Issue 174 - 23 May 2008

	Issue 174, 23 May 2008 Welcome to the latest issue of Thomson's Tax & Accounting Insight, your free news service for tax and accounting professionals. Tax & Accounting Insight is the easy way to keep up with the latest developments in your industry. Watch your inbox for your fortnightly issue of this free, informative service from Thomson.		Articles in this edition include: Acquisition of Assets by SMSF 2008-09 Federal Budget - tax changes aplenty Superannuation Guarantee Thomson Tools Editorial Enquiries: Tel: 1300 304 197 LRA.Service@thomson.com Copyright: Thomson Legal & Regulatory Limited ABN 64 058 914 668 100 Harris Street Pyrmont NSW 2009 All rights reserved. To subscribe, please click here. To unsubscribe, please reply to this email with Unsubscribe in the heading. Disclaimer: The information contained in this bulletin neither represents nor is intended to be legal or professional advice. While every care has been taken in its preparation, no person should act specifically on the basis of the material contained herein. If expert assistance is required, competent professional advice should be obtained. Privacy Policy
	Acquisition of Assets by SMSF The Tax Office has released a Draft Self Managed Superannuation Fund Ruling stating its position on when a contribution of assets to an SMSF by a related party of the fund will not contravene the SIS Act. Generally, a trustee of an SMSF is prohibited from intentionally acquiring assets from a related party of the SMSF. However, certain exceptions can apply. The Draft states that a trustee intentionally acquires an asset if the trustee means to acquire the asset. Further, the legal owner of the asset is not a decisive factor. Situations that will not result in a contravention of the superannuation law are: the trustee accepting a contribution of money; and a related-party making a monetary payment to a third party to extinguish a liability of the SMSF. The Draft states that for any of the exceptions to apply, the acquisition of an asset must be at market value and consideration be given to the in-house asset rules. This article appeared in Thomson's Client Alert Newsletter Service. Client Alert is a monthly newsletter that promotes your business and develops your client's awareness of upcoming tax issues. To find out more, phone Thomson Customer Service on 1300 304 197 or click here. Return to TOP
	2008-09 Federal Budget - tax changes aplenty On Tuesday, 13 May 2008, the Federal Treasurer, the Hon Wayne Swan MP, handed down the 2008-09 Federal Budget, his 1st Budget. From a taxation point of view, this Budget covered a wide range of matters. Revenue measures announced In summary, the many revenue measures announced in the 2008 Federal Budget include: *tax system review: further details announced of the proposed review of the tax system; TOFA:* stages 3 and 4 have been deferred until 1 July 2009, plus other amendments announced; family trusts: Government confirms reversal of family trust changes; company losses: Government to proceed with changes to company loss recoupment rules; simplified imputation: Government to complete the simplified imputation system; employee share schemes: changes re elections and removal of double taxation; consolidation: Government confirms it will proceed with modifications to the consolidation regime; CGT: extension of CGT small business concessions re related entities and partnerships; capital protected borrowings: change to benchmark interest rate; GST: several measures eg re charities, international communications, sale of real property; FBT: tightening of work-related exemption, amendments re jointly held assets, tightening of meal exemption; legislation by press release: the Government has proposed what it believes is a way of more effectively dealing with previously announced tax changes; valuations and private rulings: Government releases draft regs; depreciation on in-house computer software: increasing the write-off period to 4 years; Medicare levy: thresholds for levy and surcharge increased; First Home Saver accounts: substantial changes announced. More information on the tax-related announcements is also contained in a number of press releases - see the Treasurer's Website and the Assistant Treasurer's Website. This article appeared in Thomson's daily Latest Tax News (Tuesday 13th May). With tax fast-moving and ever changing - EVERY DAY, practitioners rely on Thomson's daily Latest Tax News for quick, accurate, comprehensive information - no compromises. When you need to know what's new in tax and related news every day, there's only one place to look - LTN. To find out more, click here. Return to TOP
