News and Insights

Wisewould Mahony offers a full suite of legal services covering business, commercial, corporate, M&A, private equity capital raising, financial services, tax, asset protection, estate planning, IT, IP, property, employment, and related areas, with lawyers in Melbourne and Geelong working on a wide range of issues.  The following is a brief outline of some of the issues arising out of recent client transactions that may also affect some of your clients:

AAT decision of Bendel v FCT (Div 7A)  – are UPE’s loans?

In September 2023 the Administrative Appeals Tribunal (AAT) held in the case of Bendel v FCT [2023] AATA 3074 (Bendel) that an unpaid present entitlement (UPE) of a corporate beneficiary of a trust was not a loan for the purposes of Division 7A. This is in stark contrast to the ATO’s views in Taxation Determination TD 2022/11 (and Taxation Ruling TR 2010/3 for UPEs before 1 July 2022) that a UPE of a corporate beneficiary can be a loan for Division 7A purposes.

If Division 7A applies, a private company is deemed to have paid an unfranked dividend to the trustee of the trust if the UPE has not been paid to the private company before lodgment day for the relevant income year, or a Division 7A-compliant loan agreement has not been entered into.

While an AAT decision is not binding on the ATO, it may provide taxpayers with a reasonably arguable position that their corporate UPEs are not loans for Division 7A purposes. However, the Bendel case is currently under appeal and may be overturned by the Federal Court. We recommend that you watch this space and seek advice if your client’s corporate beneficiary has or is likely to have a UPE.

Revised ATO guidance on crypto assets

On 30 June 2023 the ATO revised its web guidance on the tax treatment of crypto assets, following a legislative amendment which confirms that digital currencies such as Bitcoin are excluded from the income tax treatment of foreign currency.

In Australia, cryptocurrencies are considered to be CGT assets in accordance with Taxation Determination TD 2014/26 and gains or losses must be calculated each time cryptocurrency is sold, unless the cryptocurrency is held as a personal use asset (with a cost base of up to $10,000) or trading stock.  The Board of Taxation has undertaken a review of the tax treatment of digital assets and transactions in Australia, although the report remains outstanding.

We will keep you informed of the recommendations made in the report and in the meantime we recommend that clients investing in cryptocurrency or holding cryptocurrency as trading stock be advised to seek advice early on the tax consequences of any disposal.

Stamp duty – beware of double duty

Most contracts for the sale of real property allow a purchaser to nominate an alternative purchaser to whom the vendor will transfer that real property. In some cases, this can lead to double stamp duty being payable on the one transfer of land where there is either a transfer involving additional consideration or a transfer involving land development before the nomination was made (including transfers resulting from options).

On 31 October 2023 the Victorian State Revenue Office published Revenue Ruling DA-064v2 in which it clarifies the meaning of ‘land development’ for the purposes of the sub-sale duty provisions. The Ruling essentially states that if a plan of subdivision is prepared, a planning permit is obtained, a building permit is obtained, or if various other things are done, land development is considered to have occurred and double duty will be payable if an alternative purchaser is nominated.

Therefore, clients should be aware that advice should always be obtained before nominating an alternative purchaser for the sale of real property.

Payroll tax issues for Medical and Allied Health Practitioners

If you provide advice to medical and/or allied health practitioners, you should be aware that engaging contractors can expose medical and allied health practices to significant payroll tax risks, even in situations where those contractors appear to be providing services directly to the public.

The medical and allied health industries have been the recent focus in two cases where services provided by contracted medical and allied health providers were found to be ‘taxable wages’ for payroll tax purposes, resulting in payroll tax exposure for the relevant business owners. However, this payroll tax risk can potentially be managed through tax planning and structuring so advice should be sought by affected clients as early as possible.  Read more

Welcome Kathleen Jess

Senior Associate Kathleen Jess has recently joined us a tax specialist in our Business & Commercial team.

Having commenced her career working in Big 4 accounting firms, Kathleen also worked at the ATO before moving to mid-tier law firms. Kathleen advises on all areas of Taxation Law, Trusts Law and Self-Managed Superannuation Fund (SMSF) Law and assists small to medium business clients as well as individuals and high net worth family groups (including trustees of trusts and SMSFs) in disputes with state and federal revenue authorities (e.g. the ATO and the Victorian State Revenue Office).  Kathleen is a great addition to our Commercial team.

If any of these matters raise issues you would like to discuss, please give us a call on (03) 9629 8333, or email any of our lawyers or enquiries@wisemah.com.au.