- Keeping up to date on the latest tax developments will provide a competitive edge
- Our tax trainers provide advice on considerations ahead of Federal Budget and end of financial year
- Possible changes to income tax, the small business asset write-off and pertinent court cases
Developing leading tax planning strategies that result in maximised taxation outcomes will set practitioners apart with the Federal Budget and the end of financial year on the horizon. In an increasingly competitive and fast-changing tax environment, practitioners must keep a firm finger on the pulse of every policy and legislative development in order to maintain a competitive advantage.
Our dedicated team of tax trainers is responsible for being at the forefront of every tax change and through our comprehensive range of education offerings, they equip our members with leading insights and support their roles as trusted advisors in the community.
Our team provides insights into the important topics practitioners should keep in mind to ensure they are providing confident advice to clients.
Tristan Webb, Senior Tax Trainer
Tax cuts, but at what income level?
Tristan believes part of the rationale for last year’s corporate tax cuts was international competitiveness and that if the same applies to individual tax rates, the top income bracket tax rates are likely to be cut. “They are high in comparison to some of our major trading partners and they would hit the budget deficit less than cutting rates further down the income scale,” he says. However, with an election looming and the government still smarting over the headway the opposition has made with the idea that the current government favours the big end of town, “we might see a small cut to the tax rate on those with incomes above $37,001.”
Renovate before Budget night
Last year the government was successful in quietly reducing the number of tax concessions available to landlords in efforts to slowly reduce the Budget deficit. Tristan believes we may see further small changes in this area without the big bang
proposals of the opposition such as axing of negative gearing or the 50% CGT discount. “If you are thinking about putting in a new kitchen or making other structural renovations to a rental property, do it before Budget night!”
James McPhedran, Senior Tax and Superannuation Trainer
Small business asset write-off
The $20,000 small business entities instant asset write-off is due to end 30 June 2018 and for some businesses – that is, those with turnover between $2 million and $10 million – this has been the only the second year they were eligible to make this claim. James tells us that despite rumours of an extension to this concession, “practitioners should ensure clients not only pay for and order eligible assets but also have these assets installed ready for use by 30 June 2018.”
Super contribution rules
In among all the changes to super from 1 July 2017, the removal of the 10% test for personal super contributions allows many more taxpayers the opportunity to top up their super with a deductible contribution in the lead up to 30 June 2018. However, James warns that “care should be taken to ensure all the other requirements for deductibility – for example, age limits and reporting to the trustee – are met and the concessional cap of $25000 is not breached,” he says.
Bruce Thomas, Senior Tax Trainer
Watch work-related expenses
As the ATO shifts its focus to individuals this financial year, Bruce says practitioners and clients should keep a watchful eye on what is lodged as ‘other’ work-related expenses, which can include union fees, overtime meals, mobile and phone internet, and home office. “The ATO are expending considerable effort in auditing large claims but remember that even if clients claim below the reasonable amount, they may still be called on to prove they spent that amount on relevant items,” he says.
Bringing forward personal deductions
With the government considering individual tax cuts in the 2018 Budget, this means a possible permanent tax difference opening up next year compared with this year. Bruce advises that individuals may want to consider bringing forward personal tax deductions into the 2017/8 income year and that practitioners should make clients aware of this potential opportunity. “Such expenses can include prepaid interest relating to income generating assets – for example, rental properties and share portfolios – some insurance premiums and licence fees payable by sole traders,” he says.
Peter McGinty, Senior Tax Trainer
Peter encourages practitioners to follow the progress on two current court cases as the end of financial year looms. The outcomes of these may have an important impact on the advice practitioners pass on to clients at this time.
Lewski v Commissioner of Taxation  FCAFC 145
This case is important for drafting resolutions to gift the distributable income of a trust to beneficiaries. “Lewski’s case is an illustration of the importance of making sure that the distribution resolution follows the distribution procedures, if any, specified in the trust and that the words used to draft the resolution are in sync with the terms of the trust deed; especially the trust’s definition of distributable income,” says Peter.
Sharpcan Pty Ltd and FCT  AATA 2948
Although this is an AAT decision, it is expected this case will be appealed directly to the full Federal Court. If a member has clients that own licences that (a) are of value and (b) can be on-sold, the Sharpcan case may become an important consideration in the tax planning process. “A client may be considering buying (or selling) licences that satisfy these two features before 30 June; for example, a licence to operate gaming machines or a tow truck licence. Prior to executing such contracts, your client should consider getting specialist tax advice on the potential implications of the Sharpcan case,” advises Peter.
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