Media Alert: Gmk Centric Tax Notes October 2008

Tax Notes and Commentary

The following Tax Notes, distributed by GMK Centric, discuss a broad range of current hot topics including:

Luxury Car Tax

The Government's bills proposing to increase the luxury car tax rate to 33 per cent from 25 per cent have been passed by Senate, but with amendments which exempt low-emission vehicles valued at less than $75,000 from the tax. The government will also provide refunds of the increase in luxury car tax for farm vehicles and those used by tourism operators. The new rate applies from July 1, 2008, or whenever the bills receive assent.

'Borrowing Money' for SMSFs

The Superannuation Industry (Supervision) Act prohibits a self-managed superannuation fund (SMSF) from borrowing money or maintaining an existing borrowing of money except under specific circumstances. The terms 'borrow money' and 'maintaining an existing borrowing of money' are not defined.

A recent draft ruling states that a borrowing of money has two necessary characteristics: a temporary transfer of money from the lender to the borrower and an obligation to repay the amount to the lender. An existing borrowing is maintained where a borrowing agreement previously entered into remains in place and the SMSF is obliged or intends to repay the money lent.

New Double Tax Agreement with South Africa Introduced

The International Tax Agreement Amendment Bill (No 2) 2008 amends Australia's tax treaty with South Africa.

Key features include:
1. A lower tax rate of 5 per cent applies to royalties (previously 10 per cent)
2. A 10 per cent tax rate remains for interest, although exemptions apply for certain interest amounts paid to government bodies and financial institutions

For further detail, please see attached GMK Centric's Tax Notes October 2008.

To talk to a representative at GMK Centric please contact us on 02 9018 8600.