Taxation & Duties

It is said that there is nothing certain except death and taxes.

Experience in Australia proves that to be true.

There are many taxes in Australia. At Stacks/The Law Firm we are often asked to provide advice in relation to:

Capital Gains Tax

Fringe Benefits Tax

Goods and Services Tax and;

Income Tax

At a Federal level there are various duties, such as Customs Duty, and at a NSW level most people are affected sooner or later by what is generally known as Stamp Duty.

Taxation and duty issues often arise incidentally to other instructions received by our firm and some examples of that are set out below. However, busy members of the business community often don't find time to sit down with their taxation lawyer and their accountant to look over their legal structures and consider their ongoing liability to tax and duty. A thoughtful review will often reveal that there is a more tax effective way in which to operate.

There are numerous examples of people doing things which they shouldn't do, or failing to do things which they should do, because of an incomplete understanding of the taxation and duty consequences.

If a trustee executes a declaration of trust under certain circumstances, full ad valorem duty may be payable on all of the assets of the trust. If there are a lot of assets, this may be a very expensive step. However, as an alternative, the execution of a company minute noting the existence of the trust may have a quite different consequence so far as stamp duty is concerned.

Staff motor vehicles - Fringe Benefits Tax

Many businesses refuse to provide motor vehicles for their key staff, with the potential saving of GST on the vehicles, because of a concern that they will make themselves liable to Fringe Benefits Tax. However this is simply avoided. So long as the staff member prepares a logbook during the first three months, the percentage of private use can be ascertained. If that percentage is, for example, 15% and if the key staff member pays 15% to the business of its cost for the year in relation to the vehicle, then there is no fringe benefit received by the staff member. Further, there is nothing to stop the business from repaying the 15% to the staff member as a bonus - but of course that 15% is then subject to income tax.

The legislation

The potential range of taxation and duty issues is almost limitless, given the propensity of governments both state and federal to continually change the legislation. For example, there is not one, but two, Income Tax Assessment Acts, the 1936 Act and the 1997 Act. The latter act was intended by the Keating Government as a complete replacement for the 1936 Act but the Howard Government abandoned the project and introduced the later act as only a partial replacement of the earlier legislation. So, we now have two Acts with the same name sitting side by side.

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