	Superannuation Guarantee Tax Laws Amendment (2008 Measure No. 2) Bill 2008 was introduced into Parliament on 20 March 2008 and extends the period within which an employer can make a contribution after the quarterly due date and still be eligible to use the late payment offset to reduce their superannuation guarantee (SG) charge liability. Previously, an employer who makes a late contribution to an employee's super fund within one month after the due date can use that late payment to offset against part of their SG charge for the employee for the quarter. However if the employer makes a contribution more than one month after the due date, they are unable to use the offset. The amendments extend the period in which an employer can make a contribution and still be able to offset the contribution against their SG charge by removing the one month limitation. The intention of the changes is to reduce employers having to potentially pay the same amount twice: once when they make a late contribution to the employee's fund and again when they are assessed with an SG charge for making the contribution late. The amended late payment offset will be available to employers who: have an outstanding SG charge for the employee for that quarter; elect, in the approved form, to use the offset; and have made a contribution for an employee after the due date for the quarter. However, the late contribution can only be offset against an SG charge which relates to the same quarter and to the same employee. NOTE: The SG charge and late payment offset are not tax deductible to the employer. This amendment applies from the date of Royal Assent. However, transitional provisions allow an employer to use the offset if they have an SG charge or liability for a year (rather than a quarter) which becomes payable after Royal Assent. Example 1 Debbie was required to make a $1,000 contribution for the March 2006 quarter commencing on 1 January 2006 on behalf of her employee, Catherine. Debbie has failed to make the contribution by the due date of 28 April 2006 but makes a late contribution of $1,000 into Catherine's superannuation fund on 5 June 2006. Debbie is assessed on 1 July 2006 with an SG charge liability for the March 2006 quarter in respect of Catherine. The SG charge includes the shortfall amount equal to the contribution which has in fact now been paid. Before these changes, the late payment offset could not be used by Debbie since her contribution was not made by 28 May 2006 Source: Tax Laws Amendment Bill (Measures No. 2) Bill 2008 - Explanatory Memorandum Example 2 Following on from example 1, once the law is enacted Debbie decides to use the $1,000 late contribution she made into Catherine's fund on 5 June 2006, to offset her SG charge for the March 2006 quarter with respect to Catherine. The SG charge includes a shortfall amount of $1,000 and a nominal interest component of $100. Debbie lodges a late payment offset form with the Tax Office on 7 August 2008. The $1,000 contribution is used to offset Debbie's SG charge for the March 2006 quarter with respect to Catherine. The contribution is first used to pay the nominal interest component before any remainder is used to pay the SG shortfall amount. The general interest charge accrues on the original SG shortfall amount ($1,000) from 1 July 2008 (when the SG charge became payable) to 7 August 2008 (when the election is lodged). After the election, Debbie's remaining SG shortfall amount is $100. Source: Tax Laws Amendment Bill (Measures No. 2) Bill 2008 - Explanatory Memorandum Assume that in September 2008 Debbie makes a $50 contribution into Catherine's fund and on 18 October 2008 she lodges a late payment offset form to elect to use that contribution as an offset to her SG charge for the March 2006 quarter. The general interest charge accrues on the remaining SG shortfall amount ($100) from 7 August 2008 (when the first election was lodged) to 18 October 2008 (when the second election is lodged). After the election, Debbie's remaining SG shortfall amount is $50. Assume that on 3 December 2008 Debbie decides to fully pay her SG charge and general interest charge for the March 2006 quarter with respect to Catherine. The general interest charge accrues on the remaining SG shortfall amount ($50) from 18 October 2008 (when the second election was made) to 3 December 2008 (when the SG charge and general interest charge are both fully paid). This summary article appears in the May 2008 Recent Developments of Thomson's The Accountant's Manual. For over 27 years, thousands of practitioners have turned to the The Accountant's Manual for over 3,000 pages of non-legalistic assistance covering tax and accounting issues. 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Plus receive sample documents of client communications and illustrations of file notes. Return to TOP