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GUEST OBSERVATION
In general terms, the tax law contains provisions that allow taxpayers to, in effect, get out of paying their tax bill if they can prove that paying their tax would result in “serious hardship”.
Obtaining a release from tax liabilities involves a two-step process:
<ol>
<li>A determination that the applicant would suffer a serious hardship if he or she was required to satisfy the tax liability; and</li>
<li>Whether in the circumstances, discretion should be exercised to grant the release sought. A taxpayer can request that the Tax Commissioner release him or her from their tax liabilities.</li>
</ol>
The process sounds relatively straightforward, but there is no definition of "serious hardship" in the tax law. Each case must be considered on its facts.
However, the Tax Commissioner has issued guidelines in what is known as the ATO Receivables Policy to provide ATO staff with guidance in dealing with applications for release from tax liabilities. In part, that policy states:
"The term ‘serious hardship’ is not defined at law and must be given its ordinary meaning. The Commissioner determines whether serious hardship exists by applying several tests which are designed to ascertain whether payment of the tax would produce unduly burdensome consequences for the person such that they would be deprived of necessities according to normal community standards.
"Thus, serious hardship would be seen to exist where payment of a tax liability would result in the person being left without the means to achieve reasonable acquisitions of food, clothing, medical supplies, accommodation, education for children and other basic requirements. On the other hand, elements of hardship may be regarded as marginal or minor – rather than serious – if the consequences of payment of tax are seen, for example, as limitation of social activities or entertainment, or loss of access to goods or services of a more luxurious nature or standard."
Okay, so getting a release from your tax debts is possible, but how often does it happen?
The burden of proof
The onus is generally on the taxpayer to prove that serious hardship will result if they have to pay their tax bill. That's often easier said than done, and taxpayers should not underestimate exactly what they have to prove.
Two recent decisions before the Administrative Appeals Tribunal (AAT) saw taxpayers lose their claims for relief from paying their tax liabilities. They illustrate just what it takes to prove serious hardship.
In the first case, the taxpayer’s tax debt was just over $80,000. He argued that his income tax debts arose as a result of his unauthorised early access of his superannuation benefits in order to support his gambling addiction. The AAT said that during the income year ended 30 June 2011, he illegally accessed his superannuation benefits by withdrawing just over $180,000 from his super fund. The taxpayer sought release from his tax liability either in whole or in part on the basis that he would suffer serious hardship if he was required to pay the outstanding balance.
He said his total asset value was about $580,000 with total liabilities of $666,200 which did not include his tax liability.
Although acknowledging the taxpayer's intentions to control his gambling addiction, the tribunal was not satisfied the taxpayer's situation, if required to pay the tax debts, would be of serious hardship. Even if it were a case of serious hardship, the tribunal said it would not exercise the discretion to grant relief.
The tribunal noted the taxpayer was earning a high income in the mining industry and that his household expenses included discretionary spending that could be reduced, for instance, entertainment of $250 per fortnight, other expenses of $264 per fortnight and vehicle expenses including repairs and loan repayments of $926 per fortnight. It said the sale of the taxpayer's car or investment property would also significantly reduce his tax liability. Furthermore, it noted the taxpayer had preferred the repayment of other debts to his tax debt. Accordingly, the taxpayer's application was dismissed.
In the second case, a taxpayer was also unsuccessful before the AAT in seeking to be released from his tax liabilities.
As of 4 May, 2014, the taxpayer's outstanding tax debts amounted to around $58,000. However, the tribunal was not satisfied the taxpayer's situation, if required to pay the tax debts, would be of serious hardship.
The tribunal said no explanation was offered for the failure by the taxpayer to meet his tax liabilities as they arose. When comparing household income to expenses, although noting the outlays were not extravagant, the tribunal was of the view there was a level of discretionary spending (eg entertainment) which, if necessary, could be reduced.
