Tax Bites

Tax Bites are regular, short communications containing a snapshot of various common tax issues of interest to professional advisers. Here are some of our previous Tax Bites. Should you wish to subscribe to receive Tax Bites via e-mail, please click on the "Subscribe to Tax Bites" button to the right.

Formulaic trust resolutions

15th April 2014

We often try to take full advantage of a discretionary trust’s ability to stream income. This includes using “formulaic” trust resolutions, where a formula is used to achi... read more

Legal fees, cost orders and assessable recoupments

18th March 2014

Whether or not legal fees incurred by a taxpayer are deductible isn’t always straightforward. Assuming they were deductible, what happens when the Courts award costs in favour of the ... read more

Business acquisitions – Benefits of leaving trade debts behind

25th February 2014

Sometimes when taxpayers acquire business assets, they give little thought as to whether or not to acquire trade debts (which is different to how much to pay for the debts). It might be pre... read more

Don’t rush a member’s voluntary liquidation

21st January 2014

Sometimes a group of shareholders just want to liquidate a company, take their share of the company’s underlying assets, and go their separate ways.  Care needs to be taken because in ... read more
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About Tax Bites

Tax Bites are general in nature and are not a substitute for specific advice. They are the opinion of Tax Advisory Specialists, and the ATO or the Courts may take a different view. They are not updated for changes in the law or the interpretation of the law since publication.

 

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Latest Tax Bite

ATO’s Private Groups Justified Trust program

Tax Advisory Specialists recently attended a workshop with Deputy Commissioner Tim Dyce and Assistance Commissioner Gregory Dick on the ATO’s Private Groups Justified Trust program.
 
In broad terms, Justified Trust is an approach by the ATO to build and maintain community confidence that taxpayers are paying the right amount of tax.
 
The Justified Trust program is aimed towards large private groups, market leaders and groups of specific interest.  However, the principles of Justified Trust are also applied to medium sized and emerging private groups (including where net wealth is as little as $5 million).
 
So the ATO’s approach to Justified Trust will most likely apply in some way or another to your larger clients.
 
For justified trust to be established across a private group, the following four elements need to be met:
  1. Effective tax governance demonstrated;
  2. Risks flagged to market are not present or appropriately mitigated;
  3. Tax outcomes from new and significant transactions are explained; and
  4. Differences in accounting and tax results are explained.
Effective tax governance is a critical element.  It comprises the following principles:
  1. Accountable management & oversight;
  2. Recognise tax risks;
  3. Seek advice;
  4. Integrity in reporting;
  5. Professional and productive working relationship;
  6. Timely lodgement and payments; and
  7. Ethical and responsive behaviour.
It is worth thinking about how your private group clients would rate against the above criteria.
 
And if you need to seek specialist tax advice, remember we are here to help.

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