Amendments (to be effective from 1 July 2010) are being made which will allow a farm management deposit owner affected by an applicable natural disaster to access their farm management deposits within 12 months of making a deposit while retaining concessional tax treatment.

If you are eligible for early release of your farm management deposit due to natural disaster, your Sothertons partner will be happy to discuss any tax implications.

Reversionary Pensions

One option to avoid this is to establish any pension as a reversionary pension.  Upon the death of a member, a reversionary pension continues for the benefit of a member’s spouse or dependant child.  This means that if any assets are sold to fund the pension, those assets may be sold capital gains tax free.

There are many strategies for effective estate planning and if you would like any further advice regarding reversionary pensions, or any other estate planning issues, please contact your Sothertons partner.

New R & D Tax Incentive

A new Research & Development Tax Incentive will apply from 1 July 2011. AusIndustry recognises that R&D is a critical driver of innovation which drives increased productivity.

The incentive will continue to be delivered via the tax system. Your Sothertons partner can assist you with the registration requirements and the tax calculations.

What is the R&D Tax Incentive?

• The incentive is a broad based market driven entitlement program.
• It is aimed to encourage more Australian businesses to carry out research and development.
• Provides generous support for small and medium sized firms.
• It replaces the R&D Tax Concession with effect from 1 July 2011

What does the New R&D Incentive provide?

• More generous rates of assistances than the outgoing R&D Tax Concession
• 45% refundable tax offset to eligible entities with turnover less than $20 million
• 40% refundable offset for all other eligible entities
• No longer attached to the corporate tax rate (30%)

What benefits does the incentive provide?

• Increased access for foreign companies and offshore IP (intellectual property)
• Access to the expertise of approved Research Services Providers
• Double the cap for companies owned by tax exempt entities accessing 45% refundable offset
• Potential for companies owned by universities be able to access the 40% non-refundable offset
• Quarterly cash payments (in arrears) where the company has sustained tax losses from 1 January 2014

The new R&D Tax Incentive offers exciting opportunities for innovation to progress in Australia and from our experience what can appear to be a minefield is actually not too difficult… don't let it deter you from the attractive benefits potentially available.

If you have questions about your eligibility to commence claiming or to transition from the outgoing R&D Tax Concession, please contact your Sothertons partner.

Small business depreciation rules: Exposure Draft

The government released for comment on September 13 2011 the  draft legislation which proposes to make various tax law amendments concerning the small business depreciation rules, including:

• Increasing the small business instant asset write-off threshold from $1,000 to $6,500;
• Allowing small businesses to write-off all other depreciating assets in a single depreciation pool at a rate of 30 per cent (currently, small businesses allocate assets to two different depreciation pools, with two different depreciation rates (30 per cent and 5 per cent)); and
• Allowing small businesses to claim up to $5,000 for motor vehicles acquired from the 2012-13 income year.

The exposure draft legislation also amends the tax law to abolish the entrepreneurs' tax offset.

The amendments are to apply to small business entities and are proposed to have effect from the 2012-13 income year.

Please contact your Sothertons partner to discuss opportunities that may be available to you under this proposed legislation.