The tribunal said instead of paying what it considered to be manageable tax assessments, the taxpayer “largely ignored his tax liabilities over the last five or six years”, and had allowed the amounts due to accumulate with interest. It added that the taxpayer “simply failed to give proper priority to paying his tax” and that since entering the PAYG instalment system in 2008, he had paid only four of 22 tax assessments. The tribunal said the taxpayer had made no sustained effort to clear arrears and achieve compliance.
The tribunal considered that the taxpayer had overstated his expenses. It said the taxpayer's situation had been brought about by his own failure to meet his tax obligations. It was not, in the tribunal's view, a situation that had been forced upon him. He had simply failed to give proper priority to paying his tax.
While the law does allow people the opportunity to be released from their tax liabilities, the above cases prove how difficult that can be.
“Serious hardship” is determined on the facts of each case, and court and tribunal cases have built up a series of authorities on how it is to be determined. When taken with the ATO’s policy in this area, taxpayers need to understand fully just what it will take to be released from their tax liabilities.
Terry Hayes is the editor-in-chief of tax news reporting at <a href="https://www.thomsonreuters.com.au/" target="_blank">Thomson Reuters</a>, a leading Australian provider of tax, accounting and legal information solutions.
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Getting a release from your tax debts – possible, but not so simple

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In general terms, in order to claim input tax credits (ITCs) under the GST system, an enterprise must be carried on. This can be a tricky issue when property developments are concerned, as two taxpayers recently found out to their detriment before the Administrative Appeals Tribunal (AAT).
A business needs to be carried on before claims for ITCs can be made and this is where the taxpayers ran into trouble before the AAT.
In that case, the two taxpayers failed before the AAT in a matter concerning a number of ITC claims in respect of purported acquisitions made in relation to two property developments.
The first taxpayer (a company that was the trustee of a trust) and the second taxpayer (a partnership of two individuals) claimed to have made acquisitions in relation to a 4900 acre property development near Goulburn in NSW. The first taxpayer also claimed to have made acquisitions in relation to another property development in Grenfell NSW.
Both taxpayers were registered for GST. However, the Tax Commissioner issued to both taxpayers amended assessments denying ITCs claimed on those purported acquisitions – in the first taxpayer's case, for the tax periods April 2010 to June 2011, and in the second taxpayer's case, for the tax periods April 2009 to December 2010.
The Commissioner's position was that neither taxpayer carried on an enterprise at all, so that neither of them could be entitled to any ITCs. The Commissioner also imposed a 50% administrative penalty.
The tribunal dealt mainly with the arrangements of the first property development as it was of the view the arrangements did not differ materially from the second development. The tribunal noted there had been some work done on the property; however, the parties disputed what that work consisted of, how much of it was done, who it was done for, and whether it had been paid for.
The taxpayers said they were "principal contractors to the project". The project was presumed by the tribunal to be the development of the property for eventual subdivision. However, the tribunal noted that exactly what the "principal contractors" did in respect of the property remained the subject of "quite profound mystery". It also said the same observation applied in respect of what the "principal contractors" were supposed to have acquired from various entities, described by the taxpayers as the "subcontractors", who were said to have undertaken some of development activities.
The tribunal understood the case put by the taxpayers as follows: the owner of the property engaged the principal contractors to get certain work done on the property; the principal contractors in turn engaged subcontractors to do the physical work; the subcontractors did the work and charged the work to the principal contractors; and the principal contractors bundled up the charges with a 20% mark-up and on-charged the owner of the property.
The total amount invoiced to the first taxpayer by the subcontractors (in relation to both property developments) was over $250,000. The total amount invoiced to the second taxpayer was over $820,000. However, the tribunal said the invoices themselves were "short on detail". The tribunal also noted that the Commissioner had notified the taxpayers his doubts concerning the work undertaken on the property after he was informed by the relevant council authority that approval to subdivide the property had been refused.
The tribunal said each taxpayer's claim for ITCs failed "at the most basic level". It said that an entity is not a "project manager" simply because someone says it is, and it was important that, to carry on an enterprise (thus enabling the ITC claim to potentially succeed), "an entity must do something".
