Archive for year: 2017

From the 1 July 2017, all transactions involving the disposal of real property with a market value of or over $750,000, will need the consideration of whether a clearance certificate is required.

Where a foreign resident disposes of Australian real property that has a market value of and over $750,000, the purchaser is required to withhold 12.5% of the purchase price and forward it to the ATO, unless the seller provides a variation. However, Australian resident vendors who dispose of Australian real property with a market value of $750,000 or above will need to apply for a clearance certificate from the ATO to ensure amounts are not withheld from their sale proceeds.

Bill Shorten, The Leader of the Opposition, has announced that if Labor Government were to be elected, they will introduce a standard minimum 30% tax rate for discretionary trust distributions to 18 years and over.

The ALP recognises that many individuals and businesses use trusts for legitimate reasons, for instances business succession and asset protection, it is targeting those that use it purely for tax minimisation.

Labor’s policy will only apply to discretionary trusts, so other trusts – such as special disability trusts, deceased estates and fixed trusts – will not be affected by this change.

Labor’s policy will also not apply to farm trusts and charitable trusts, and other exemptions will apply, such as for people with disability (the Commissioner of Taxation will be given discretionary powers to manage this).

In the 2017/18 Federal Budget handed down on 9 May 2017, the Federal Government announced that it intended to extend the ability of Small Business Entity (or ‘SBE’) taxpayers to claim an outright deduction for depreciating assets costing less than $20,000 until 30 June 2018.  This Budget Night announcement has now been passed into law.

Prior to the relevant legislation being passed into law, the outright deduction threshold for SBEs in relation to depreciating assets was scheduled to revert back to $1,000 as of 1 July 2017.  Now that this change has become law, the threshold is scheduled to revert back to $1,000 as of 1 July 2018.

To qualify for an immediate deduction for depreciating assets purchased by an SBE taxpayer costing less than $20,000, the asset needs to be first used or installed ready for use on or before 30 June 2018.

Due to the introduction of the new ‘transfer balance cap’ from 1st July, 2017, super fund members with pension balances (in ‘retirement phase’) exceeding $1.6 million will need to partially commute one or more of their pensions to avoid the imposition of excess transfer balance tax.

In addition, members in receipt of a transition to retirement income stream (‘TRIS’) will lose the pension exemption from 1st July, 2017.

This means that the future disposal of any assets currently supporting such pensions will potentially generate a higher taxable capital gain (eve though the disposal of the asset prior to 1st July, 2017 could be fully or partially tax-free, depending on whether the asset is a segregated or unsegregated asset).

Fortunately, to avoid funds selling off assets before 1st July, transitional provisions have been introduced to allow super funds to apply CGT relief in certain situations.

Although the choice to apply the CGT relief can be made up until the day the super fund is required to lodge its 2017 tax return, in many cases, action must be taken on or before 30th June, 2017 for the fund to even be eligible to make that choice. In particular, funds calculating exempt pension income using the segregated assets method will generally need at least a partial commutation of the pension.

Please contact our office if you need any information regarding the super reforms, including what needs to be done to obtain CGT relief (if necessary), whether a TRIS should be commuted to accumulation phase or continued into the 2018 year, and how the new contribution rules will affect contributions in both the current and future years.