NTAA Tax Schools Day 18 Notes 2021 PDF

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NTAA Member #33146 (Kristian Gray)

NTAA’s 2021 TAX SCHOOLS DAY 2 SEMINAR Presented by Andrew Gardiner & Michael Gilmour on behalf of the National Tax & Accountants' Association Ltd.

NTAA Member #33146 (Kristian Gray)

NTAA Member #33146 (Kristian Gray)

NTAA Member #33146 (Kristian Gray)

NTAA Member #33146 (Kristian Gray)

2021 Tax Schools Day 2 IMPORTANT INFORMATION

Statement of purpose and intention These seminar materials have been produced for the purpose of continuing professional education seminars provided by the National Tax and Accountants’ Association Ltd (‘NTAA’) to its members. Those members are professional accountants, tax agents and tax advisers to whom the NTAA provides continuing education in relation to matters of taxation and accounting. The information contained in these seminar materials together with anything said at any time during the seminars which are conducted by reference to it, including during periods of informal discussions, (‘seminar information’) is intended to be educational and used as a guide only. The seminar information is not intended to constitute advice. A person should not act on the basis of the seminar information as it has been generalised for educational purposes. In particular, the seminar information does not consider all of the matters that might be relevant to a particular client in particular circumstances. As the seminar information may apply differently to different people in different circumstances, the seminar information should not be used as a substitute for expert advice. Seminar information is not financial product advice. The NTAA and those who present the seminar information do not hold an Australian Financial Services Licence nor are they otherwise authorised to provide financial product advice pursuant to the Corporations Act 2001. Whenever you see this symbol in these seminar materials, it identifies an example of a matter which may require the intervention of a person who is licensed or authorised, in order to give financial product advice. This has been done to highlight areas of particular concern. Note that it should not be assumed that, because there is no warning symbol, no licence or authorisation is required. A person who is not licensed or authorised should not give financial product advice. An unlicensed or unauthorised person can however provide factual information. ASIC regulatory guides 36 and 244 explain the difference between financial product advice and factual information (it is also noted that a limited exemption applies to registered tax agents or BAS agents (within the meaning of the Tax Agent Services Act 2009). That exemption is set out at S.766B(5)(c) of the Corporations Act 2001). Private Binding Rulings Any Private Binding Ruling (‘PBR’) referred to in these seminar materials (as published on the ATO’s register) cannot be relied upon as precedent or used for determining how the ATO will apply the law in other cases. This is because a PBR is only binding on the ATO in relation to the specific taxpayer to whom the ruling was issued, some of the material facts have been removed in preparing the edited version for publication on the ATO’s website, and the PBR has not been updated by the ATO to reflect, for example, changes in legislation and any changes in the ATO’s view on how the law applies. Disclaimer The NTAA, its directors, employees, contractors, consultants, presenters, related entities, authors and anyone else involved in the production of the seminar information, expressly disclaim any and all liability to any person, whether a purchaser or not, for the consequences of anything done or omitted to be done by any such person relying on any part or the whole of the seminar information, including the appearance or omission of a warning symbol. The seminar information may be subject to change as taxation, superannuation and related laws and practices alter frequently and without warning. All persons and other entities appearing in any Examples or Case Studies in these seminar materials are fictitious. Any resemblance to real persons or entities, living, dead or otherwise, is purely coincidental. © National Tax & Accountants’ Association Ltd: May – July 2021

NTAA Member #33146 (Kristian Gray)

NTAA Member #33146 (Kristian Gray) 2021 Tax Schools Day 2

Exemptions and concessions The seminar information has not taken into account the various Legislation, Practice Statements, Revenue Rulings and General Guidelines issued by State and Territory revenue authorities. This may have an effect on the application of any exemptions and concessions referred to in these seminar materials. The application of exemptions and concessions are further subject to all relevant conditions and requirements being met.

Copyright © Copyright 2021 National Tax & Accountants' Association Ltd. All rights reserved. Except as permitted by the Copyright Act 1968, no part of this information may be reproduced or published in any form or by any means, electronic or mechanical, including photocopying, recording, or by information storage or retrieval system, without prior written permission from NTAA. Reproduction in unaltered form for your personal, non-commercial use is permitted. Other than for any use permitted under the Copyright Act 1968, all other rights are reserved.

Law The law is stated as at 31 March 2021.

Acknowledgments The preparation of these seminar materials has involved a tremendous amount of work and commitment by Siobhan Simpson, Taxation Manager, Andrew Gardiner, Senior Taxation Manager, Fatma Hashim, Taxation Specialist, Jien Cheng, Taxation Specialist, Rene Chan, Taxation Specialist and Riley Jones, Legal Counsel. Thank you also to the following people: •

Ben Kilkenny Taxation Specialist, Michael Gilmour, Taxation Manager, Neil Bryden, Taxation Specialist and Delphine Hall, Taxation Specialist, for their assistance in reviewing segments of these seminar materials.

•

Melanie Cvetkovic, Digital Marketing Coordinator, for her assistance in grammatically reviewing these seminar materials.

