News & Tax Insights

Tax credits for junior minerals explorers

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Investors in junior minerals explorers will benefit from a new tax credit system with Government legislation now under consideration in the Senate. The new rules replace the Exploration Development Incentive and allow junior explorers to sacrifice their carry forward tax losses and distribute a refundable tax credit to new investors. This article will be of interest to mining professionals generally, leadership of junior minerals explorers and investors interested in that sector and that are seeking tax effective securities for their portfolio. You can use this information to keep up to date, monitor the progress of the legislation, optimise the management…

Big tax breaks for investors in new innovative companies

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Sophisticated investors in early stage innovative companies can receive a tax credit of 20% of their investment, up to a limit of $200,000, and subsequent sale of the company shares will be capital gains tax free provided they are held for 12 months to ten years. There are also concessional capital gains tax outcomes if the shares are held for longer than ten years. Smaller investors that don’t meet the “sophisticated investor” test are eligible for the tax incentives only if their investment in early stage innovative companies is $50,000 or less, for any particular tax year. Question: What are…

New rules to help directors save their company

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The Government changed the Corporations Act in September 2017 to provide, so called, ‘safe harbour’ rules to help directors rescue their company if they are concerned that it can’t or may not be able to pay its debts when they fall due. The new rules soften the subsisting insolvent trading regime which sheets home to directors the personal liability for the debts a company incurs whilst trading at a time that it is insolvent and place a responsibility on directors to put their company into administration or liquidation. Personal responsibility for a company’s insolvent trading debts applies: to someone who…

Government tries to fix the glitch in company tax cut. Does it make things worse?

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Earlier in 2017, the Government introduced legislation to cut all company tax rates progressively from 30% to 25%, over the next decade.  They did not get the full suite of tax cuts through the Senate but the Parliament did pass amended legislation providing tax cuts for smaller companies conducting a business.  Unfortunately, there was a glitch in how eligible companies were determined.  The Government has now introduced amending legislation to the Parliament to fix that glitch but there may be problems remaining. Under the current law, companies that operate a business have their tax rate cut to 27.5% where: Aggregated…

Warning – Your home sale may be subject to big tax if you go overseas

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Treasury has released draft legislation to impose capital gains tax on the sale of your Australian home if you have become non-resident, punishing ordinary Australians that need to travel internationally for work. It follows an announcement made in the May 2017 Budget. If you sell your home, broadly, there is an exemption from tax on the gain you make during the period that you use the property as your main residence - the main residence exemption. Further, if you are away from your home the main residence exemption is extended indefinitely or if you rent your house out, you can…

Family trusts allow the rich to dodge tax, hurting Australia’s poor. Not!

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Family trusts are used extensively in Australia, much more so than other countries. Why is that? Is it so the Australia’s evil rich folk can dodge tax forcing the poor to pay more? We don’t believe so. Family trusts are used to solve real financial problems in an efficient way. They offer several distinct advantages including: Providing corporate limited liability by using a company as trustee protecting assets from malicious litigation Protecting family assets from children’s gold digging partners Succession planning to allow business and other assets to seamlessly transfer from one spouse or generation to another Providing flow through…

FIFO workers now have superannuation opportunity

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A big superannuation disadvantage existed for fly-in fly-out resources professionals working overseas for a foreign company.  The foreign company is not obliged and probably not able to make superannuation contributions and the professional was not able to make deductible personal contributions. The problem for an overseas FIFO professional was this: She is likely a resident of Australia for tax purposes The foreign employer can’t or won’t make superannuation contributions The mining professional would like to get tax deductions for personal contributions The requirement was, in effect, to be ‘self-employed’ and satisfy the 10% test That test requires less than 10%…

Who we are

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The Lovetts team are focused on getting the best outcomes for our clients. For over 50 years, Lovetts has been helping businesses solve complex problems and take advantage of lucrative opportunities. Our team also works with individuals who require personal accounting advice to manage their portfolio of wealth affairs. By offering specialised and tailored services, we can solve almost all financial situations. Our portfolio of work spans many industries including; mining services, tourism, property development, dental, rural and complex international tax business matters. We have a dedicated team of specialists in our Brisbane office who are ready to take on…

Foreign resident or Australian overseas? Banks and governments automatically sharing your information around the world

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Parliament has just passed legislation that requires local banks, on an annual basis, to provide detailed information to the Tax Office who will then automatically share that information with the relevant foreign tax authority where an Australian bank account is held by a foreigner or a company, trust or other entity that is controlled by a foreigner.  The purpose of the new legislation is a global crackdown on people holding funds offshore and not declaring income to their home country tax authority. It is a multi-way, reciprocal arrangement with many national governments planning on gathering and cross-sharing information under the…

New foreign investors beware: Co-operate with the Tax Office or be forced to sell-up

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Foreign companies investing in Australia will have new obligations to co-operate with the Tax Office, and if they don’t keep the tax man happy they could face prosecution, fines and potentially be forced to divest the asset, according to Treasurer Morrison’s media release on 22 February. Significant foreign investment into Australia requires approval by the Foreign Investment Review Board (FIRB) and approvals can have conditions applied.  The investor is required to comply with those conditions or face sanctions.  The approval requirements depend on a number of factors including: Whether the investor is a foreign Government; The type of investment (agricultural,…

Initial Repairs

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Question: I have just bought a house that I intend to rent out to a tenant.  Before I do that, there are repairs needed including carpentry repairs to the deck at the back of the house, painting, replacement of the carpet and replacement of the dishwasher.  Can I get a deduction for these repairs? Answer: Unfortunately, no you can’t get an immediate deduction for those items. However, you can claim depreciation for the new carpet and new dishwasher and you can claim the capital works allowance for carpentry repairs to the deck and also the painting. Explanation:  As you have just bought the property,…

Renting former home out, repairs costs

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Question:  Last year, we moved out of our home to relocate and signed an agency agreement and got the real estate agent to find tenants and set up a rental arrangement for the house.  There are some repairs that really should be done to the house including carpentry repairs to the deck at the back of the house, replacement of the dishwasher, replacement of the carpet and painting of the exterior of the house.  Can I get a deduction for the money spent on those items? Answer:  For the money spent on carpentry repairs to the back deck and painting, you can get an immediate…

Bank information shared with USA Internal Revenue Service

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Under the US Foreign Account Tax Compliance Act (known as FATCA) Australian banks have provided details of over 30,000 customer accounts worth over $5 billion to the US Internal Revenue Service (IRS – the US equivalent of our Tax Office). These are accounts of US citizens and tax residents with Australian bank accounts.  There is a wave of transparency measures being implemented world-wide.  By 2017 close to 100 countries will be sharing non-resident data under the OECD Common Reporting Standard. The Australian Tax Office will receive data from the IRS about Australians with financial accounts in the US and will…

Australian Securities and Investments Commission – is it up to the task?

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Log on to ASIC’s website – www.asic.gov.au and you can obtain information about how to make a complaint or report misconduct.  This is divided into different categories, many of which must be dealt with by other organisations.  But those matters which are within its responsibilities include troubles with investments, companies which have gone into liquidation or administration, shares, insider trading and operation of companies.  It also carries regulatory responsibility for company auditors and financial planners.  It has a very broad set of responsibilities. Will your complaint or problem be dealt with expeditiously?  Probably not.  The word around the traps is that ASIC doesn’t have the manpower to…

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