Welcome to Glance Consultants

At Glance Consultants our experienced team is committed to providing a personalised service to meet our clients’ diverse needs. We offer up-to-date, tailored advice and take great pride in ensuring our clients are well-equipped with the knowledge & skills they need to succeed. Read More

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Glance Consultants Chartered accountant Ashburton – offer a range of accounting, taxation & business advisory services to businesses, individuals & SMSF clients. We are here for all your accountancy, bookkeeping and business advice needs. You can rely on Glance Consultants chartered accountants to take care of your finance requirements

Our Services

We provide a tailor made service to our clients to meet their specific needs.

Business Taxation Services

  • Business Taxation Advisory & Planning
  • Taxation Audit Support and Australian Taxation Office Liaison
  • Preparation & Lodgement of Annual Taxation Returns

Business Advisory

  • Management & Financial Reporting
  • CFO Services
  • Strategic Business Advice & Planning
  • Due Diligence Process – Purchase of Business
  • Cashflow Management, Forecasting and Budgeting expertise

Individual Taxation Services

  • Taxation Advice & Planning
  • Preparation & Lodgement of Annual Taxation Returns
  • Taxation Audit Support and Australian Taxation Office Liaison

Self-Managed Super Fund
Taxation

  • Formation of Self-Managed Superannuation Funds including all required registrations
  • Financial Statements and Returns including the preparation of Annual Accounts, Member’s Statements, Income Tax and Regulatory Returns
  • Self-Managed Superannuation Fund Audits

Audit and Assurance

  • Self-Managed Superannuation Funds (“SMSFs”)
  • Owners Corporations
  • Solicitors’ Trust accounts/External Examination for Lawyers
  • Real Estate Agents’ Trust accounts

Bookkeeping Services

  • Xero Accounting Software Integration
  • Bank account and credit card reconciliations
  • BAS Services
  • Payroll Services

Wealth Creation & Risk Management

  • SMSF (Establishment & Wind up)
  • Financial & Investment Advice
  • Property
  • Lending & Finance Solutions
  • Insurance services
  • Estate Planning

Client Testimonials

Glance Consultants provided us with invaluable guidance in setting up our unit trust and corporate trustee. We also use their expertise on an ongoing basis for both our business and individual accounting needs. Kavi and the team are always ready to answer our questions. We have no hesitation in recommending their services.

Mustardseed Capital

Just wanted to mention how happy I was with your service. Thank you very much for your quick turnaround and a very healthy return, appreciate that you made it so simple and painless. Highly recommend to anyone else who is interested in getting their tax done .

Brian

Glance Consultants August 2024 Newsletter

The importance of “Tax Residency”

Whether you are a resident or non-resident of Australia for tax purposes has significant consequences for you.

Primarily, if you are a resident of Australia for tax purposes you will be liable for tax in Australia on income you derive from all sources – including of course from overseas (eg, an overseas bank account, rental property, an interest in a foreign business, etc).

On the other hand, if you are a non-resident of Australia for tax purposes, you will only be liable for tax on income that is sourced in Australia (including capital gains on certain property such as real estate in Australia).

And while there may be difficulty in determining the source of income in some cases, if you are a resident  for tax purposes, the principle of liability for tax in  Australia on income from all sources remains clear.

 

Resident of Australia for tax purposes  

So, what does it mean to be a resident of Australia for  tax purposes?  

Well, broadly, it means you “reside” in Australia (as  commonly understood), unless the Commissioner  is satisfied that your permanent place of abode is  outside Australia. 

However, a recent decision of the Federal Court has  shed some light on this matter – especially the often misunderstood presumption that “connections with  Australia” is all that counts. 

 

“Connections with Australia” 

The Federal Court case involved a mechanical  engineer who was posted to Dubai for a period of  six years, followed by a posting to Thailand, but who  had continuous family ties to Australia (in that he  financially supported his wife and daughters who  were living in Perth). 

Originally, the taxpayer was found to be a resident  of Australia for tax purposes essentially because of  his continuous ties to Australia and the fact that he did not establish personal ties overseas while he was living there (other than via his work commitments). 

However, the Court found that “connections with Australia” was not the key test but rather the key matter was where one intended to treat as home for the time being, but not necessarily forever, ie, not necessarily “permanently”. 

Likewise, it said that the matter of residency is worked  out on income year by income year basis (ie, one  particular year of income at a time) and it doesn’t  mean a person has to have the intention of living in  a particular location forever. 

Among other things, the case may have implications  for people who work overseas on a contract basis  for periods of time, but still maintain family ties to  Australia. 

It may also mean that closer scrutiny will have to be  paid to determine a person’s residency on a year by-year basis and not just “locking” them into a  residency or non-residency status from the beginning  of any relevant change in their circumstances. 

