to be either very important or important.

Participants were also quizzed on their relationship with the Australian Taxation Office (ATO). Although channels of communication appear to be good, 70 per cent of the respondents considered the ATO’s general stance on GST to be ‘too aggressive’ or ‘aggressive’. Fifty per cent were of the view that the ATO rarely or never focuses on the right areas of the business with regard to GST compliance.

Half agreed with the view expressed by the ATO in its 2006-07 compliance program that some large businesses have failed to keep up-to-date their internal corporate governance processes and systems for GST.

Looking into the future, there was a significant discrepancy between what people thought they should focus on in the next two years, compared to what they thought they will end up focusing on. Forty four per cent of the respondents were of the view that system and process improvement should be the focus, but only 28 per cent thought that this would be the case, with compliance and risk being the anticipated focus.

Almost half of the audience believed GST ‘risk’ to be higher for their business than income tax, while more than half believed there to be less GST ‘planning opportunities’ than income tax planning opportunities.

While the 80 advisers who participated in the survey were thought to represent more than 50 per cent of the current in-house GST advisers in Australia (excluding the profession), it was acknowledged by Deloitte that the sample group is a small population and the results should be treated accordingly.

For further information, view the survey results from the Deloitte website.

Tax Press-Australian Financial Review

'Contribution conundrum for volunteers' (Does doing charity work allow people to contribute to super over 65?) AFR [p 29], Wed 21.2.2007

'Ratings not a reason to switch' (Complex super rules mean good advice is needed) AFR [p 32], Wed 21.2.2007

'ATO taxes the patience of big business' (Report that big companies are increasingly unhappy with the Tax Office and have registered a drop in their overall satisfaction levels) AFR [p 1], Tue 20.2.2007

'$600,000 storm in a coffee cup' (Report of a court dispute over a $600,000 NSW stamp duty bill on a multimillion dollar international branding deal re a coffee franchise) AFR [p 5], Tue 20.2.2007

'Getting a handle on small business' (Proposed tax changes seen as a help to small business, but clarification wanted on exactly what is a small business) AFR [p 17], Tue 20.2.2007

'Call for tax cuts to boost productivity' (The Australian Industry Group calls on Federal Government to cut tax burden for low-income families and to cut the company tax rate) AFR [p 9], Mon 19.2.2007

'High corporate tax checks productivity' (Opinion that tax reform in Australia is unfinished business) AFR [p 63], Mon 19.2.2007

'Vizard caught up in tax office fraud probe' (Report of a Victorian Supreme Court case involving allegations of tax fraud) AFR [p 3], 17-18 February 2007

'Planners test advice limits' (Report that the financial services industry is lobbying the Federal Government to allow financial planners to provide limited advice) AFR [p 5], 17-18 February 2007

'Make your salary work for you' (Strategies to boost superannuation savings before, and after, 1 July 2007) AFR [p 44], 17-18 February 2007

'How to keep them down on the farm' (Changes to the assets test treatment of land) AFR [p 45], 17-18 February 2007

'AMP super probe widens' (Report that AMP will offer more clients a full review of their superannuation investments) AFR [p 1], Fri 16.2.2007

'Tax break runs to listed trusts' (Employee share scheme tax concessions extended to certain stapled securities) AFR [p 30], Fri 16.2.2007

'Female lawyers head to court over tax' (Report that the Victorian Women Lawyers group is fighting the Tax Office in the Federal Court as to whether or not it is a charity) AFR [p 57], Fri 16.2.2007

'Work needed to bolster confidence' (Comment that the advisory industry needs to work on its compliance with the disclosure laws that govern the financial services sector) AFR [p 73], Fri 16.2.2007

'Call for rethink on hasty tax changes' (Concerns that a one-year reprieve from tax changes for non-forestry agribusiness MIS is not enough) AFR [p 6], Thur 15.2.2007

'Wickenby on the defensive' (Tax Commissioner appears before Senate committee and talks about Operation Wickenby) AFR [p 9], Thur 15.2.2007

The Australian

'Make your contributions to super tax deductible' (Strategy to reduce employment income and to make personal super contributions tax deductible) AUSTRALIAN [Wealth, p 4], Wed 21.2.2007

'Join the millionaire club' (Strategies to make undeducted contributions to super of up to $1m before 30 June 2007 eg home equity, sell investment property, CGT exemptions on the sale of business, contribute to parents' super) AUSTRALIAN [Wealth, p 5], Wed 21.2.2007

'Allocated pensions to last longer' (Report on changes to the way some allocated pensions operate may mean they will last much longer) AUSTRALIAN [Wealth, p 9], Wed 21.2.2007

'Put those tax cuts into super' (Edited excerpts of former prime minister, Paul Keating's address to a pension forum on current government policy on super and ageing population) AUSTRALIAN [p 32], Mon 19.2.2007

'ATO warns greens over politicking' (Report that environmental groups have been warned they could be stripped of their status as charities for engaging in political activity) AUSTRALIAN [p 5], 17-18 February 2007