The tribunal was unable to identify the "activity" that the taxpayers were undertaking in respect of the properties. It was also not satisfied that either of the taxpayers, in relation to the relevant property developments, carried on any activities "in the form of a business". A key issue identified was the difficulty the taxpayers had in articulating the arrangement between themselves, landowners and subcontractors. The AAT said it could not see that either taxpayer did much at all, beyond receiving invoices from the subcontractors and it rejected any notion that receiving invoices is relevantly an “activity”.
The tribunal member (Deputy President Frost) said the taxpayers "could not take me to any document that set out an agreement, between either of the landowners and either of the applicants, that the applicants would perform services or tasks, engage or co-ordinate third parties, or even make arrangements of any kind in relation to the development of the properties".
That, to say the least, was not helpful to the taxpayers' cause.
The tribunal was of the view the "true arrangement" was work was done for, and the supplies were made to, the owners of the properties, and that at most, the taxpayers agreed to pay for some of the supplies. The tribunal found, on the balance of probabilities, that there were "supplies" by the subcontractors; however, it was of the view that any supplies were not made by the subcontractors to the taxpayers. It said it could not see any indicators of a business being carried on. Accordingly, it held the claims for ITCs were not sustainable.
Although not required to, the tribunal also rejected the taxpayers' argument that "promissory notes" issued by them to the subcontractors for work done constituted consideration at the time of the supplies. The tribunal also affirmed the penalty at 50% of the shortfall amount.
The tribunal said the arrangement involved multiple entities, many of them not at arm's length, and that given the type of arrangement involved and its size, independent advice should have been obtained.
This case is a clear demonstration of the need to properly and fully document the operations of a business. The need to obtain clear and independent advice on any business proposition, be it property development or something else, is also a "take-away" message from this case.
Terry Hayes is the editor-in-chief of tax news reporting at <a href="https://www.thomsonreuters.com.au/" target="_blank">Thomson Reuters</a>, a leading Australian provider of tax, accounting and legal information solutions.
This article first appeared on <a href="https://www.SmartCompany.com.au" target="_blank">SmartCompany</a>.
Photo courtesy of Chris Tolworthy/Flickr/<a href="https://creativecommons.org/licenses/by/2.0/" target="_blank">Creative Commons</a>.
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The tricky business of property development and GST credits

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GUEST OBSERVATION
Under the capital gains tax laws, taxpayers can be entitled to small business capital gains tax concessions which can, depending on the circumstances, either reduce or eliminate any capital gain made. <a href="https://www.smartcompany.com.au/finance/tax/34073-capital-gains-tax-get-your-house-in-order" target="_blank" style="line-height: 1.3em;">The concessions</a> are very beneficial to small businesses, but are unfortunately complex (much more so than they should be).
One of the tests in the law that a taxpayer needs to meet is what is called the maximum net asset value test. This test is whether in the year in question, the concession can be claimed if the value of its net assets did not exceed $5 million. It sounds straightforward, but it isn’t. Under the test, the net value of CGT assets of entities “connected with” the taxpayer is required to be taken into account for purposes of maximum net asset value test. It is the meaning of “connected with” that recently brought a taxpayer undone before the Federal Court.
The taxpayer was a company that made a capital gain of just over $1 million in selling its 50% interest in a car wash business in the 2007-08 income year. It did not return the gain as assessable income but instead claimed that it was entitled to apply the CGT small business concessions. The company claimed that in calculating its taxable amount, it was entitled to rely on a statutory concession in the tax law on the basis that the value of its CGT assets did not exceed $5 million.
However, the Tax Commissioner issued an amended assessment to include the gain on the basis that the taxpayer failed the (then) $5 million MNAV test. At first instance, the Administrative Appeals Tribunal had to decide whether sole director and controller of the company (Mr Roberts), could exclude from the MNAV his interest in a Queensland property, which had been rented for much of the previous seven years, but which at the time of the sale of the carwash had been taken off the rental market and had intended to be once again used as his and his wife's holiday home.
