September 2024 Newsletter

Please click on the following link to view this month's newsletter for September 2024. We would like to highlight the following articles:-

Withholding for foreign residents

If your business or investment structure makes payments such as interest, dividends, or royalties to foreign residents, you may have an obligation to withhold tax from these payments unless an exemption applies. This obligation arises whether you pay the foreign resident directly, credit their account, or handle the payment on their behalf. The Australian Taxation Office (ATO) is currently focusing on ensuring taxpayers are aware of these withholding obligations.

If applicable, you must lodge the appropriate report, withhold tax from the payment and remit the tax withheld to the ATO.

Small business restructure roll-over

The Small Business Restructure Roll-Over (SBRR) offers a lawful framework for reorganising operations without harming creditors or engaging in unethical practices.

To qualify for the SBRR, each party involved must meet the small business entity definition, which applies to entities with an aggregated turnover of less than $10 million. This includes sole traders, partnerships, companies, and trusts. Entities connected or affiliated with a small business entity also fall under this category.

The assets being transferred using the SBRR must be active assets, such as capital gains tax (CGT) assets, trading stock, revenue assets, or depreciating assets. Non-active assets, such as shareholder loans, are excluded. The transfer must also be part of a genuine business restructure, not a tax-driven scheme, and there should be no change in the ultimate economic ownership of the transferred assets as part of the rollover.

Key tax implications of the SBRR include:

The transfer does not trigger income tax at the time of the transfer.
The transferor is deemed to receive an amount equal to the asset’s cost, while the transferee acquires the asset at the same cost.
Anti-avoidance rules may apply to ensure the restructure is not solely tax-motivated.
Liabilities like GST or stamp duty may still apply.

For CGT assets, the transferee must hold the asset for at least 12 months after the rollover to access the CGT discount on a future sale. Trading stock is transferred based on its value or cost at the start of the income year. For depreciating assets, the transferee continues to deduct value using the transferor’s method and effective life. Revenue assets are transferred without profit or loss for the transferor.

Please do not hesitate to contact us if you have any queries in relation to your tax and accounting matters.