'Taxman plans test case on schemes' (Report that the Tax Office will issue a draft ruling on its revised view of managed agribusiness schemes within a month, then identify a test case) AUSTRALIAN [p 33], 17-18 February 2007

'A MIStake in investment schemes' (Comment that there are likely to be fewer tax deductions for agribusiness schemes in the future) AUSTRALIAN [p 39], 17-18 February 2007

'Go SMSF' (According to a SMSF administrator, 3 times as many people than usual are transferring assets, especially into self-managed funds) AUSTRALIAN [p 39], 17-18 February 2007

'Former watchdog caught in tax net' (Report of Federal Court dispute regarding Tax Office revised assessments re tax losses involving horse-breeding joint venture) AUSTRALIAN [p 1], Fri 16.2.2007

'AMP super bungle blows out to 35,000' (Update on bank's internal review process after switching super advice issue) AUSTRALIAN [p 21], Fri 16.2.2007

'A world of horses, law and tax' Publish(Further report of litigation between a taxpayer and the Tax Office re claims of lease and interest expenses claimed as losses) AUSTRALIAN [p 24], Fri 16.2.2007

'Foreign flyers ponder stamp duty legal action' (Report of international airlines considering legal action against Vic Government to stop possibly illegal stamp duty payments) AUSTRALIAN [p 29], Fri 16.2.2007

'More charges to come in tax fraud probe' (Report that the Tax Commissioner has told a Senate committee that more individuals were likely to be charged under Project Wickenby) AUSTRALIAN [p 2], Thur 15.2.2007

'Tax bug threatens to bite farmers' (Claim that the Tax Office treats compensation payouts for water buyouts as assessable income) AUSTRALIAN [p 6], Thur 15.2.2007

Melbourne director of self-managed super companies fined

ASIC has announced that Mr Damian Tolson has appeared before the Melbourne Magistrates Court charged with operating a financial services business without a licence. ASIC said Mr Tolson pleaded guilty to the charge and was convicted and fined $2,500. ASIC alleged that Mr Tolson, a director of several Personalised Finance Solutions (PFS) group companies, encouraged people to invest their superannuation monies in property development projects being undertaken by PFS. In most cases, ASIC said the superannuation funds involved were self-managed, and had been set up for the investors by another PFS company.

Tax Press-Australian Financial Review

'Tax schemes win stay of execution' (Report that the Tax Office is expected to offer a one-year reprieve to non-forestry agribusiness MIS) AFR [p 1], Wed 14.2.2007

'Insurance a benefit, but it depends' (Claim that, with the coming abolition of RBLs, super funds need to be careful about boosting their life insurance cover) AFR [p 29], Wed 14.2.2007

'Costello should rule on buybacks' (Letter to the Editor from S E K Hume QC about off-market share buy-backs - he says tax is the main consideration) AFR [p 52], Wed 14.2.2007

'MIS investors seek more time' (Prediction that non-forestry MIS investors will get transitional arrangements to ease the Government's tax decision) AFR [p 6], Tue 13.2.2007

'Super performance but fees are on the rise' (Claim that red tape and increased advertising costs are eradicating the beneficial effects of choice of super fund) AFR [p 20], Tue 13.2.2007

'Change comes slowly for ATO' (Report that the Tax Office's $450m Change Program has run into difficulties, with performance and resource issues slowing progress) AFR [p 31], Tue 13.2.2007

'ATO warns on super fund risks' (ATO and the Government warn investors about the risks of establishing self-managed super funds) AFR [p 1], Mon 12.2.2007

'PM might act to ease tax scheme pain' (Report that the PM is considering introducing transition arrangements re the Government's planned changes to the tax treatment of non-forestry MIS) AFR [p 1], Mon 12.2.2007

'Plan to lure foreign research spending' (Report that multinationals will be encouraged to conduct R&D under plan to lift restrictions on foreign companies claiming tax deductions on R&D conducted in Australia) AFR [p 1], Mon 12.2.2007

'Farm funds tapped as big dry hits hard' (Report that farmers are starting to draw down on their Farm Management Deposits) AFR [p 5], Mon 12.2.2007

'Possible relief for penalty tax' (Call for threshold to be raised before the superannuation no TFN penalty tax applies) AFR [p 54], Mon 12.2.2007

'Costa rejects end to stamp duty' (Report that NSW Treasurer rejects call for stamp duty exemption on all new houses and apartments across NSW to boost housing industry) AFR [p 57], Mon 12.2.2007

'Small business sceptical of red-tape reforms' (Draft legislation released to standardise thresholds for small business tax concessions from 1 July 2007) AFR [p 7], 10-11 February 2007

'Miserable - tax schemes backlash' (Reaction to the Government's changes to the tax treatment of non-forestry MIS) AFR [p 25], 10-11 February 2007

'Agribusiness threatened with capital drought' (Government is being pressured to provide transitional arrangements for its planned changes to the tax treatment of non-forestry MIS) AFR [p 25], 10-11 February 2007

'Super help for repayments' (Ways to use superannuation to accelerate mortgage payments) AFR [p 39], 10-11 February 2007