Also at issue was whether the wife's CGT assets, including her interest in the Queensland property, were to be taken into account on the basis of her being either a connected entity and/or a "CGT small business affiliate" of the taxpayer company.
In its decision, the AAT dismissed the argument that the 50% interest of the husband in the Queensland property should be disregarded. However, it held that the wife's CGT assets, including her 50% interest in the holiday home, were not to be counted in applying the MNAV test because she was not connected with the taxpayer company as she did not own any shares in it. It then found that although she was a "CGT small business affiliate" of the controller of the taxpayer company (her husband) by virtue of being his wife, she was not a CGT small business affiliate of the taxpayer company as required by the relevant law in order for her CGT assets to be included. The Tax Commissioner appealed.
The Commissioner argued that in applying the relevant provision, the tribunal ought to have included, but did not include, the value of the assets of Mrs Roberts in the calculation of the value of the company’s assets before the sale of the car wash.
The Commissioner contended that the tribunal erroneously limited its enquiry into whether Mrs Roberts herself beneficially owned shares in the company that carried the right to control the exercise of at least 40% of the voting power, whereas the tribunal ought to have considered whether Mrs Roberts’ small business CGT affiliate (her husband) owned shares in the company that carried between them the right to control the exercise of at least 40% of the voting power.
The Federal Court said the covering words in the relevant provisions of the tax law contemplated three bases upon which to determine the relevant connection between the company and another entity (in this case the wife). The court said the tribunal concluded that the relevant provision did not apply because the wife was not connected with the company although her husband was.
The tribunal did not, however, consider (but should have) whether the wife was deemed to be connected with the company by the same law which required that her connection be determined also by reference to her small business CGT affiliate (in this case, her husband) or together with her small business CGT affiliate (in this case, together with her husband).
The case highlights the inherent complexities in what should really be a relatively straightforward tax concession.
The small business CGT concessions are valuable to any SME and can result in significant tax savings. However, any SME contemplating claiming the concessions would be very well advised to seek professional advice. This is one piece of tax law that is crying out for simplification.
Terry Hayes is the editor-in-chief of tax news reporting at <a href="https://www.thomsonreuters.com.au/" target="_blank">Thomson Reuters</a>, a leading Australian provider of tax, accounting and legal information solutions.
This article first appeared on <a href="https://www.smartcompany.com.au/" target="_blank">SmartCompany</a>.
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Beneficial but tricky capital gains tax concessions explained

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GUEST OBSERVATION
Despite what you may think, that is not a rhetorical question.
The <a href="https://www.smartcompany.com.au/finance/tax/41486-ato-data-matching-targets-online-selling">Australian Tax Office</a> is a large federal government agency that comprises about 15% of the Australian Public Service, and has around 24,000 people in more than 60 locations around Australia. It’s a large organisation by any measure. Reinventing any entity that large is no mean feat – and it won't happen quickly.
Some may question why a country of 23 million people needs a tax agency that large. Well, our tax system is complex (way too much so), and the ATO has many taxes to administer. However, while the size itself of the ATO is one thing, how it operates is a whole other issue.
Tax Commissioner Chris Jordan is looking at how the ATO can reinvent itself to make it simpler and easier for people to comply with their tax obligations and to make the ATO a more responsive and “user-friendly” agency. These are not platitudes from the Commissioner; he means it.
In a recent speech, the Commissioner said that with the Coalition government's "open for business" mantra, the push for productivity increases and de-regulation, the ATO must be able to show improvements in efficiency and reductions in red tape. Jordan said he has promised government he will do everything he can "to improve the tax and super experience in Australia – making it simpler and easier to comply". He said he has also promised to change the culture of the ATO and is required to report back to the Assistant Treasurer regularly on that front.
The Commissioner said that building trust in tax administrations was critical to the success of tax systems.