•

Jien Cheng, Taxation Specialist, for updating the 2021 Day 2 Tax Schools software.

•

Kristyn House, Marketing Manager, for her assistance with project managing the seminar notes and related materials.

•

Spresa Kurto, Personal Assistant, for her assistance in collating these seminar materials.

Finally, a special thank you to the families of the presenters, for their understanding and support whilst Andrew and Michael undertake their preparation and film/present this seminar. Presented by:

Andrew Gardiner, Senior Taxation Manager & Michael Gilmour, Taxation Manager On behalf of the National Tax & Accountants’ Association Ltd 29-33 Palmerston Crescent South Melbourne Vic 3205 Telephone : (03) 9209 9999 Facsimile : (03) 9686 4744

© National Tax & Accountants’ Association Ltd: May – July 2021

NTAA Member #33146 (Kristian Gray)

NTAA Member #33146 (Kristian Gray)

2021 Tax Schools Day 2

List of common acronyms We (along with the ATO, and most others in the tax world) often use acronyms to shorten otherwise unwieldy tax and related terms. Following is a list of some of the most common acronyms used in tax and superannuation discussions. This is designed to be a handy, quick-reference guide, but it should be noted that it is not intended to be exhaustive, and not all of the acronyms set out below will necessarily be used in this set of seminar notes. AAT

Administrative Appeals Tribunal

ABN

Australian Business Number

ABP

Account based pension

ACN

Australian Company Number

ACNC

Australian Charities and Not-for-profits Commission

ACR

Auditor contravention report

AFSL

Australian Financial Services Licence

APES

Accounting Professional and Ethical Standard(s)

APRA

Australian Prudential Regulation Authority

APSI

Alienation of Personal Services Income

AR

Authorised Representative

ASIC

Australian Securities and Investments Commission

ASX

Australian Securities Exchange

ATI

Adjusted Taxable Income

ATO

Australian Taxation Office

ATO ID

ATO Interpretative Decision

AUASB

Auditing and Assurance Standards Board

AWOTE

Average Weekly Ordinary Time Earnings

BA

Bankruptcy Act 1966

BCT

Business Continuity Test

BDBN

Binding death benefit nomination

BFA

Binding financial agreement

BRE

Base rate entity

BRP

Business real property

BSA

Buy-sell agreement

CA

Corporations Act 2001

CC

Concessional contribution

CDBIS

Capped Defined Benefit Income Stream

CGT

Capital Gains Tax

CM&C

Central Management and Control

CMT

Child maintenance trust

COR

Condition of release

COT

Continuity of ownership test

CRB

Credit Reporting Bureau

CSHC

Commonwealth seniors health card

DAS

Dividend Access Share

DASP

Departing Australia Superannuation Payment

DCT

Deputy Commissioner of Taxation

DICTO

Dependant (Invalid and Carer) Tax Offset

DHS

Department of Human Services (including Centrelink) © National Tax & Accountants’ Association Ltd: May – July 2021

NTAA Member #33146 (Kristian Gray)

NTAA Member #33146 (Kristian Gray) 2021 Tax Schools Day 2

DIS

Decision Impact Statement

DPN

Director penalty notice

DV

Diminishing Value

DVA

Department of Veteran Affairs

ECC

Excess concessional contribution

ECPI

Exempt current pension income

ECT

Excess contributions tax

ED

Exposure Draft

EFLE

Entertainment facility leasing expense

ENCC

Excess non-concessional contribution

EM

Explanatory memorandum (to a Bill)

ESS

Employee Share Scheme

ETB

Excess transfer balance

ETP

Employment termination payment

FBT

Fringe Benefits Tax

FBTAA

Fringe Benefits Tax (Assessment) Act 1986

FCA

Federal Court of Australia

FCAFC or FFC

Federal Court of Australia (Full Court) or Full Federal Court

FCT

Federal Commissioner of Taxation

FL Act or FLA

Family Law Act 1975

FLS Regulations

Family Law (Superannuation) Regulations 2001

FMDs

Farm Management Deposits

FOFA

Future of Financial Advice (reforms)

FWA

Fair Work Act 2009

GIC

General interest charge

GST

Goods and Services Tax

GST Act

A New Tax System (Goods and Services Tax) Act 1999

GSTD

Good and Services Tax Determination

GSTR

Goods and Services Tax Ruling

ID

Interpretative Decision

IFBA

Individual Fringe Benefits Amount

IGT

Inspector-General of Taxation

IHS

In-house software

IPP

Individual Professional Practitioner

ITAA 1936

Income Tax Assessment Act 1936

ITAA 1997

Income Tax Assessment Act 1997

ITAR

Income Tax Assessment Regulations 1997

ITC

Input tax credit

ITRA

Income Tax Rates Act 1986

IT(TP)A

Income Tax (Transitional Provisions) Act 1997

JV

Joint venture

LAFH

Living-away-from-home

LITO

Low income tax offset

LMITO

Low and middle income tax offset

LCG (or LCR)

