Practical Compliance Issues Facing Tax Advisers Today – 5 program on demand webinar series

Program1: That Distribution Could Incur More Tax Than You Think: Beware 100A

After much anticipation, the ATO has finally released on 23 February 2022 its draft ruling on section 100A, together with a Taxpayer Alert, a draft Practical Compliance Guideline, and a Draft Determination—the “Taxation Quad”! With audit activity on the rise and, in light of the Federal Court’s recent landmark decision on sec. 100A, it has never been more important for advisers to be across the situations where the ATO may consider that a reimbursement agreement exists. This session covers:

• Unpacking Draft Taxation Ruling TR 2022/D1, Taxpayer Alert TA 2022/1, Draft Practical Compliance Guideline PCG 2022/D1 (and Draft Tax Determination TD 2022/D1)
• What is a “reimbursement agreement” and how far can sec. 100A go?
• Exception for “ordinary family or commercial dealings”
• Recent clarification on meaning of OFOCDs in Guardian AIT Pty Ltd v Cmr of Taxation
• What are the implications if sec. 100A is triggered?
• How many years can the ATO amend assessments?
• Deep dive into TR 2022/D1, TA 2022/1 and PCG 2022/D1, with focus on:
  • ATO’s detailed examples
  • White Zone, Green Zone, Blue Zone and Red Zone arrangements
• Can UPEs be in the firing line that have arisen from:
  • distributions to adult children?
  • distributions to loss entities?
• Are there any strategies to tidy up “at risk” loans (e.g. gift, assign, forgive or set off)—should trust distributions just be paid?
• Interaction of sec. 100A, Div. 7A and Pt IVA

Program 2: Division 7A: There’s More to It than Meets the Eye

The ATO is stepping up its audit activity and from all accounts has the division 7A interposed entity rules firmly in its sights. Practitioners may be surprised at the type of scenarios these rules encompass. This session explores the workings of this piece of legislation, including:

• Section 109T ITAA 1936 explained
• What is the “reasonable person” test?
• Factors the Commissioner takes into account when applying section 109T
• What if the payment or loan from a private company to interposed entity is an ordinary commercial transaction? (TD 2018/13)
• Calculating the amount of a deemed dividend under section 109T
• A private company guarantee is called on to pay a Bank loan of a defaulting shareholder:
  • what are the tax implications?
  • are there any exclusions?
• How does the ‘no potential deemed dividend’ rule for company to company payments or loans under section 109K interact with 109T?
• Distributable surplus rules in section 109Y and negative net assets in the company – when can the distributable surplus formula give some unusual results?
• Practical examples and case studies

Program 3: Looking Beyond the Losses and Franking Credits: Family Trust and Interposed Entity Elections

Whilst the family trust election (FTE) can be a useful tool to ensure the benefits of trust tax losses and franking credits are maximized, there are other consequences that without proper planning, can lead to unforeseen tax consequences. This session sheds some light on these issues, including:

• The extended definition of ‘distribution’ for family trust distribution tax purposes (FTDT)
• When loans to parties outside the family group can lead to FTDT
• Issues to consider when a trust with an FTE moves assets by way of sale or restructure
• Future consequences of making an FTE and interposed entity election (IEE)
• Can an FTE and IEE be revoked or varied
• ATO guidance on strategies which may reverse FTDT subject to amendment periods (QC 48752)
• The calculation of FTDT when it applies
• Case studies

Program 4: Allocation of Professional Firm Profits: The Commissioner Has His Eye on You

The ATO’s compliance approach to the allocation of professional firm profits (PCG 2021/4) has now been finalized and will apply from 1 July 2022. Now is the time for practitioners get up to speed with this, not only for their professional clientele, but also for their own tax affairs. This session will assist in drilling down on the requirements, including:

• Who the guidelines apply to
• Indicators that would result in passing:
  • Gateway 1
  • Gateway 2
• What are the “high risk” features where the ATO would expect the professional to engage with them?
• How to calculate your score to risk assess your arrangement
• The extent of ATO engagement you can expect based on your risk assessment
• The traffic light system that guides you as to the likelihood of follow up ATO interaction
• When you can continue to rely on the ATO’s previous guidelines which are now suspended?
• Case studies

Program 5: An Exception to Every Rule: Capital Gains and Non-Resident Beneficiaries

It could be said that a general rule is that non-residents are not taxed on capital gains that relate to non-taxable Australian property. However, the Greensill case throws up an exception when that gain flows to the non-resident from a resident discretionary trust. This session explains the key issues, including:

• Capital gains under Div. 855 ITAA 1997 in relation to:
  • fixed trusts
  • discretionary trusts
• Is the source concept relevant (TD 2019/D7)?
• What situations do not attract CGT event E5 when a beneficiary becomes absolutely entitled to a CGT asset of a trust?
• Are double tax agreements relevant in these scenarios?
• 2021-22 federal budget proposal for residency rules - what is the impact?
• What situation is the trustee assessed under sec. 98 ITAA 1936?
• A review of Peter Greensill Family Co Pty Ltd (trustee) v Commissioner of Taxation [2020] FCA 559
• Practical examples