Jordan said that when he was asked to take on the role, he was aware of feedback that despite best intentions, the ATO had become isolated from some of its key stakeholders and segments of the community. Jordan said he knew that trust and confidence needed to be lifted and he was asked to work on relationships with government, other agencies, and, SMEs will be glad to hear, the business community.
The Commissioner said his "fundamental belief is that in order to deliver to government, the ATO must use its power legitimately, build trust in its judgment and demonstrate fairness and integrity". He said the ATO has to design and operate a system for the majority of taxpayers who do the right thing,rather than for the few who don't [Commissioner's emphasis]. Jordan said the ATO was asking itself "how do we design the system so that it suits the 95%, rather than a system designed for 5%?"
The Commissioner said the ATO’s answer to this complex situation is to reinvent itself, transform how it goes about its core business, and make it a contemporary and service-oriented organisation. He acknowledged that reinventing the ATO is a long-term journey — recognising that building trust in a tax administration is not a simple or quick effort.
Jordan said the ATO has to build on the positives of its culture like commitment to its role, to service and taxpayers, integrity and ethics, but, in a frank assessment, he said the ATO also has to “acknowledge the negative aspects of our culture like risk aversion, righteousness, silo mentality and bureaucracy”. SMEs and their advisers would certainly agree.
Jordan said the ATO's approach to accountability needs to change – "to be simpler, clearer and connected to reward and consequence". He said the ATO's measures "have to include views from others and be related to effectiveness and outcomes…We must put a much greater emphasis on how others judge our performance."
Integrity is about character, Jordan said. In terms of the ATO and the tax system, he said  it is about doing the right things consistently by all of the ATO’s stakeholders (e.g. government, business, taxpayers generally) — “safeguarding and future-proofing the system on behalf of the Australian community and dealing with taxpayers in a way that is fair and right in the long run”.
The Commissioner said these thoughts have helped shape the ATO’s strategic directions.
Recognising that time is money for all businesses, Jordan said the ATO is focusing on early discussions between the taxpayer and relevant tax officers responsible for making decisions. These early, face-to-face talks, he said, aim to get to the core issues more quickly and short-circuit unproductive paper wars between the parties. SMEs will no doubt be delighted if the paper war can be won!
The ATO is also seeking to bring to a sensible close unnecessarily long running cases and audits — “recognising when we reach the point of diminishing returns or an impasse”, the Commissioner explained. Of course, if agreement or settlement cannot be reached, the courts will need to decide. In a refreshing stance, the Commissioner said that continuing dialogue for five years or more is not productive, prevents closure and damages trust.
The ATO is at the centre of the tax world in Australia. It deals with millions of taxpayers and their tax issues every day. Overshadowing all of that is the tax law. The Commissioner said it is important to him that the ATO is able to influence law design. He said the ATO has the advantage of seeing what works and doesn’t in practice and can use those insights to advise Treasury. The ATO’s new Integrated Tax Design Unit seeks to ensure requests to Treasury are prioritised and presented from a whole-of-system perspective. Jordan said there is limited capacity to change law and the ATO is looking at other ways to resolve issues.
Seeking the community’s perspective through consultation – knowing what problems exist and their ideas for possible solutions is, in the Commissioner’s view, vital in order for the ATO to provide the right advice to Treasury.
SMEs and businesses generally have avenues to make their views known, for example as I explained in my recent article about the Inspector-General of Taxation’s new work program. And the ATO itself is asking small business owners to join its new small business consultation panel to help boost the ATO’s small business expertise. In addition, the government has asked the Board of Taxation to identify features of the tax system that are hindering SMEs.
There is a lot happening at the ATO and in the tax system. The Commissioner says he is “going to do what I can to make improvements to the tax and super experience by reinventing the ATO”.
“I want the ATO to be trusted and respected…where people choose to comply and we make it as painless as we can. In the end, I want confidence in the ATO and the tax system so that there is conscious willing participation, hopefully higher than the current 95%.”
Can the ATO reinvent itself? The sceptics may have doubts, but the Commissioner is clearly serious and appears intent on giving it “a red hot go”. He has already got some runs on the board, so watch this space.