And of course, there is also the key issue of when in  fact your residency status may change! 

 

We are here to help 

Suffice to say, if you find yourself in any such  circumstances (eg, you undertake a foreign posting  for a period or you decide to move overseas for some  time but still maintain connections here), you will  need to speak to us about your residency status –  and the tax implications thereof.

 

Changes to preservation age

Since 1 July 2024, the age at which individuals can access their  superannuation increased to age 60.  So what does this mean for those planning on accessing their superannuation upon reaching this age? 

 

What is preservation age?  

Access to superannuation benefits is generally  restricted to members who have reached  “preservation age”, which is the minimum age at  which you can access your superannuation benefits.  

Prior to 1 July 2024, a person’s preservation age could  range from 55 to 60 as it depends on their date of  birth. Preservation age has been slowly increasing  over the years and has finally reached its legislated  maximum age limit of age 60, as shown in the table below:  

 

What does this change mean for me?  

Once you have reached preservation age, you may  receive your superannuation benefits as:  

A lump sum or as an income stream once you  have retired (or a combination of both), or 

A transition to retirement income stream while  you continue to work. 

Furthermore, once you turn age 60 your  superannuation benefits (ie, any lump sum  withdrawals and/or pension payments) will  generally be tax-free. 

This change simplifies the tax rules as previously  those between preservation age and age 60  were subject to tax on lump sum withdrawals  and pension payments. Now, the tax treatment  of superannuation benefits depends on whether  you are above or below age 60 – there is no need  to consider preservation age which is based on a  person’s date of birth.  

 

Need more information? 

If you’re wondering what your superannuation  withdrawal options are or how tax may apply  to your superannuation benefits, transition to retirement or superannuation income streams,  contact us today for a chat.

It’s important to note that preservation age is not the same as your Age Pension age. To get the Age Pension, you must be age 67 or over, depending on when you were born (and other rules you need to meet). So even if you reach preservation age, it could be some time before you are eligible to receive the Age Pension from Services Australia (ie, Centrelink).


CGT & foreign residents:  Complex rules apply! 

A person who is not a resident of Australia for tax purposes is nevertheless liable for capital  gains tax (CGT) on certain assets located in  Australia. And these assets are assets which have a  “fundamental” connection with Australia – and are  broadly as follows:  

real property (ie, land) located in Australia –  including leases over such land;  

certain interests in Australian “land rich” companies  or unit trusts; 

business assets used in carrying on a business in  Australia through a “permanent establishment”; and  

options or rights over such property. 

This means that such assets will be subject to CGT in  Australia regardless of the owner’s tax residency status.  

Importantly, in relation to real property, this also includes  a home that the foreign resident may have owned in  Australia. And this home will not be entitled to the CGT  exemption for a home if the owner is a foreign resident  when they sell or otherwise dispose of it.  

Furthermore, a purchaser of property from a foreign  resident will be subject to a “withholding tax”  requirement, whereby they have to remit a certain  percentage of the purchase price to the ATO as an  “advance payment” in respect of the foreign resident’s  CGT liability. However, this requirement is subject to  certain thresholds and variations. 

Importantly, a foreign resident will generally not  be entitled to the 50% CGT discount on any capital  gain that is liable to CGT in Australia – subject to an  adjustment for any periods when they owned the asset  when they were a resident of Australia. 

In relation to a foreign resident’s liability for CGT on  certain interests in Australian “land rich” companies or unit trusts, this rule broadly requires the foreign  resident to:  

own at least 10% of the interest in the company or  trust at the time of selling the interest (or at any time  in the prior two years); and 

at the time of sale, more than 50% of the assets  of the company or trust (by market value) are  attributable to land in Australia. 

This means that interest owned by foreign residents in  private companies and unit trusts can potentially be  caught by these rules.  

Moreover, the application of these rules can be very  difficult, particularly as a foreign resident can be  caught by them at certain times and not others. 

It is also worth noting that if someone ceases to be an  Australia resident and becomes a foreign resident for  tax purposes, then they will generally be deemed to  have sold such interests at that time and be liable for  CGT on them. However, this is subject to the right to opt  out of this deemed sale rule – but this “opt-out” has  other important CGT consequences. 

On the other hand, the rule that applies to make a  deceased person liable for CGT in their final tax return for assets that are bequeathed to a foreign resident  beneficiary does not apply to certain assets – and  these assets are any of the above assets with a “fundamental” connection with Australia.  

And this may be further complicated by the fact  that, for example, at the time of making the will, the  beneficiary may not have been a foreign resident. 

The application of Australia’s CGT rules to foreign  residents can be very complex – especially given the  “variable” nature of some of the rules. Therefore, it is vital  to speak to us if you have a “foreign residency” issue.

 

Selling a small business  operated through a company Sell the shares or sell the assets? 

If you run a small business through a company and you decide to sell it, you have  the choice of either selling the business assets themselves (together with any  goodwill) or selling your shares in the company. 

 

Access to the CGT small business concessions 

Usually, such decisions are made on the basis  of relevant commercial considerations (eg, due  diligence and future liability issues). 

However, if you are seeking to access the CGT small  business concessions on any sale, then you should  also consider whether it is better to sell the business  assets per se or the shares in the company. 

While in principle there should be no difference in  terms of the CGT outcome in selling either, it may  well be easier to access the concessions by adopting  one approach over the other. 

For example, if you sell the business assets at the  company level you will need to find one or more  controllers of the company (ie, broadly someone  with a 20% or more interest in it at the relevant time)  in order to be able to access the concessions. 

And, depending on the circumstances, this can be  both easier and harder than it looks. 

Furthermore, in the case of the “retirement  exemption”, it is necessary to actually pay any  exempted capital gain to this controller in order to  be able to use the concession (or to put it into their  superannuation if they are aged under 55 at the  relevant time). 

On the other hand, if you can use the “15 year  exemption”, it is enough that such a person exists –  without the need to pay the exempted gain to them. 

 

“Assets used in carrying on a business” 

Most importantly however, if you choose to sell the  shares in the company, the company itself must have  certain attributes – the most important of which is  that 80% or more of its assets (by market value) must  be assets used in carrying on a business.

This, in turn, raises the thorny issue of how money in  the bank is to be treated – and there is often a fine  line between whether it is considered to be used in  carrying on a business or not. 

 

More hurdles to jump for eligibility 

Furthermore, if the company has “controlling  interests” in any other entity, then the assets of any  such entity also must be also taken into account in  determining if this test is met. 

And, of course, as with the application of the CGT  small business concessions in any circumstances,  the “taxpayer’’ must satisfy either the $2m turnover  test or the $6m maximum net asset value (MNAV)  test. 

And where shares or units are sold, the “taxpayer’’  is the individual who owns the shares and where  the business assets are sold the “taxpayer” is the  company or trust itself. 

In either case, the tests can be difficult to apply  because the “taxpayer’’ includes affiliates and  connected entities (ie, related parties).  

By way of example, if you sell the business assets of  a company and you use the $6m MNAV test, then any person who has a 40% or more shareholding  in the company will be a connected entity and  their assets (other than personal ones such as  superannuation and their home) will also have to  be taken into account. Importantly, this can include  investment properties and shares. 

And then there is the difficult task of determining  what liabilities relate to those assets for the  purposes of this test – especially where the business  assets are sold. 

Suffice to say, the issues surrounding the question  of whether you should sell the business assets of  a company or the shares in them when seeking  to apply the CGT small business concessions are  complex.  

Furthermore, the same issues arise in respect of  deciding whether to sell the units in a unit trust  that operates a small business or the assets of the  business itself. 

 

We are here to help 

In any of these scenarios we are here to help – as  this is a matter which clearly requires the expertise of a tax professional.


Spouse contributions splitting

Splitting superannuation contributions to your spouse can be a great way to boost your  combined superannuation balances which can  benefit you both in retirement.  

 

What is contribution splitting?  

Spouse contribution splitting allows a couple to  optimise their superannuation balances by splitting  up to 85% of concessional contributions (CCs) they  made or received in one financial year (ie, 2023/24)  into their spouse’s account the next financial year  (ie, 2024/25).  

Remember, CCs are before-tax contributions and  are generally taxed at 15% within your fund. This is  the most common type of contribution individuals  receive as it includes superannuation guarantee  (SG) payments your employer makes into your fund  on your behalf. Other types of CCs include salary  sacrifice contributions and tax-deductible personal  contributions. 

The maximum amount that can be split to your  spouse is the lesser of:  

85% of CCs made in the previous financial year  (ie, 2023/24), and  

The CC cap for that financial year (ie, $27,500 in  2023/24).  

 

EXAMPLE 

Alex and Kat are parents to three young children. Kat  has taken time off work to care for their children and  has much less superannuation than Alex.  

After speaking to their financial adviser, they decide to  split the $20,000 in SG contributions that Alex received  from his employer last financial year (2023/24). In  August 2024, Alex applies to his superannuation fund  to transfer as much of his CCs as he can to Kat. 

Alex is able to split 85% of his CCs which provides a  much-needed boost of $17,000 to Kat’s retirement  savings. 

 

Rules for the receiving spouse  

An individual can apply to split their CCs at any age, but the receiving spouse must be either:  

Under preservation age (currently age 60 if born  on 1 July 1964 or later), or  

Aged between their preservation age and 65 years,  and not retired at the time of the split request.  

