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Corporate Tax Transparency Code

Sounding Board

Ideas for better tax regulation

  • Incorrect CGT small business entity requirement in 328-430

    There appears to be a drafting error in subsection 328-430(1)(d)(ii) dealing with small business entity ['SBE'] rollovers. A SBE is defined in section 328-110 as an entity that has an aggregated turnover of less than $10 million, accordingly it should be possible to roll an asset into a SBE using Subdivision 328-G provided the SBE is either an affiliate of or connected with the transferor (assuming the other requirements in section 328-430 are met). The current wording of subsection 328-430(1)(d)(ii) however, requires the asset transferred to meet the requirements of subsection 152-10(1A) - which means that the transferee has to be a "CGT small business entity" (rather than an ordinary SBE). A "CGT small business entity" is defined in subsection 152-10(1AA) as an entity that would be a SBE under section 328-110 if the aggregated turnover test was done using a $2 million threshold - this much lower threshold means that many taxpayers will not be able to obtain relief under section 328-430 despite transferring assets to entites that are SBEs. This drafting error / gremlin can be corrected by amending subsection 328-430(1)(d)(ii) to add words like "if the references to 'CGT small business entity' in that subsection were instead references to a small business entity."

  • 152-70 - How can a Trustee hold a legal and equitable interest?

    There is an apparent disconnect between the language of Item 1 in section 152-70, which requires an entity to hold a legal and equitable interest in the shares in a company, and Example 1.2 in the Explanatory Memorandum to the Tax Laws Amendment (2006 Measures No. 7) Bill 2006 - which introduced this section. While Example 1.2 evidences a clear policy intention that a Trust (via its Trustee) can hold a direct small business participation percentage in a company, the actual language of Item 1 in section 152-70 requires the Trustee to hold a legal and equitable interest in the shares in a company - which the Trustee would not seem able to do, as it holds the shares on behalf of the beneficaries. It would be preferable if this issue could be put beyond doubt by amending subsection 152-70(2) by adding (say) the following words "and regard a Trustee as holding both the legal and equitable interests in shares in the company."

  • FBT and Cars - Logbook applies to a car (not employee)

    I can not understand why a logbook is assigned to a car, rather than to an employee. Eg Salesperson uses car for 6mths 90% business, then admin person uses same car for 6mths at 10% business. Why do we not simply address the provision of each benefit to each employee based on the actual %? By having to apportion/average the % it is unfair to the salesperson/inappropriate for admin person. Then it gets more crazy, as the salesperson/admin does not mind as there will be no RFBT as it is now shared/pooled car. In contrast if they drove it the whole year, there would be RBFT. There is great opportunity to rort the system - i.e. share the car for one day in the FBT year and then no RFBT? (this affects Centrelink, CSA etc etc). Both these issues should be addressed - i.e. FBT should be calculated on benefits provided to the employee.

Meetings & events

  • 8 Aug 2019 - Adelaide
  • 12 Sep 2019 - Sydney
  • 17 Oct 2019 - Perth