Terry Hayes is the editor-in-chief of tax news reporting at <a href="https://www.thomsonreuters.com.au/" target="_blank">Thomson Reuters</a>, a leading Australian provider of tax, accounting and legal information solutions.
This article first appeared on <a href="https://www.smartcompany.com.au/" target="_blank">SmartCompany.</a>
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Can the ATO reinvent itself? The push for a more “user-friendly” tax agency

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GUEST OBSERVATION
Tax refunds are often thought of as a sacrosanct part of our tax system. They're not. There is no guarantee that anyone will <a href="https://www.smartcompany.com.au/finance/tax/24536-is-the-ato-s-ability-to-retain-tax-refunds-too-great" target="_blank">get a tax refund</a>. It depends entirely on one's particular circumstances, and how the numbers fall when a person's tax return is compiled.
However, when refunds are due, taxpayers are always keen to receive them and any delays are not welcomed.
So why are some tax refunds delayed?
The Australian Tax Office says within the tax system, there is an endemic risk of taxpayers and tax return preparers lodging incorrect or fraudulent returns. Left untreated, the ATO considers that such risks may result in reduced community confidence, an erosion of voluntary compliance and significant revenue leakage.
Therefore, the ATO runs what it calls an "income tax refund integrity program" whereby it uses a series of analytical models designed to detect instances of overclaimed tax deductions, offsets or other credits in income tax returns. The ATO stops these returns for manual review before any refunds are issued to the taxpayer. The ATO takes the view that certain risks should be addressed prior to issuing the notice of assessment and before any refunds are paid to the taxpayer. The aim is to protect the integrity of the tax system. Fair enough.
However, there have in recent years been complaints about the length of time tax refunds have been delayed. The Inspector-General of Taxation, Ali Noroozi, has <a href="https://www.smartcompany.com.au/finance/tax/29185-inspector-general-of-taxation-investigates-ato-refund-delays" target="_blank" style="text-decoration: none; color: #000000; font-weight: bold;">conducted a review into this ATO refund review program</a> and his report has just been released. At 108 pages, it's a lot of reading.
The review arose out of taxpayer and tax agent concerns regarding extended ATO delays in processing income tax returns held for review under the ATO program. Significant complaints were raised with the Commonwealth Ombudsman, the ATO’s Complaints section and the IGT in 2011-12 when higher than expected numbers of tax returns were held leading to extended delays in the processing of those returns. Some 109,000 returns were held when only 33,000 had been expected.
As a result, Noroozi said a significant number of taxpayers experienced extended delays, sometimes of many months following lodgment. These extended delays were exacerbated by the inability of taxpayers or tax agents to find out why these delays occurred or to have their returns expedited. Moreover, the Inspector-General said it was contended that the ATO’s communication led to the perception that the ATO considered these taxpayers to be dishonest or fraudulent.
Following the experience in 2011-12, the ATO embarked on a significant program of work to refine the models and processes it used to stop fewer tax returns and reduce timeframes. The Inspector-General said this review confirmed that the ATO has improved its communications to affected taxpayers by providing greater clarity of timeframes for release of their refunds.
Noroozi said the ATO has placed less emphasis on potential fraud as a reason for returns being held to allay taxpayer concerns and anxiety. In relation to concerns that the ATO review program only stopped and adjusted tax returns with small refund amounts, the IGT found that statistics over a 3-year period indicated that of the stopped returns, 5.29% cent in 2010–11, 1.85% in 2011–12 and 2.87% in 2012–13 contained refunds of $1,000 or less.
The Inspector-General said submissions to his review acknowledged the improved experience with the ATO review program in the 2012–13 financial year. However, they raised concerns regarding delays that have persisted, the inadequacy of the ATO’s communication and the inability of taxpayers and their agents to intervene early and request their returns be expedited.
