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2008 Victorian State Convention

Published on 09 Oct 2008 | Took place at Novotel Forest Resort, Creswick, VIC

The 47th Victorian State Convention inlcuded sessions with a strong technical focus. Where appropriate practical applications and examples were given. Sessions included: Tax Litigation and Process; Trust Issues; Mergers Acquisitions and Restructures; Estate Planning; International Tax; GST; Superannuation; State Taxes; Transfer Pricing; Insolvency; Operation Wickenby; and Managed Funds and Tax Issues in a Bear Market.

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Individual sessions

The litigation lottery

Author(s):  David BLOOM

This paper considers the role of an appellate court and the modern approach to the construction of litigation. Topics covered include:

  • is tax litigation a lottery?
  • tax cases - complexity of tax legislation as well as other areas of law
  • the roles and processes of the Federal Court and High Court
  • precedent and the Tax Commissioner
  • interpreting a Tax Act - Literal vs Purposive interpretation
  • what the Courts should not do.
Materials from this session:

Mergers, acquisitions and restructures

Author(s):  Toby EGGLESTON

The ATO is regularly issuing class rulings on the taxation impact of restructures resulting from corporate activity. Some of the ATO positions are favourable to taxpayers and some are not. In many instances the reasoning behind the ATO position is unclear or called into question by practitioners. Now is the opportunity to hear first hand some of the logic and reasoning of the ATO from one of its chief tax counsels intricately involved in developing the rulings. The ATO position is illustrated through a series of examples. This paper analyses:

  • capital gains tax issues
  • scrip for scrip rollover
  • previous rulings of the ATO.
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Modern day trust structures

Author(s):  Daniel SMEDLEY

Note: This paper was delivered at both the Victorian and Tasmanian Conventions in 2008 (9-11 October and 17-18 October respectively).

This paper considers some of the fundamental concepts underlying the trust relationship and considers how they relate to the modern day trust structure. Issues addressed include:

  • is the concept of the substratum of a trust still relevant?
  • mere, trust, general, special, hybrid and dispositive powers - what are they and why is the distinction important?
  • consideration of the fiduciary obligation of trustees
  • beneficiaries of a discretionary trust as discretionary objects - significance?
  • an overview of income for the purposes of Division 6 and its application for a modern trust structure.
Materials from this session:

Partnerships of trusts vs unit trusts

Author(s):  Jeffrey CHANG

The partnership of trusts became a popular alternative to the unit trust as a middle market investment structure post-Ralph. Recent reforms have sought to level the playing field, but how successful have they been? This paper covers the pros and cons of the two structures including:

  • impact of the new "small business entity" rules
  • CGT upon entry and exit
  • availability of tax losses
  • stamp duty when used to hold land
  • compatibility with employee incentive schemes.
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Trust me - I don’t own anything!

Author(s):  Michael LHUEDE

It has been two years since changes to the Bankruptcy Act caused a re-appraisal of asset protection strategies and the harbingers prophesised the end of many basic principles underlying effective asset structuring for clients. Yet, since then, and cases such as Cummins and Richstar, little appears to have changed in fact. This paper considers:

  • the implications for trust structures arising from the 2006 Bankruptcy Act amendments
  • an analysis of recent cases where the courts have been prepared to go behind trust and asset protection structures
  • the fallout from the Cummins and Richstar cases
  • the implications of the Family Law and Bankruptcy Act Amendments for asset protection strategies.
Materials from this session:

Taxation of managed investment funds – Where to?

Author(s):  Adrian O'SHANNESSY

The recent turbulence in our markets, particularly in the managed funds area, provides a timely reminder to advisors that they need to closely monitor emerging tax developments. This paper provides an analysis of interim changes to Division 6C, and potential changes of broader application as a result of the Board of Taxation's review, including:

  • ways to clarify the scope and meaning of "investment in land" for the purpose of deriving rent
  • a 25% "safe harbour" test for non-rental income from an investment in land
  • an expansion of the range of financial instruments that a trustee can trade or invest in without triggering company taxation
  • insights on the Board of Taxation's review of the taxation of managed funds.
Materials from this session:

Latest tax updates

Author(s):  Michael CLOUGH,  Jerome TSE

This presentation reviews some of the more contentious issues arising from tax legislation, cases, rulings and announcements released during the past 12 months, including decisions affecting:

  • the direct vs proportionate allocation of trust net income
  • present entitlement and Section 100A
  • Part IVA - how it should work
  • interest deductibility
  • Division 152 concessions.
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Outbound structuring for SMEs

Author(s):  Denise HONEY

Note: This paper was delivered at both the Victorian and Tasmanian Conventions in 2008 (9-11 October and 17-18 October respectively).