Law Companion Guideline (or Law Companion Ruling)

LPR

Legal personal representative © National Tax & Accountants’ Association Ltd: May – July 2021

NTAA Member #33146 (Kristian Gray)

NTAA Member #33146 (Kristian Gray)

2021 Tax Schools Day 2

LRBA

Limited recourse borrowing arrangement

LTCs

Low tax contributions

LVP

Low-value pool

LVR

Loan-to-value ratio

MLP

Market linked pension

MNAV

Maximum net asset value (test)

MR or MRE

Main residence or Main residence exemption

MSV

Margin Scheme Valuation

MVPR

Market valuation private ruling

MVSR

Market Value Substitution Rule

NALI

Non-arm’s length income

NCC

Non-concessional contribution

NCL

Non-commercial loss

NGUT

Non-geared unit trust

NTLG

National Tax Liaison Group

PAYGW

Pay-as-you-go withholding

PB

Preserved benefit

PBI

Public Benevolent Institution

PBR

Private binding ruling

PCG

Practical Compliance Guideline

PDS

Product Disclosure Statement

PHI

Private Health Insurance

PII

Professional indemnity insurance

PPR

Promoter penalty regime

PSB

Personal Services Business

PSI

Personal Services Income

PSLA

Practice Statement Law Administration

PUA

Personal use asset

RESC

Reportable Employer Superannuation Contribution

RFB or RFBA

Reportable Fringe Benefits or Reportable Fringe Benefits Amount

RNPB

Restricted non-preserved benefit

RSA

Retirement savings account

RSE

Registrable Superannuation Entity

SAF

Small APRA Fund

SAN

SMSF Advisers Network

SBCs

Small Business Concessions

SBE

Small Business Entity

SBPP

Small business participation percentage

SBR

Standard Business Reporting

SBRR

Small Business Restructure Rollover

SBT

Same business test

SCT

Superannuation Complaints Tribunal

SG

Superannuation guarantee

SGAA

Superannuation Guarantee (Administration) Act 1992

SGC

Superannuation guarantee charge

SIC

Shortfall interest charge © National Tax & Accountants’ Association Ltd: May – July 2021

NTAA Member #33146 (Kristian Gray)

NTAA Member #33146 (Kristian Gray) 2021 Tax Schools Day 2

SIRN

Superannuation Industry Relationship Network

SIS Act

Superannuation Industry (Supervision) Act 1993

SIS Regs

Superannuation Industry (Supervision) Regulations 1994

SMSF

Self-managed superannuation fund

SMSFD

Self Managed Superannuation Fund Determination

SMSFR

Self Managed Superannuation Fund Ruling

SSA

Salary sacrifice arrangement

STP

Single Touch Payroll

TA

Taxpayer Alert

TAA 1953

Taxation Administration Act 1953

TAP

Taxable Australian Property

TARP

Taxable Australian Real Property

TASA

Tax Agent Services Act 2009

TASR

Tax Agent Services Regulations 2009

TB

Transfer balance (e.g., transfer balance cap or transfer balance account)

TBA

Transfer Balance Account

TBAR

Transfer Balance Account Report

TBC

Transfer Balance Cap

TD

Taxation Determination

TFN

Tax file number

TMC

Terminal medical condition

TOTD

Transparency of Tax Debt

TPB

Tax Practitioners Board

TPD

Total and permanent disablement

TR

Taxation Ruling

TRIS

Transition to retirement income stream

TSB

Total Superannuation Balance

UCA

Uniform Capital Allowance (depreciation rules)

UNPB

Unrestricted non-preserved benefit

UPE

Unpaid present entitlement

WRE

Work-related expense

NOTES TIP – Searching the notes It is possible to search all of our notes online. Simply go to the homepage of our website (ntaa.com.au), hover over the ‘Products’ tab along the top menu bar and click ‘Notes Online’ – this will take you to a page which gives you the option of searching our notes. In particular, the second search option field will pick up words in the online PDF copy of the Table of Contents for each set of notes. The results include a link which allows you to open and view the Table of Contents instantly (and if you don't have the relevant set of notes, it's also easy to then buy the Seminar Notes).

© National Tax & Accountants’ Association Ltd: May – July 2021

NTAA Member #33146 (Kristian Gray)

NTAA Member #33146 (Kristian Gray)

2021 Tax Schools Day 2

WHAT’S NEW FOR BUSINESS IN 2021? ..................................................................................... 1 Introduction ............................................................................................................................... 3 1.

Government introduces new temporary depreciation concessions for SBE taxpayers ......................................................................................................................... 4 Introduction ....................................................................................................................... 4

2.

1.1

Instant asset write-off concession for SBE taxpayers extended under new full expensing measure ........................................................................................... 5

1.2

SBE taxpayers claim immediate deductions for all second elements to existing assets ........................................................................................................ 6

1.3

Government expands the instant asset write-off concession for low value pools... 8

1.4

October 2020 Budget changes allow SBE taxpayer...