The CGT small business concessions : recent evidence from the perspective of the tax practitioner

On 21 September 1999 Division 152 was inserted into the Income Tax Assessment Act (1997) (ITAA 1997). It was subsequently subject to amendments in 2006. Division 152 contains the small business CGT concessions, which enables eligible small business taxpayers to reduce the amount of tax payable on capital gains arising from certain CGT events (including the sale of the small business itself) that occur after 11:45 am on 21 September 1999. One of the stated principal objectives of the legislation was to provide a concessionary regime for small business owners who did not have the same ability to access the concessionary superannuation regime (particularly the superannuation guarantee charge) generally available to employees. The then Federal Treasurer, Mr Peter Costello, when announcing the introduction of the concessions, specifically stated that the object of Div 152 was to provide “small business people with access to funds for retirement or expansion”. The purpose of this project is to: one, assess the extent to which small business taxpayers understand the CGT small business concessions, particularly when considering sale of their business; two, determine which of the four small business CGT concessions are being adopted and/or recommended by tax advisors to clients; and three, determine whether the recent superannuation changes announced by the Federal Government in relation to the capping of the concessional superannuation thresholds have had an impact on the use of the small business retirement concession. It is anticipated that the results of this study will reveal that that small business owners are reliant on their tax advisors to explain the operation of Division 152. It is plausible that give the complexity of the CGT concessions, most small business owners are completely unaware of the four small business CGT concessions contained in Division 152 and do not understand how these concessions apply. Our study will also reveal the extent to which each CGT small business concession has been adopted (and reasons why). In particular, emphasis will be placed on the adoption of the small business retirement concession contained in Subdivision 152-D (and specific reasons for its adoption). This study also seeks to understand whether the recent (and impending) changes to the concessional superannuation cap has resulted in the retirement concession being more widely adopted (or recommended) by tax advisors. We would expect that the results of our study to confirm this to be the case, particularly coupled with the recent economic downturn, which has led to lower superannuation fund balances. By providing accounting firms with this information, small business owners will benefit from the information, becoming better placed to be long-term self funded retirees, providing not only financial benefits to the individuals and the country, but a significant increase in social self-assurance by these members of the community.

Double tax agreements and the international allocation of business income in Australia

Increasingly, the effectiveness of the present system of taxation of international businesses is being questioned. The problem associated with the taxation of such businesses is twofold. A system of international taxation must be a fair and equitable system, distributing profits between the relevant jurisdictions and, in doing so, avoiding double taxation. At the same time, the prevention of fiscal evasion must be secured. In an attempt to achieve a fair and equitable system Australia adopts unilateral, bilateral and multilateral measures to avoid double taxation and restrict the avoidance of tax. The first step in ascertaining the international allocation of business income is to consider the taxation of business income according to domestic law, that is, the unilateral measures. The treatment of international business income under the Australian domestic law, that is, the Income Tax Assessment Act 1936 (Cth) and Income Tax Assessment Act 1997 (Cth), will depend on two concepts, first, whether the taxpayer is a resident of Australia and secondly, whether the income is sourced in Australia. After the taxation of business profits has been determined according to domestic law it is necessary to consider the applicability of the bilateral measures, that is, the Double Tax Agreements (DTAs) to which Australia is a party, as the DTAs will override the domestic law where there is any conflict. Australia is a party to 40 DTAs with another seven presently being negotiated. The preamble to Australia's DTAs provides that the purpose of such agreements is 'to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income'. Both purposes, for different reasons, are equally important. It has been said that: The taxpayer hopes the treaty will prevent the double taxation of his income; the tax gatherer hopes the treaty will prevent fiscal evasion; and the politician just hopes. The first purpose, the avoidance of double taxation, is achieved through the provision of rules whereby the Contracting States agree to the classification of income and the allocation of that income to a particular State. In this sense DTAs do not allocate jurisdiction to tax but rather provide an arrangement whereby the States agree to restrict their substantive law. The restriction is either through the non-taxing of the income or via the provision of a tax credit.

Smart coordination of energy storage units (ESUs) for voltage and loading management in distribution networks

This paper proposes a distributed control approach to coordinate multiple energy storage units (ESUs) to avoid violation of voltage and thermal constraints, which are some of the main power quality challenges for future distribution networks. ESUs usually are connected to a network through voltage source converters. In this paper, both ESU converters active and reactive power are used to deal with the above mentioned power quality issues. ESUs' reactive power is proposed to be used for voltage support, while the active power is to be utilized in managing network loading. Two typical distribution networks are used to apply the proposed method, and the simulated results are illustrated in this paper to show the effectiveness of this approach.