The Inspector-General has identified a number of areas for improvement and has made a total of 13 recommendations aimed at:
<ul>
<li>
continuously improving the time taken to review cases held under the ATO review program by increasing staff levels at appropriate times and exploring strategies to make use of third party data to verify taxpayer claims;
</li>
<li>
adopting a differentiated approach to prioritising and expediting the processing of tax returns in appropriate cases;
</li>
<li>
improving the giving of specific reasons for tax returns held up and reasons for any adjustments made as a result of the program;
</li>
<li>
adopting behavioural economic concepts and utilising randomised controlled trials to test the effectiveness of correspondence used in the ATO program;
</li>
<li>
raising awareness of cost-effective and efficient dispute resolution strategies to address challenges to refund delay decisions and monitoring the use of default assessments to limit instances of such assessments issuing to compliant taxpayers;
</li>
<li>
maintaining robust and streamlined governance processes to avoid uncertainties, duplication and inefficiencies; and
</li>
<li>
developing and maintaining comprehensive reporting systems to measure the effectiveness of fraud detection and treatment strategies.
</li>
</ul>
The recommendations made are aimed at enhancing the ATO’s communication and engagement with taxpayers and tax agents including better differentiation of potentially fraudulent taxpayers from those who may have merely overstated refund claims by mistake. The ATO has agreed in full with 12 recommendations and agreed in principle with the other. The effective implementation of these recommendations should ensure that the ATO program is further improved for taxpayers, Noroozi said.
Understandably, tax refunds are often the only thing many people think of when they think about tax, and many people are properly entitled to them. Nonetheless, the ATO has a duty to protect the integrity of the tax system (and that includes making sure tax refunds are properly given) which is why it seeks to check refunds in certain cases. Inappropriate delays in issuing refunds are, however, a matter of concern and it is to be hoped the Inspector-General's report leads to improvements.
Terry Hayes is the editor-in-chief of tax news reporting at <a href="https://www.thomsonreuters.com.au/" target="_blank">Thomson Reuters</a>, a leading Australian provider of tax, accounting and legal information solutions.
This article first appeared on <a href="https://www.SmartCompany.com.au">SmartCompany</a>.
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The tax refund delays that try taxpayers' patience: Why the hold-ups happen

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Data-matching by the Tax Office is now a well entrenched feature of the Australian tax landscape. It seems that almost not a week goes by without an announcement of some new Australian Tax Office data-matching project.
<a href="https://www.smartcompany.com.au/finance/tax/31198-beware-of-the-ato-s-data-matching-machine" target="_blank">Data-matching</a> is not about to stop. In fact, it will expand and a new proposal from the government will see new reports submitted to the Tax Office. Oh joy – another report to be done!
In November last year, the government announced its intention to proceed with the 2013-14 budget proposal by the former Labor government to improve tax compliance through third party reporting and data-matching. The proposal is designed to improve taxpayer compliance by increasing the information reported to the ATO by a range of third parties through the introduction of new reporting regimes. It is also proposed that this additional information would allow the ATO to offer an enhanced pre-filling service to taxpayers. The proposal is currently scheduled to commence from July 1, 2014 (although first reports would not be due to the ATO until after July 1, 2015).
In last year's federal budget, the former Labor government announced it would provide funds to the ATO to improve compliance for taxpayers by expanding data-matching with third party information.
Treasury has now released a discussion paper on the proposal. It notes that some of the elements of the proposal can be implemented by the ATO changing its administrative practices whereas others would require tax law changes. The paper only relates to those elements requiring legislative change.
