3 OCT 2018
Report your undisclosed income streams from foreign countries
Pursuant to the Common Reporting Standard (CRS) – a new global standard on the automatic exchange of financial information – banks and other financial institutions in different countries must report financial information of both individual foreign tax residents and entities (e.g. companies, trusts or partnerships) with which they have a special relationship, to the tax authorities in the different countries.
Such data received by the overseas tax authorities will then be exchanged with the ATO as from September 2018.
With this data matching initiative, it is much easier for the ATO to check whether resident taxpayers have disclosed all their income from overseas sources in their tax returns.
Please speak to your Nexia advisor so that we can examine your particular facts and circumstances and help you to be fully tax compliant by disclosing all your offshore income on your tax return.
24 APR 2018
Issues to think about when expanding your business overseas
Many businesses are growing and are looking at opportunities to expand to overseas markets.
There is no “one size fits all” solution for planning and structuring international business expansion. Tailored analysis is required for all the commercial and tax aspects of the expansion. All potential risks must be managed. These issues are not simple matters.
Some initial issues to consider in such a risk assessment can include:
- What are the rules for business registration in the foreign country?
- What international tax rules can potentially affect such an expansion? (e.g. tax issues such as transfer pricing, thin capitalisation, tax residency, non-resident withholding tax, foreign trust tax provisions and impact of double tax treaties)
- What rules are there for employing Australians offshore? (e.g. international secondment arrangements)
- What are the tax consequences if Australian tax resident individual shareholders or beneficiaries of Australian trusts become non-residents for tax purposes because of the business expansion? (e.g. CGT consequences on ceasing to be an Australian resident and loss of CGT discount for non-residents etc.)
This is a very complex area. Therefore, please speak with your Nexia adviser before embarking any international expansion project so that we can assist you in planning the best structure for your business depending on your individual circumstances.
12 APR 2017
No 10% withholding if vendor is an income tax exempt entity
As reported in previous Top Tax Tips and Nexia Updates, from 1 July 2016 all purchasers of certain types of Australian property must withhold 10% of the purchase price, unless the transaction is excluded from these rules or the parties undertake certain actions before settlement date (e.g. a resident vendor obtains a clearance certificate from the ATO).
Another specific case where such withholding will not be necessary is where a tax exempt entity sells property – in such a case, the withholding amount will be varied to nil – a variation that makes sense because a tax exempt entity is not subject to income tax on a capital gain made from the sale.
If you are selling a property in Australia for $2 million or more, we can assist in obtaining the required ATO clearance or explain the obligations imposed on buyers of such properties.
22 FEB 2017
Real estate agents: Beware of breaching Foreign Investment Review Board rules
Generally, foreign investors need permission from the Foreign Investment Review Board (FIRB) before purchasing residential properties (excluding some new dwellings) or agricultural land in Australia. By using data matching, the ATO can easily determine whether a foreigner owns property in Australia as well as whether the foreigner has obtained FIRB approval.
Although a wide variety of criminal or civil penalties (e.g. divestment orders or infringement notices) may apply to foreign investors who breach these rules, real estate agents who knowingly assist foreign investors to act in contravention of these FIRB rules may also be subject to civil and criminal penalties.
Real estate agents should therefore ensure that they do not sell Australian properties to foreign investors without first determining whether the foreign investor has obtained FIRB approval prior to buying the property.
14 DEC 2016
Avoid delays in settlement: Apply for clearance certificates before the Christmas break
From 1 July 2016, all purchasers of real estate for more than $2 million in Australia (whether purchased from a resident or foreign resident vendor), must withhold 10% of the purchase price, unless the transaction is excluded from these rules (e.g. if the purchase price of the property is less than $2 million) or if the parties undertake certain actions before settlement date (e.g. a resident vendor obtains a clearance certificate).
This 10% withholding obligation inevitably leads to added compliance costs for both the purchaser and vendor of Australian real property.
In particular, if a property is due for settlement over the Christmas break, care should be taken to apply for such a clearance certificate early, especially because the ATO will be closed from 23 December 2016 to 3 January 2017, during which time clearance certificates are unlikely to be issued.
14 SEP 2016
No 10% withholding tax on death
As mentioned in an earlier Top Tax Tips, from 1 July 2016, any transfer of a relevant asset from one party to another (e.g. the sale of real estate) will be subject to the 10% withholding rule where 10% will be withheld from the purchase price.
Importantly, no 10% withholding tax is payable if the relevant asset is transferred from a deceased person to either the legal personal representative (the executor), a beneficiary or a surviving joint tenant.
For more detailed information on how this 10% withholding rule will affect you, please see our comprehensive news article here.
7 Sep 2016
Personal income tax: rate change for taxable income between $80,000 and $87,000
Following on from proposals in the 2016 Budget, the Government has now introduced draft legislation to reduce the income tax rates for middle income earners – the 37% rate will now only kick in at $87,000 rather than at $80,000.
Although this rate change applies from 1 July 2016, PAYG withholding tax schedules will only be updated to factor in the new lower tax rate effective from 1 October 2016 – any tax overpaid between July and September 2016 will be refunded by the ATO on assessment after the end of the 2017 income tax year.
31 AUG 2016
What should you do if an external debt collection agency contacts you about your outstanding tax debt?
Recently, the ATO confirmed that debts (up to $100,000) that are not being formally disputed can be referred to collection agencies for collection (without affecting your credit rating).
The normal procedure following such a referral is that the collection agency will contact you or your authorised representative in writing and then via phone to negotiate payment of your debt. If the debt cannot be collected in this way, the debt will be returned to the ATO for further action (e.g. garnishee notices, director penalties or insolvency proceedings).
Please contact us if you have any outstanding tax debts so that we can help you manage your debt obligations.