We specialise in servicing and advising smaller public companies, large family businesses, small to medium enterprises and high wealth individuals (which we collectively refer to as the “middle market”). Therefore, in making submissions, we focus on the implications of a proposed change for the middle market.

Below is some background on (and links to) submissions that Pitcher Partners has made on behalf of the middle market.

Modernising The Taxation Of Trust Income

For the last five to ten years, the trust taxation regime has undergone a significant amount of scrutiny from the Australian Taxation Office ("ATO"). Due to this high level of scrutiny, a significant amount of uncertainty has been raised in respect of the efficacy of a number of the aspects of the trust taxation measures.

We highlight that, in many cases, the issues raised do not involve revenue concerns. For example, the uncertainty on the scope of Division 6 when there is a bare trust relationship should not be a revenue issue. Accordingly, while we agree that there are a number of uncertainties in relation to the trust taxation provisions, we do not agree that there are significant problems with the way in which the provisions are intended to operate. Therefore, we do not agree that there is a case to justify wholesale reform to the measures. That is, we believe that the measures only require some fine tuning to address a number of the uncertainties that currently exist.

Click here to read our submission to Treasury on 17 February 2012.

FBT Reform - Living away from home benefits

The effective removal of the living away from home concessions will have a significant impact on the costs of employing skilled overseas workers - who will only be attracted to Australia if their employer is prepared to pay either increased remuneration or pay FBT on benefits formerly exempted or concessionally taxed.

We are of the view that the proposed amendments relating to temporary resident employees, whereby they must maintain a home in Australia (which they are living away from for work) will mean that most such employees will be severely disadvantaged when compared to permanent resident employees.

Click here to read our submission to Treasury on 3 February 2012.

Income Tax: cross border profit allocation - Review of Transfer pricing rules consultation paper 

We welcome the opportunity for the transfer pricing rules to be clarified. Their complexity has long been a significant challenge for the middle market.

Click here to read our submission to Treasury on 07 December 2011.

Improving the taxation of trust income

On 4 March 2011 the Assistant Treasurer announced proposed changes to the taxation treatment of trusts for the 2010/11 year of income. The discussion paper accompanying the announcement contained two proposed measures, both having an impact on trusts including those making distributions in this income year, and those seeking to stream various classes of income in this income year.

Pitcher Partners’ submission to the Federal Treasury argued that it is too near the end of the current financial year to consider making fundamental changes to the definition of “income of the trust estate”. We also presented that current problems will only be exacerbated by changing this definition without also making changes to the definition of the phrase “presently entitled”. Finally, in the interests of ‘good, practical tax administration’, Pitcher Partners advocated that the current provisions should continue to be applied in a manner consistent with prior years.

For a copy of our earlier Tax Alert on this issue please click here.

For a copy of our Submission please click on this link.

Reform of the Foreign Source income deferral rules

On 17 February 2011, the Treasury released Exposure Draft ("ED") legislation, outlining proposed changes to the tax treatment of income derived through foreign investments. These provisions affect Australian taxpayers who derive income indirectly through either controlled or minority investments in foreign entities. The proposed application date of the measures is unclear.

Whilst we are pleased that both the CFC and the FAF ED go some way towards addressing some of the problems in the previous papers, we believe that there are significant areas of uncertainty in the both EDs which will create substantial compliance issues for taxpayers in the middle market.

For a copy of our earlier Tax Alert on these issues please click here.

For a copy of our Submission on the FAF ED please click on this link.

For a copy of our Submission on the CFC ED please click here.