Question:
Tax Office tells valuers how to do their job
Answer:
Recent changes are outlined below:
July 1, 2022
- Loss carry back for eligible companies extended to cover 2023 income year.
- Professional firm profits diverted to the professional's spouse or other associates to be reviewed under new Tax Office guidance.
- Corporate collective investment vehicle legislative regime introduced.
- Temporary full expensing of depreciating assets extended to include 2023 income year.
- Depreciable assets of a company joining a tax consolidation group have tax costs setting rules modified for assets depreciated under temporary full expensing rules.
December 9, 2021
- Reduced Pandemic leave disaster payment of $750 per week made available through to 30 June 2022.
August 5, 2021
- COVID-19 Disaster Payments are non-assessable non-exempt income in 2021 income year and later. Payments phasing out as vaccination rates increase.
July 1, 2021
- New Investment Engagement Service launched for businesses planning significant new investments in Australia.
- Tax Office small business independent review service made permanent for businesses with turnover < $10m, for income tax, GST, exercise, luxury car tax, wine equalisation tax and fuel tax credits. Requested before amended assessment issued.
- Small business income tax offset for individuals increased to provide a reduction of 16% for a tax payable up to $1,000.
- Self-managed superannuation funds can now have six members, increased from four members previously.
July 1, 2021
- Some COVID -19 state and territory business grants received by small and medium enterprises are non-assessable, non-exempt income for 2021 and 2022 income years.
- Certain state, territory and local government financial support for individuals and businesses suffering COVID-19 impacts made exempt where businesses have turnover less than $50 million and only in eligible programs.
March 31, 2021
- JobKeeper payments scheme ended.
October 5, 2020
- Boosting apprenticeship commencements subsidy (up to 50% of apprentice's wages) is assessable income.
June 4, 2020
- Homebuilder grant for new home or substantial renovation construction is not subject to income tax.
April 1, 2020
- COVID-19 cash flow boost payments are not subject to income tax
Valuers should check their calculations and supporting evidence particularly for profit and risk ratios, market interest rates, comparable sales and development costs on real property valuations according to a new Tax Office Issues Paper released in January.
Valuations are used extensively in tax for CGT and GST purposes. There are recent cases where disputes over valuations have lead to taxpayers being defeated in the Tribunal on small business CGT concession matters.
The Tax Office says it has consulted the Australian Property Institute and the Australian Valuation Office in drafting the paper.
Where a property transaction is involved (particularly to a non-arm’s length party), taxpayers should ensure that the valuer produces a quality report.
The Tax Office says that valuations should ensure:
+ Profit and risk ratios reflect realistic profit expectations and risk factors;
+ Interest rates adopted are based on commercially available or Reserve Bank rates;
+ Comparable sales used are actually comparable and the commentary should indicate why; and
+ All relevant development costs should be included in the valuation.Further key issues include:
+ Selling and completion time frames;
+ Potential site contamination;+
Pre-sale values; and
+ Post-valuation knowledge.
www.ato.gov.au/content/00304814.htm, WTB 2012/58
