April 2008

Land Tax and Unit Trust - Amend your deeds before 30 June 2008

The Office of State Revenue NSW has announced that the NSW Treasurer has authorised "Act of Grace Payments" on a case-by-case basis for unit trusts that were unable to meet the 31 December 2007 deadline to become fixed trusts. The OSR said this relief will only be provided if a trust deed is changed to become a fixed trust by 30 June 2008.

The OSR says you must show that there were reasons beyond your control that prevented you from restructuring to a fixed trust by the original deadline of 31 December 2007.

If you qualify for relief, Acts of Grace payments may be provided for the 2006, 2007 and 2008 land tax years, and for transfer duty arising from restructuring your trust. You should note that the OSR relief does not assist any possible CGT consequences arising from a potential resettlement.

This has got to be the last opportunity to rectify a trust that otherwise causes land tax. Advisors should alert all property owning clients to this final once only amnesty.

The attached documents provides you with more detail in relation to this and the issue set out below. We can provide you with the necessary documents to amend a unit trust where a decision is made to do so. Please note that given the small window of opportunity, you will need to act fast in dealing with this matter.

Division 7A Loans - Self corrective action prior to 30 June 2008 for the 2002-2007 income years

The Federal Commissioner of Taxation now has a legislative discretion to disregard the operation of Division 7A or allow a Dividend to be Franked.

The Commissioner has provided a one-off opportunity to business owners until 30 June 2008 to self-correct past mistakes regarding payments and loans from their private companies, and to avoid penalties under Div 7A, without applying for the Commissioner's discretion.

Certain conditions must be met. The offer applies to situations where honest mistakes and inadvertent omissions have been made in respect of the 2001-02 to 2006-07 income years.

Taxpayers who don’t meet the conditions, can apply to the ATO in writing to disregard errors at any time. If taxpayers meet the conditions to correct the error themselves, and do not self correct by 30 June 2008, they will have to apply to the ATO in writing to disregard the error.

We can assist you in dealing with these issues as well as properly documenting such arrangements with complying Division 7A loan agreements. As with the above, given the small window of opportunity you will need to act fast in dealing with this matter. Click here to read more

For further information contact:

Peter Bobbin pbobbin@argylelawyers.com.au
George Samaras gsamaras@argylelawyers.com.au