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This page is used by our firm to highlight important breaking tax news that affects taxpayers and advisors and will require their immediate attention .

TAX AGENTS & THE PROVISION OF LEGAL SERVICES

For some time now we have been concerned that tax agents may be at risk when they provide certain services to their clients.  Unresolved concerns exist where tax agents do any of the following for their clients:-

  • draft trust distribution resolutions or minutes;
  • draft or use Division 7A loan agreements;
  • draft, use or establish trust deeds; or
  • provide advice on State taxes.

There may be other services which tax agents provide which may put them at risk besides those listed.  If you do any of these things and you are not also a legal practitioner, you should read the attached TAX-ACTION as you may be taking risks and breaching laws without realising it!

TAX-ACTION August 2012

We are not the only tax professional who has these concerns.  Those interested should also look at the feature article prepared by Chris Wallis, Barrister – Victoria Bar (Greens List) published in Taxation in Australia (Volume 45(10)) which provides a far more technical analysis of this issue and which is attached (with permission):-

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NEW TRUST STREAMING RULES EFFECTIVE FROM 1ST JULY, 2010

New rules have been rushed through parliament in relation to streaming of capital gains and franked dividends out of trusts to beneficiaries which apply to the year ended 30th June, 2011 and to subsequent years.  The rules are extremely complex and trustees and their advisors need to exercise significant care where they wish to stream these items to specific beneficiaries.  Capital gains may be inadvertently streamed where capital advancements occur during the year of the capital gain or within 2 months after the year has ended.  Extreme care is required as a result.  We can assist in providing advice on streaming of these amounts - please contact us by email if assistance is required.

DIVISION 7A AND UNPAID PRESENT ENTITLEMENTS OWED TO COMPANIES

The ATO has changed its treatment of unpaid present entitlements ("UPEs") owed to companies for distributions made after 15th December, 2009 and now argues that they will be converted into loans and will trigger Division 7A as a result.  Full details of their views can be obtained by looking at TR 2010/3 and PS LA 2010/4.  Our recent publication (attached to the link below) on this can be downloaded and sets out the choices facing corporate beneficiaries as a result.

Tax-Action November 2010

 

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