Good & Bad Tax News for Private Companies
(Treasury Releases 4 June 2015)
Private Companies - The Good News
If your private company is one of a limited category with > $100 Million ‘Total Income’ (Label 6(S) Company Tax Return) the good news comes in the form of Draft Legislation from Treasury (see Better targeting the income tax transparency laws | The Treasury). This Draft Legislation suggests Australian resident-owned private companies in this category may become exempt from current requirements for the ATO to publicly report taxable income, tax payable and more on their website later this calendar year.
Private Companies - The Potentially Bad News
If instead, your private company has some quarantined pre 4 December 1997 loans or pre 16 December 2009 Unpaid Present Entitlements (UPE’s) the proposed new Division 7A from the Board of Taxation in its final Division 7A Review (see Current Activities of the Board of Taxation) includes the potentially alarming suggestion that these ‘grandfathered’ balances should be repaid in full (with interest higher than the current Div 7A rate) over a 10 year period from a future start date of the new Division 7A.
While in its early stages, with no formal Government response or start date (and some administrative concessions which may assist under the proposed new rules), the possible exposure of historical balances, previously understood to be ‘grandfathered’ and protected, is certainly one to watch.
Tax Astute clients can elect to receive all the details in their forthcoming training sessions and reference notes.