Overseas expansion can be a potential gold rush for growing SMEs and their compliance costs. This paper provides an in depth review of key outbound structuring issues including:

  • whether an offshore entity/branch is required
  • common foreign tax issues to be aware of
  • whether your offshore structure is actually an Australian resident
  • non-resident company/trust/branch compared
  • taxation of profits upon repatriation to different types of Australian structures - effective tax rates for ultimate owners
  • worked examples to illustrate how these issues apply in practice.
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Permanent establishments in the 21st century

Author(s):  Anthony KLEIN,  Rob BENTLEY

As the nature and style of business operations have evolved, the concept of permanent establishment (PE) has also had to evolve. This paper considers various issues for corporates associated with having a PE in Australia or an overseas jurisdiction, whether this be by deliberate design or unintended consequence, including:

  • an update on the status of the "virtual PE"
  • is it ever helpful to have a PE?
  • recent Australian developments and trends
  • highlights and anecdotes from around the world.
Materials from this session:

Tax issues for foreign institutional investors

Author(s):  Duncan R C BAXTER

Australia's ongoing resources boom has attracted a great deal of foreign investment into our equity capital markets, some of which has been sourced from global resources companies, and some from global investment funds (including foreign governments' sovereign wealth funds). The recent downturn in global credit and equity markets makes it quite timely to consider what tax principles might apply to the divestment of such investments. This paper covers:

  • institutional investors - rethinking the capital/revenue distinction in a post-CGT environment
  • the source of income from Australian investments
  • applying the tracing rules to identify taxable Australian property
  • international tax aspects of scrip-for-scrip rollovers and demergers
  • sovereign wealth funds.
Materials from this session:

Fixed trusts fixed entitlements

Author(s):  Andrew O'BRYAN

There are a number of substantial tax provisions which practitioners regularly rely upon which work on the presumption that they're dealing with a "fixed" trust. But are they? The common example is a unit trust which is generally assumed to be a fixed trust. Often it is not the case. This paper covers:

  • what is a fixed trust?
  • what is a ‘vested and indefeasible interest?'
  • when do you need a fixed trust?
  • trust losses
  • CGT events affecting trusts
  • CGT scrip for scrip rollover
  • company ownership interests and losses
  • amendments to make a trust fixed - is it a resettlement?
  • mining hybrid trust gems or creating false leads.
Materials from this session:

Goods and services tax–Practical issues

Author(s):  Ken FEHILY,  Terry MURPHY This paper covers how well the GST legislation, ATO Rulings Program and the Courts are dealing with the realities and technicalities of:

  • supplies of residential property - a working example
  • going concerns - a working example
  • the high level GST implications and issues arising in respect of everyday issues such as exports, insolvency, tough economic conditions, time limitations, year end and other "adjustments", and dispute resolution.
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Contributing to and cashing from superannuation–Complexities and opportunities

Author(s):  Vesna PAVLOVIC

Note: This paper was delivered at both the Victorian and Tasmanian Conventions in 2008 (9-11 October and 17-18 October respectively).

Having a detailed understanding of the contribution and cashing rules for superannuation can allow you to maximise strategies and avoid problems. This paper addresses some of the more common questions that are raised by financial planners and also highlights certain benefits or opportunities clients may be missing out on. Topics covered include:

  • know the ‘bring forward rule'
  • utilising the transitional concessional contribution cap
  • foreign super fund transfer limitations
  • understanding the ‘Retirement' condition of release
  • problems with transition to retirement rules.
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Stealing the gold – Project Wickenby

Author(s):  Jennifer BATROUNEY

The recent activities of the ATO with Operation Wickenby bring a stark reminder to tax advisors that the ATO won't be far behind in targeting dubious tax schemes that seek to venture ‘over the line'. This paper reviews key Wickenby issues for tax advisors such as legal professional privilege, the privilege against self incrimination and the courts' attitude towards tax criminals by reference to:

  • the stockaders - who are the targets?
  • the troopers and their ammunition
  • armed resistance - LPP and privilege against self incrimination?
  • the casualties - analysis of the sentencing of Wheatley
  • a brutal over-reaction or legitimate enforcement?
Materials from this session:

Fixed trust/Fixed entitlement

Author(s):  Andrew O'BRYAN This paper covers:

  • what is a fixed trust?
  • when do you need a fixed trust?
  • mining hybrid trusts gems or creating false leads.
Materials from this session: