February 2015 Newsletter Part 1

Mar 01, 2015



Removing Tax Impediments to certain Business Structures

On 12 December 2014, the Tax Superannuation Laws Amendment (2014 Measures No. 6) Bill 2014 received Royal Assent. The Bill makes changes to the CGT rollovers for businesses by extending the existing business restructure rollovers available where a member of a company or unitholder in a unit trust can defer the income tax consequences of transactions that occur in the course of a business restructure. 

This includes allowing tax payers to apply the rollovers where the CGT assets they held, the shares or units, are held as revenue assets or trading stock. The amendments also tidy up the law so the business restructure rollovers that apply to shares and units are now found in one set of provisions. 

If you were contemplating a restructure or previously have been, please contact us as these changes may provide relief that was not previously available. 

Dabbling in Bitcoin? Thats the 'tax' story? 

On 17 December 2014, the ATO issued its position on how it will treat Bitcoin, a digital currency, for tax purposes. The ATO's views are: 

Income Tax 
  • Bitcoin is not a 'foreign currency' for the purposes of the income tax law because the ATO does not view Bitcoin as a currency or foreign currency in the content in which those terms operate for the purpose of the Australian tax law (TD 2014/25)
  • Bitcoin is a 'CGT asset' for the purposes of the income tax law as it is regarded as 'property' for the purpose of the tax law (TD 2014/26) 
  • Bitcoin is trading stock when held for the purpose of sale or exchange in the ordinary course of a business because it is regarded as property for tax purposes (TD 2014/27)
  • The provision of Bitcoin by an employer to an employee in respect of their employment is a property fringe benefit (TD 2014/28)
  • A transfer of Bitcoin from one entity to another is a 'supply' for GST purposes. The exclusion from the definition of supply for supplies of money does not apply to Bitcoin because Bitcoin is not 'money' for the purposes of the GST act 
  • The supply of bitcoin is not a 'financial supply' nor an input taxed supply
  • A supply of bitcoin is a taxable supply if the requirement under the GST act are met 
  • A supply of bitcoin in exchange for goods or services will be treated as a barter transaction 
  • Bitcoin is not goods and cannot be the subject of a taxable importation. However, an offshore supply of Bitcoin can be a taxable supply under the 'reverse charge' rules 
  • An acquisition of Bitcoin will not give rise to input tax credits under the provision of the GST Act which allow input tax credits for certain acquisition of second-hand goods
  • A supply of Bitcoin is not a supply of a voucher  

Also at the time of writing, there is a Senate committee conducting an inquiry into how Australia should regulate digital currency, including how the tax system should treat digital currency, such as Bitcoin. The tax treatment for Bitcoin could potentially change pending the outcome of the inquiry. 

Employee Share Scheme changes

In our previous new alerts, we referred to the Government's recent announcement to make changes to the tax treatment of employee share schemes. The Government has since released exposure draft legislation for consultation. We will provide further detail regarding the proposed changes shortly.

If you have any queries regarding the February due dates, please contact the office on 07 3088 2040 or info@affinitypartners.com.au