Delay of stamp duty abolition

The State Government has again deferred the abolition of stamp duty on non-real, non-residential property conveyances.

Stamp duty is currently payable (on a sliding scale) when business assets are sold or transferred. So for example, if you sell your South Australian business to another party, you would pay stamp duty. It had previously been announced that this would be abolished from 1st July 2012 but, unsurprisingly given the long history of delays on this matter, the State Government announced in December that this will be deferred until 1st July 2013. Another initiative, the abolition of stamp duty on unlisted financial products, will still proceed on 1st July 2012 as previously announced.

Data matching pleasure craft purchases

Most likely reasoning that people who buy boats have money, the Australian Taxation Office (ATO) recently announced that it will be electronically matching insurance data with respect to cover for pleasure craft with their own information on income and net worth. Information will be supplied by a number of insurance companies (a list of which appears below) for pleasure craft with a value greater than $25,000. This will then be reviewed by the ATO, which may then require explanations from individuals who do not appear to have earned enough taxable income to afford the purchase.

The marine insurance companies that will supply data include:

• Suncorp Metway Insurance Ltd
• GIO General Limited
• Australian Alliance Insurance Company Limited
• Vero Insurance Limited
• Club Marine Limited
• QBE Insurance (Australia) Limited
• Wesfarmers General Insurance Limited
• Nautilus Marine Insurance Agency Pty Ltd
• Insurance Australia Limited
• CGU Insurance Limited
• Insurance Manufacturers of Australia Pty Limited
• Associated Marine Insurers Agents Pty Ltd
• RACQ Insurance Limited
  

Tax Office can't withhold BAS refunds

From time to time the Tax Office may challenge a BAS and ask for further information to justify a claim for a refund. This happens most often when there is a purchase of a significant asset and there are question marks as to the level of income generating use that asset will see, but there are other circumstances where it might arise also. In this situation, Tax Office practice has been to withhold a GST refund until the information is provided and the claim substantiated. This can potentially have an adverse impact on cash flow where the amount involved is significant.

This practice was challenged in a recent case heard by the Full Federal Court, which upheld the decision of a lower court that the Tax Office is not entitled to withhold these amounts while they await further documentation. The effect is that they must issue the refund stated in the BAS, and then if further investigation is required, request a repayment of any overpaid amounts in the event that it is found necessary. It is likely that the Government will legislate at some point in the future to correct this, but in the meantime, if you have a BAS refund that is being held up by the Tax Office, you are entitled to demand your refund while any further investigation is taking place.

Buying, Selling, Renting or Building?

If you own or rent real estate and would like to know what the tax implications are, the Tax Office has recently created a new consolidated property page that summarises a range of tax information as it relates to property. This includes issues such as what happens when you inherit, subdivide or develop a property, and when you rent one out or use it for business purposes.

Naturally, for more complex advice we recommend that you consult with us before doing anything, but if you'd like to get a general overview of things, including the GST, Capital Gains Tax and Income Tax consequences of various options, you can find the consolidated property page here.

Retention of Title Changes

In October 2011 the new Personal Property Securities regime will commence. This is a national scheme that brings together a number of different state and territory laws covering security over property. A common example is where, for example, a lessor retains security over property until the lease has been paid out. Even though the program has the word 'personal' in it, it applies to all businesses that hold security over 'personal property', which for these purposes is almost anything other than land.

One area where many businesses are likely to be be affected is when using retention of title clauses. We addressed this in our December 2010 Newsletter. While there has been some delay to the implementation of the scheme, the effect is still the same. If you sell stock and have a retention of title clause in order to protect your interests, that will no longer be enough. In order for you to preserve your interest in the inventory until payment is made, you will also need to register the security interest with the Personal Property Securities Register. Failure to do so may mean that your interest in those goods will be lost to another party who has registered a security interest.

There will be a two year transitional period to register Retention of Title sales, up until October 2013. After that time, interests will need to be registered before goods are supplied (or within 15 days if they are plant and equipment), for every customer that you have a Retention of Title arrangement with. You don't have to register every sale, as one registration will cover all transactions with that customer.

If you use retention of title clauses, it's critical that you undertake a review of your procedures and policies to make sure that all relevant future transactions are registered. You'll also need to make sure that you amend any affected documentation, such as your terms and conditions of sale. There are transitional arrangements that apply for existing interests, so you should also review your current customer/client lists to see if there is anything that needs to be registered. Finally, you should seek legal advice to ensure that your procedures and documents are legally sufficient to protect you.  

Please contact us for further information or assistance.