The tax impact of roll-over relief, Super Stream deadlines, and the recent Panama Papers

From 1 July 2016, small businesses can transfer their assets to a new business structure without incurring capital gains tax implications.

Effectively, the Tax Laws Amendment (Small Business Restructure Roll-over) Bill 2016 makes a restructure of your assets more feasible due to a roll-over relief.

How the Proposal Works

Michael and Kevin are the only shareholders in New Tech Co. New Tech Co develops mobile software and has accumulated significant assets, including an office space, mobile phones, and mobile testing technology.

Michael and Kevin wish to transfer the premises, equipment, and technology from New Tech Co to a recently settled discretionary trust, the Fresh Tech Trust, and then lease the premises to New Tech Co. The family trust election is made, nominating Kevin as the primary individual controlling the trust, while both Michael and Kevin are members of the family group.

Michael and Kevin can benefit from the roll-over relief because

  • There is no change in the final economic ownership of the premises as a result of the transfer of the asset from New Tech Co to the Fresh Tech Trust
  • The business premises are an active asset of the business carried on by New Tech Co

Call Calibre’s tax accountants to discuss how you can prepare your business to benefit from this roll-over relief.

Make sure you register with Super Stream before the deadlines

Remember to register with a Super Stream compliant platform before 30 June 2016. Super funds are only allowed to accept your employee super payments through a Super Stream compliant platform.

The 30 June 2016 registration deadline applies to small businesses. You are considered to have a small business of you have less than 19 employees or less than $2 million in annual turnover. Once you have registered, you can pay your employees’ superannuation contributions through a compliant platform from 1 July 2016. Compliant platforms include clearing houses, default funds, payroll software, another service provider, or your accountant, bookkeeper, or advisor.

Important points to remember

  • Even if you already pay super contributions using EFT or BPAY you still need to register with Super Stream
  • You must tell your employees what information you need and give them a reasonable period to respond. If you don’t receive it, ask the employee to complete a standard choice form and return it within 28 days
  • If you still don’t receive the information, you may send their contributions to your default fund.
  • Generally an employee’s super contribution is counted as being paid on the date their super fund receives it, not the date a clearing house receives it from you.

Our professional tax accountants can make sure you meet all your superannuation requirements.

The Panama Papers remind offshore entities to clarify their Australian tax obligations

If you operate offshore, it is always important to ensure that you meet your Australian tax obligations. Even if you operate offshore, if your company or entity is a resident of Australia for tax purposes it will be subject to Australian income tax on its worldwide income.

This is all more pertinent in light of the controversy surrounding the Panama Papers. Numerous individuals and organisations are being scrutinised for their links to offshore accounts organised by Mossack Fonseca. Claims of tax evasion have been levelled.

A recent and significant court case demonstrates how easy it is to be caught out.

Court Rules in Tax Evasion Case

In Bywater Investments Limited and ORS v FCT (2015),  the Federal court emphasized that it is important to identify the place from which the company’s/entity’s activities are controlled, rather than, for instance, its place of incorporation, where its activities occur, or the location of the ultimate owner. In this case, even though all the taxpayers were incorporated overseas, they were considered to be Australian tax residents because their place of central management and control was in Sydney. Therefore they were taxable on profits derived from the sale of shares on the ASX.

So if you operate offshore and have any doubt in this matter, you should contact Calibre Advisory Group to clarify your tax status in Australia.

Important Disclaimer: Readers should not act solely on the basis of the material on this page. Items herein are general comments only and do not constitute or convey advice. Legislation and proposals of legislation are also subject to constant change. We therefore recommend that formal advice be sought before acting in any of the areas. This news article is issued as a guide to the readers. Calibre Business Advisory Pty Ltd and its associated entities disclaims any losses that may be incurred as a result of the reader undertaking any action based on this article.