Bottrell Accountants, Financial Planners & Tax Agents

Recent tax and super cases

Recent tax and super cases

Sole director of corporate trustee did not ‘control’ trust

The AAT has held that the sole director and shareholder of the corporate trustee of a discretionary trust did not ‘control’ the trust for the purposes of the CGT small business concessions. Instead, the AAT found that the trust was not “accustomed to act in accordance with” the directors wishes independently of her fathers wishes( and if she did not comply with her fathers wishes, the trustee could be removed by the independent appointor, who regarded himself bound by the wishes and directions of the father). Consequently, the director was not connected with the trust and her assets did not need to be considered in applying the maximum net asset value test( meaning the trust would be entitled to claim the small business concessions).

SMSF trustee ignored BDBN and held personally liable

The Supreme court of Victoria has held that a binding death benefit nomination (BDBN) executed by a decreased member of an SMSF was valid and binding on the trustees of the SMSF. The trustees had wrongly believed that the BDBN was invalid and so had ignored it, instead creating the deceased death benefits of the reaming members account( the deceased’s spouse). Therefore, the court held that the current trustee of the fund was required to make payment of the full amount of the deceased’s benefits as at the date of death, plus an interest component, to the nominated beneficiaries under the BDBN ( the children of the deceased from prior marriage). That is, all the monies held by the SMSF( not just those attributable to the deceased still remaining) were available to meet the payments to the beneficiaries. In addition, because the trustee had favored the remaining members interest’s over those of the beneficiaries by taking this action initially, as well as in deciding to defend the proceedings brought by the children ( and had paid the legal and accounting fees for the “wrong headed defense” exclusively for the funds hat should have been in the deceased’s accounts), despite a “substantial conflict of interest”, the court also entered judgment against the deceased’s spouse personally, jointly and severally with the trustee.

 

SMSF Trustee not obliged to pay death benefits in accordance with deceased’s Will

The Supreme court of Western Australia has held that, although a decreased number of an SMSF expressed a desire in her Will that her superannuation benefits be applied to her children (and specifically not to her husband), this did not affect the rights or duties of the trustee of the fund under the fund’s trust deed. Consequently, the remaining trustee ( ie the husband) had no obligation to appoint the deceased executor as a trustee of the fund, and was also entitled to distribute the death benefits at his discretion, contrary to the discression in the deceased’s will.

Taxpayer that withheld information form tax agent did not take reasonable care

The AAT has held that a taxpayer that received over $3 million for the sale of a property but then failed to include GST in the correct quarter did not take reasonable care, and so upheld the imposition of a penalty of $56,553 ( being 25% of their shortfall amount). In particular, the managing director of the taxpayer had formed a view as to the GST treatment of the receipt, and withheld the relevant information form his tax agent. Regarding this, the AAT stated: “What care would a reasonable person be likely to have exercised in the applicants circumstances in fulfilling the applicants tax obligations? I consider that such a person, if in any doubts as to whether it should and consequently would account for those procedures in the month in which they were received, would seek legal or accounting advice about the issue. Such a person would at least, upon becoming aware that the sale proceeds had been received( as the applicant did in mid January), provide that information to his tax agent, so that the agent could consider whether the amended BAS for the period should be prepared or other steps should be prepared or other steps should be taken to fulfill the applicants obligations, which might involve communicating with the ATO about the matter. Mr Stevens experience as a property developer did not obviate the need for such steps to be taken.”

Accounting firm negligent for not amending BASs

In an action involving an accounting firm suing a client for unpaid fees, the supreme court of South Australia has held that the accounting firms negligence was at least partially responsible for causing the ATO to conduct an audit of the clients business. The accounting firm had failed to correct a mis-allocation of elevator invoices in three BAS’s in the 2008 financial year, but the 2008 income tax return was lodged on the correct basis, creating a significant discrepancy between BASs and income tax returns. However, the clients bookkeepers’s conduct was such that the client was also negligent ( with the accounting firm’s liability being fixed at 75% and the clients liability at 25%).

 

Interested in joining our team? Why not apply today? 

About Our  Traineeships:-

Join the Market Leader in 2016 – Accounting Traineeships

Looking to study a B.Com at University of Newcastle in 2016?

Bottrell Business Consultants are a Multi Award Winning Firm

We have 2016 Traineeships available – work 3 days Study part-time 2 days

Apply now to Tara Skippen on tara@bottrellaccounting.com.au – send resume & cover letter

www.bottrellaccounting.com.au or check us out on Facebook, Twitter, Instagram or LinkedIn

Offices – East Maitland | Newcastle | Sydney | Melbourne | Brisbane | Gold Coast

11951573_939337562798334_3875447510593119880_o

Bottrell Business Consultants Pty Ltd – Chartered Accountants and Business Advisors.

The Bottrell group incorporates Bottrell Business Consultants, Bottrell Accounting & Taxation, Maitland Accounting & Taxation, East Maitland Accounting Services and Mobile Bookkeeping & Recruitment.

Our group of businesses & links include the following companies (& our websites);-

, , , , , , , ,

Comments are closed.