Important advice to help businesses prepare for potential changes to Australian tax laws

Sydney, October 15, 2009 – RSM Bird Cameron, a leading Australian accounting firm, has developed a check list for Australian businesses to prepare for potential changes in Australian taxation brought about by the Konza Proposition, budget changes to Division 7A legislation and the Henry Review.

The Australian Taxation Office (ATO), through the Konza Proposition, is seeking to treat unpaid present entitlements (UPEs) between discretionary trusts and corporate beneficiaries as loans, which would trigger the application of Division 7A deemed dividend provisions and effectively result in hundreds of millions of unexpected tax liabilities for private companies and their shareholders and associates.

There are a number of influences at work here and the result is impossible to predict. It is commonly known that the ATO is not a ‘fan’ of trusts and discretionary trusts in particular. Certainly, trusts generate some difficult issues for modern tax law.

Craig Cooper, director – taxation services, RSM Bird Cameron, said, “As expected, businesses are up in arms as to what these changes could mean and what they should be doing to prepare.”

RSM Bird Cameron recommends businesses follow these actions to assess how these changes may affect them:

1. Invest time to develop a working understanding of the issues in play and the factors influencing those issues.

2. Understand how these issues may apply to your circumstances as you may not be directly affected.

3. Re-acquaint yourself with the terms of your trust deed. There have been a number of court decisions and other developments that may require a reassessment of positions that have been taken for granted.

4. Review your trust accounts and other secretarial and compliance requirements, against a current “best practice” check list in conjunction with your financial advisor.

Cooper said, “At any given time, there will be many technical and policy issues in dispute between the ATO and the business world. The Konza Proposition is just another example of these disputes, although the importance of the issue elevates it above many others.

“However, there is a framework within which these differences are developed, and ultimately settled, with government legislation the final arbiter if required.

“It is also possible that a recommendation to revisit entity taxation and to tax trusts as if they were a company from the Henry Review may overshadow the Konza Proposition,” concluded Cooper.


About RSM Bird Cameron
RSM Bird Cameron is the largest mid-tier accounting firm in Australia serving the middle market with technical and commercial expertise over the full range of specialist corporate and business advisory services including assurance and advisory, corporate finance, taxation consulting and turnaround and insolvency.  

RSM Bird Cameron is a core member firm of RSM International, the seventh largest accounting and consulting organisation in the world.