What were they thinking

Ideas that require the policy intent be clarified and identifying uncertainty in the application of the law.
(@kitmorgan64)

What were they thinking

Incorrect CGT small business entity requirement in 328-430

There appears to be a drafting error in subsection 328-430(1)(d)(ii) dealing with small business entity ['SBE'] rollovers. A SBE is defined in section 328-110 as an entity that has an aggregated turnover of less than $10 million, accordingly it should be possible to roll an asset into a SBE using Subdivision 328-G provided the SBE is either an affiliate of or connected with the transferor (assuming the other requirements ...more »

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1 vote
1 up votes
0 down votes
(@kitmorgan64)

What were they thinking

152-70 - How can a Trustee hold a legal and equitable interest?

There is an apparent disconnect between the language of Item 1 in section 152-70, which requires an entity to hold a legal and equitable interest in the shares in a company, and Example 1.2 in the Explanatory Memorandum to the Tax Laws Amendment (2006 Measures No. 7) Bill 2006 - which introduced this section. While Example 1.2 evidences a clear policy intention that a Trust (via its Trustee) can hold a direct small business ...more »

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1 vote
1 up votes
0 down votes
(@elinor.kasapidis.cpaaustralia)

What were they thinking

Redundancies after the age of 65 aren't 'genuine' – is it fair?

Subsection 83.175(2)(a) of the Income Tax Assessment Act 1997 requires that the employee is dismissed before the day he/she turns 65 to satisfy the genuine redundancy provisions. The provision was inserted in July 2007 as part of the Tax Laws Amendment (Simplified Superannuation) Bill 2007. No mention of this provision was included in the Explanatory Memorandum, nor in the second reading speeches. The earlier Treasury ...more »

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5 votes
5 up votes
0 down votes
(@onesuperidea)

What were they thinking

Superannuation on resignation

When an employee leaves they are paid annual leave and long service leave, but no superannuation. This means that when an employer won't let the employee work out their leave, the employee misses out on the super. This is unfair and confusing. The super for the annual leave is confusing. Under the Fair Work Act 2009 Section 90 it says "If, when the employment of an employee ends, the employee has a period of untaken ...more »

Voting

3 votes
3 up votes
0 down votes
(@michaelc)

What were they thinking

Adjusted income calculations - double counting of losses

Some odd outcomes can arise when working through adjusted income calculations for certain tax and other purposes. The problem seems to mainly arise when someone has a net investment loss for the year as well as an overall tax loss for the year. For example, for some purposes a taxpayer will need to calculate their 'income for surcharge purposes' (eg, to determine whether Division 293 applies, applying the private health ...more »

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2 votes
2 up votes
0 down votes
(@michaelc)

What were they thinking

ESS start up options held by associates

Amendments were made to the employee share scheme rules in 2015 to introduce concessions for small start up companies. If certain conditions are met, the discount provided in relation to shares / options is not included in the assessable income of the employee. Section 115-30 has been amended to ensure that for the purpose of the CGT discount, when options are issued under the start up rules the ownership period is not ...more »

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1 vote
1 up votes
0 down votes
(@michael.flynn)

What were they thinking

Absolute entitlement

If a beneficiary is absolutely entitled to a trust asset, they, rather than the trustee, are required to return any capital gain, or claim any capital loss from a CGT event that happens to the asset. A common example that illustrates the significance of this concept is that of a nominee who holds shares on behalf of a principal. If the principal directs the nominee to sell the shares, the principal returns the capital ...more »

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2 votes
2 up votes
0 down votes
(@reynah)

What were they thinking

Foreign resident capital gains withholding payments

Given the broad application of this regime (eg. deeming all vendors of real property to be foreign residents unless they produce a clearance certificate from the ATO) and its red tape implications for day to day transactions, there is an urgent need for the ATO to issue class variations for situations where there is no tax payable including: • transactions attracting roll-over relief; • transactions required to give ...more »

Voting

7 votes
7 up votes
0 down votes