Dividends/Loans and Payroll Tax
Q: Can payments made to shareholders by way of dividends (rather than salaries or wages) be subject to Payroll Tax in Western Australia?
A: Provided the payments are not made to an employee in his/her capacity as an employee (rather, they are made in any other capacity, for example as a shareholder), the OSR accepts that the payments will not be subject to Payroll Tax.
Small Business Restructure Rollover (SBRR) and Shares
Q: Can a Small Business Entity utilise SBRR involving the transfer of shares from one entity to another?
A: To be eligible, the shares must be active assets in a limited sense that they must be used, or held ready for use, in the course of carrying on a business by either the entity, its affiliate or connected entity. Therefore, shares in companies are generally not eligible for the SBRR.
Capital Gains Tax – Deferring inclusion of income until after settlement time
Q: Can you defer including a capital gain in relation to the sale of a property until settlement or change of ownership occurs?
A: Where a property is sold, a capital gains tax event occurs at the time that the contract is signed. Therefore, any capital gain realised will need to be included in your income tax return in the income year that the contract is signed.
Generally, settlement of the property occurs at a later date and in some cases that date occurs in a later income year to the signing of the contract.
Paragraph 3 of Taxation Determination TD 94/89 states that a taxpayer is not required to include any capital gain or loss in the appropriate year until an actual change of ownership occurs, being settlement.
Where the income tax assessment for the appropriate year has already been issued it will be the taxpayers responsibility to amend the assessment once settlement has occurred.
Income tax assessments that are amended to include an amount of omitted income may give rise to interest on the shortfall amount. However, as discussed in TD 94/89 at paragraph 5, where the amendment is made within a reasonable time the discretion to remit the interest is likely to be exercised. It is generally accepted that within a period of one month following settlement would be reasonable.