Managing Tax Compliance Risks During Uncertain Times - 5 program video webinar series

Market Value: Often Used, Rarely Understood

The concept of market value is fundamental to several areas of the tax law. Unfortunately, it is not adequately defined anywhere in the tax rules. Moreover, the tax effectiveness of particular schemes or arrangements will often be dependent on the market value of particular assets. This session examines this often misunderstood concept and provides practitioners with some clarity. The following areas are discussed:

• What is market value? Unpacking the key issues
• Analysis of case law, ATO guidelines and rulings
• Analysis of the legislative provisions which rely on the concept of market value (e.g. NAV test, market value substitution rules)
• Market value considerations in the post COVID-19 economy
• Practical scenarios (e.g. when is a professional valuation necessary?)

Division 7A: Practical Strategies in an Uncertain Landscape

The Government announcement that the proposed start date of the changes to Division 7A would be further deferred signals that no change to the rules is likely in the near future. In the interim, advisers are still required to comply with the existing rules. This session examines some of the areas of the existing law which are still causing concern, the recent rulings and announcements issued by the ATO, and the strategies you should be implementing now. It covers:

• Unpacking the interposed entity rules (section 109T of the ITAA 1936, TD 2018/13)
• UPEs and corporate beneficiaries (Subdivision EA)
• Division 7A and COVID-19 (Deferral of loan repayments for 12 months under section 109RD - ATO Guide QC 62915)
• Calculating distributable surplus (section 109Y)
• Interaction of Division 7A and other provisions of the tax law (e.g. Div 7A and the small business restructure rollover)
• Dealing with UPEs and subtrusts

Availability of Tax Losses in a Downturn Economy

There has always been widespread confusion amongst clients and advisers in relation to the application of the loss recoupment rules for companies and trusts. As the economy emerges from the devastation of the COVID-19 pandemic some taxpayers may now be in the position to recoup losses that they have previously accrued. This session seeks to examine the more complex areas of the loss recoupment rules, along with recent changes brought about by the 2020 Federal Budget, including:

• Loss carry back rules:
  • how it works
  • to what entities does it apply?
  • to which years will it apply?
  • impact of tax refund on franking account
  • what if the previous years’ profits have been paid out?
• Analysis of the “new” similar business test
• Practical scenarios (e.g. do I satisfy the similar business test where I have shut down parts of my business in response to lock-down restrictions)
• Family trust elections - should I make a family trust or interposed entity election?
• Interaction of income injection test and family or interposed entity elections

Fruit or Tree? - Recent Examinations of the Capital/Revenue Distinction

The capital/revenue distinction is a concept that has caused confusion in the courts and amongst tax practitioners for decades. Recent cases have added further uncertainty rather than provided clarity. This session examines some of the recent cases in detail and considers their practical implications. It covers:

• Brief overview of the capital/revenue concept
• Analysis of recent cases (e.g. Origin Energy v FCT, Sharpcan v FCT, Healius v FCT, Mussali v FCT [2020] FCA 544, Greig v FCT)
• Analysis of recent rulings (e.g. TR 2019/D6)
• Practical implications for various industries/taxpayers (e.g. FCT v Greig - share trading, Healius v FCT - medical and allied health practitioners, FCT v Sharpcan and Mussalli v FCT - licensing and franchise arrangements)

Debt Forgiveness and Restructuring - The Debt is Forgiven but is the “Taxman” Appeased?

The current economic environment has resulted in many businesses having to restructure their financing arrangements or waive debt obligations. While the arrangements entered into between debtors and creditors may be commercially prudent, the parties involved seldom consider the tax consequences that may arise from such dealings. This session aims to inform practitioners about the tax consequences of forgiving or restructuring debt. It covers:

• What is a debt forgiveness?
• Analysis of the commercial debt forgiveness provisions and the debt forgiveness provisions in Division 7A (e.g. Div 7A consequences of guarantee or debt parking arrangements)
• CGT implications of forgiving or restructuring debts
• Analysis of the bad debt provisions
• What are the tax consequences of writing-off an unpaid present entitlement?
• Practical case studies (e.g. tax issues for forgiving debit and credit loans)