News & Tax Insights

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

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In December 2017, we published this article and video: government-tries-fix-glitch-company-tax-cut-make-things-worse Those publications were in response to a Government Bill to change the way companies could access the lower corporate tax rate.  That bill has now become law and has made the determination of the tax position for a company much more complicated. With the “bright line” test in this new law, companies may fluctuate from being a lower tax “base rate entity” one year and subject to the full 30% corporate tax rate the next year and then, subsequently revert.  A change would also trigger for the maximum franking for dividends from…

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…

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%…

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