'Stay ignorant at your own peril' (Legislation will lift the bar for DIY super fund trustees) AFR [p 40], 10-11 February 2007

'MPs appeal for tax scheme phase-out' (Report that some Government MPs have appealed for a phase-out period for agribusiness schemes in light of Cabinet's decision to end tax breaks) AFR [p 3], Fri 9.2.2007

'Tax agents fight rise of bookkeepers' (Report that tax agents and accountants fear that the Tax Office wants to provide further support for bookkeepers, at the expense of accountants) AFR [p 25], Fri 9.2.2007

'MPs furious over tax scheme decision' (Report of fury over Federal Government's decision to allow the Tax Office to end tax breaks for agricultural schemes without transitional arrangements) AFR [p 1], Thur 8.2.2007

'Dutton ploughs on rocky road' (Further report on Government's decision on agricultural MISs) AFR [p 4], Thur 8.2.2007

'Call for car tax' (According to report tabled in Parliament yesterday, Australia must consider imposing vehicle congestion charges in major cities) AFR [p 11], Thur 8.2.2007

'Investor gains from DIY super flows' (Claim that more investors are deciding to place super money in listed investment companies) AFR [p 21], Thur 8.2.2007

'Agriculture schemes a bit hit and MIS' (Comment that regulatory risk has long cast a shadow over the future of tax-driven agricultural schemes) AFR [p 24], Thur 8.2.2007

'ATO takes axe to money trees' (Report that the Federal Government's decision on non-forestry products has wiped more than $400m from the sector's market capitalisation) AFR [p 25], Thur 8.2.2007

'ATO ruling axes timber group's name change' (Comment on impact of a company's name change and Tax Office's decision re non-forestry MISs on the company's share price) AFR [p 42], Thur 8.2.2007

'Tax rates at heart of fiasco' (Comment on Federal Government's decision on non-forestry products and opinion that punitive marginal tax rates drove demand for tax schemes) AFR [p 62], Thur 8.2.2007

'Sky's the limit for top end's favoured few' (Strategy to use travel as an incentive for high achieving employees and comment on tax effectiveness and FBT) AFR [p 10, Special Report Section], Thur 8.2.2007

The Australian

'PM gives in on tax breaks' (Comment that the Government is considering transitional arrangements following earlier decision to remove tax breaks for non-forestry MIS) AUSTRALIAN [p 2], Wed 14.2.2007

'Retirees shun work and fund reforms' (According to a survey, nearly 70 per cent of retired and semi-retired Australians aged 55 or over are upbeat about their super savings) AUSTRALIAN [p 33], Wed 14.2.2007

'Hogan linked to tax cases in court' (Report of taxpayers' links to Federal Court cases to stop ACC investigators using seized documents as part of Project Wickenby) AUSTRALIAN [p 3], Tue 13.2.2007

'Agri tax lurks under fire' (Claims that profits in non-forestry MIS were being made from tax losses and not from production) AUSTRALIAN [p 19], Tue 13.2.2007

'Coalition brawl on tax breaks' (Report that the Prime Minister will listen to his colleagues' concern re scrapping of tax breaks for non-forestry MIS) AUSTRALIAN [p 12], Mon 12.2.2007

'States see tax revenue in carbon trade' (Report that States' agreement recommends any revenue raised from the auction of carbon credits be given directly to the states) AUSTRALIAN [p 6], 10-11 February 2007

'Tax-break lobby blasts MIS decision' (Comment of lobby efforts to reverse Government's decision on non-forestry MIS) AUSTRALIAN [p 35], 10-11 February 2007

'Brief opportunity to invest in agribusiness schemes' (Further report on Governments' announcement re: non-forestry MIS) AUSTRALIAN [p 35], 10-11 February 2007

'How to put $1m into your super' (List of superannuation strategies for baby boomers to consider doing before 30 June) AUSTRALIAN [p 44], 10-11 February 2007

'Who should take the plunge and make the big contribution' (Report on who should be making a $1m contribution to super before 30 June) AUSTRALIAN [p 44], 10-11 February 2007

'Wheatley's wife in court over tax return' (Report of a taxpayer being charged for allegedly failing to lodge a tax return) AUSTRALIAN [p 3], Fri 9.2.2007

'Qantas deal may hit tax revenue' (Claim that the takeover is debt reliant for funding and could cost $200m in lost tax, because interest payments are tax-deductible and company tax is charged on profits) AUSTRALIAN [p 6], Fri 9.2.2007

'Libs at odd over tax breaks for agribusiness' (Report that some Liberal MPs are calling for ruling on non-forestry MISs to be reversed) AUSTRALIAN [p 6], Fri 9.2.2007

'Instos go short on BHP in tax punt' (Report that a Tax Office technical guideline means investors who want to receive franking credits of the off-market buyback had to buy the stock by yesterday) AUSTRALIAN [p 22], Fri 9.2.2007

'Tax ruling savages farms schemes' (Report that shares in agribusiness fund managers have dropped following the Government's announcement that certain tax concessions were set to be abolished) AUSTRALIAN [p 21], Thur 8.2.2007