In other words, if the receiving spouse has reached  their preservation age and is retired, or they are 65  years and over, the application to split your CCs will  be invalid. 

 

Benefits of contribution splitting 

Contribution splitting is an effective way of building  superannuation for your spouse and can manage  your total superannuation balance (TSB) which can  have several advantages, including: 

Equalising your superannuation balances to  make best use of both of your “transfer balance  caps” (TBC) which can maximise the amount you  both have invested in tax-free retirement phase  pensions. Note, the TBC limits the amount that a  person can transfer to retirement phase pensions  in their lifetime – this limit is currently $1.9 million  in 2024/25.  

Optimising both of your TSBs to:  

■  Access a higher non-concessional (after-tax)  contribution cap (as the amount you can  contribute to superannuation depends on  your TSB) 

■  Access the carry-forward CC rules and make  larger CCs (note, the option to utilise these  rules is restricted to those with a TSB below  $500,000 on the prior 30 June) 

■  Qualify for a government co-contribution  

■  Qualify for a tax offset for spouse contributions  

Boosting your Centrelink entitlements by  transferring funds into a younger spouse’s  accumulation account if your spouse is under Age  Pension age. 

 

Last word 

As always, there are eligibility requirements that  must be met and deciding what is best for you will  depend on your personal circumstances. For this  reason, you may want to seek personal financial  advice to determine whether contribution splitting is  right for you and your spouse.

 

Breaking up (by text) is hard to do

A recent decision by the Full Federal Court around a man’s tragic death by suicide clarified the standing of a defacto spouse in the context of a non-lapsing death benefit nomination on a life insurance policy made by the deceased person.

Just prior to C’s death in September 2019 the death benefit under his insurance policy was  valued at $1.1 million, with the death benefit  nomination in favour of his de facto spouse, N,  having been made in December 2018. 

On the night of his death, C sent a text message to  his sister, purporting to be his last will and testament  and indicating his wish that all his assets should  pass to his family, with N receiving nothing. The text  was not copied to N and it was later established  that it was sent while C was under the influence of cocaine and alcohol.

The trustee of the policy took the view that the defacto relationship had continued right up to the time of C’s death and that N was therefore entitled to the death benefit. This decision was challenged by C’s family before the Australian Financial Complaints Authority (AFCA), arguing the text was evidence that the relationship between C and N had ended before C’s death.

However, AFCA decided that relationships have their ups and downs and people say and write a lot of things they don’t mean all the time. This meant the trustee was right, the relationship remained ongoing just prior to C’s death and N was entitled to receive the death benefit.

The family then appealed to the Federal Court, where a single judge ruled that AFCA had erred in law in not construing the text message as proof that C’s relationship with N had come to an end, meaning that N was not a valid beneficiary after all.

Finally (one would think), N appealed to the Full Federal Court, which held unanimously that in the absence of communication from C to N, there needed to be some other course of conduct, such as a refusal to cohabitate, which would clearly be inconsistent with a continuation of the relationship.

Since there was no evidence about such conduct, the Full Court ruled in favour of N. The decision by AFCA was therefore upheld.

This case, with its own peculiar facts, highlights the importance of keeping things like binding death benefits nominations up to date and being clear about spousal relationships, especially when couples live apart.

 

Small business energy incentive

A little-known tax incentive that is aimed at encouraging businesses to improve energy efficiency is the small business energy incentive (SBEI).

You will have to jump through a few hoops to qualify, but depending on what sort of  depreciating assets you have acquired between 1 July 2023 and 30 June 2024 (the bonus  period), you may be entitled to a bonus deduction  of 20% of the cost of acquiring up to $100,000 of  eligible equipment. This is over and above what  you would ordinarily claim, so it’s bit like the old  investment allowance, but with a $20,000 cap. That’s  up to $9,400 extra in your pocket, which may make it  worth a look.  

The SBEI is available to businesses with an annual  turnover of less than $50 million, where they have  invested in certain eligible depreciating assets  during the bonus period and where one or more of  the following apply: 

there is a new reasonably comparable asset that  uses fossil fuel available in the market; 

the new asset is more energy efficient than the  one it is replacing; 

if not a replacement asset, it is more energy  efficient than a new reasonably comparable  asset available in the market. 

An asset can also be eligible if it is an energy storage,  time-shifting or monitoring asset, or an asset that  improves the energy efficiency of another asset. 

The bonus deduction is available on second hand  assets, although the comparable asset must be  available in the market as new. 

It only applies to businesses, so replacing gas  appliances with electric ones in a rental property  would not qualify. The bonus deduction does not  apply to solar panels or motor vehicles.

If you think you may have a claim, please feel free to contact us.

 

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