This would involve the creation of new third party reporting regimes in relation to:
<ul>
<li>
sales of real property – To implement this proposal, the ATO would need to receive the following type of information for each real property transaction: vendor and purchaser name; vendor and purchaser address;  vendor and purchaser date of birth (for individuals); vendor and purchaser Australian Business Number or Australian Company Number (for entities); property details, including ID and address; property type (eg residential, commercial, new residence or vacant land); contract date; settlement date; and  consideration and any other costs and charges. The reporting of property information would not necessarily be restricted to an annual report. The likely reporting entities could be State and Territory Land Titles and Revenue Offices;
</li>
<li>
sales of shares and units in unit trusts – Sales of shares in companies and units in unit trusts may give rise to income tax (including Capital Gains Tax) consequences. Initially, the proposed reporting regime would apply to transactions for shares in companies listed on a recognised stock exchange. However, going forward, the paper says it may be possible and necessary to bring sales of "private company" shares within the reporting regime. To implement the reporting proposal, the ATO would need to receive the following type of information in relation to each share transaction: shareholder's name, address and date of birth (if applicable); shareholder's Tax File Number, ABN or ACN (if applicable); TFN withholding tax code; "non-resident indicator" in respect of the shareholder; company name and Australian Securities Exchange code, and the CHESS and internal registry reason codes; shareholder's account holding number (Share Reference Number/Holder Identification Number) (if applicable); acquisition and disposal dates, prices and quantities; incidental costs (such as broker's fees); and any capital returns or payments and the associated dates. Those most likely to have ready access to the required information would be the "market participant" executing the transaction, the clearing house provider used by the market participant to facilitate the transfer, and the Share Registry maintaining the company's share register (particularly in relation to "off-market" transfers);
</li>
<li>
sales through merchant debit and credit services – To implement this proposal, the ATO would need to receive the following type of information: merchant name, address and ABN or date of birth; all monthly purchase/sale amounts from credit card and debit card transactions; and all monthly cash out amounts. The reporter would be the entity that provides the payment facilities to the merchant. Traditionally, this has been financial institutions that operate in Australia’s payment system and are attached to card schemes (eg financial institutions and banks providing such services). However, the expansion of the e-commerce market has impacted the methods consumers use to purchase goods and services. Under this proposal, where an entity provides merchant payment facilities for debit and credit payments, they would need to report to the ATO; and
</li>
<li>
taxable government grants and other payments – To implement this proposal, the ATO would need to receive the following type of information for each grant or payment recipient: ABN (for grants and payments made to businesses); TFN or date of birth (for grants made to non-business individuals); full name; address; gross amount paid; total GST (if applicable); BSB and account number; and other contact details such as phone number or email address. All government entities including federal, state, territory and local government bodies that make grants and payments are likely to collect some of this information.
</li>
</ul>
In respect of the above, the ATO would initially seek to receive annual reports and then seek to move to quarterly, monthly or "real time" reporting.
The paper sets out a preliminary set of law design principles that could form the legislative basis for the new reporting regimes. However, it notes that the final form of any draft legislation would depend on the final form of the policy design and this, in turn, will be informed by the outcomes of the consultation process. Accordingly, the government says it is seeking feedback on policy issues and, in particular, and SMEs should take note, the compliance cost impacts of the proposed reporting regimes.
The proposed reporting regimes would be designed so that in most cases third parties would only need to provide information to the ATO that they receive or record in the ordinary course of their business or operations. That's fine, but it doesn't mean a third party won't incur costs in reporting the new information. However, as an effective third party reporting regime depends on the ATO being able to match the reported data to the relevant taxpayer, some additional identifying information may be required.
For individuals, the minimum amount of identifying information needed to provide high confidence identity matching for tax purposes is their name, address and either date of birth or TFN. However, it is important to note there are tax and privacy law restrictions on requesting, recording and using TFNs which would need to be taken into account when considering the use of TFNs in these proposed reporting regimes. For business taxpayers (including individuals in a business), the minimum information is name, address and either an ABN, ACN or TFN.
Whilst it is likely that many of the proposed reporting entities currently collect an entity's unique identifiers in the ordinary course of their activities, there may be some that do not. The paper says these entities would be required to collect this additional information and report it to the ATO under the proposed reporting regimes.
SMEs should note that comments on the Treasury paper are due by March 11, 2014, with details on the <a href="https://www.treasury.gov.au/ConsultationsandReviews/Consultations/2014/Improving-tax-compliance" target="_blank">Treasury website</a>.
The range of data being collected by the Tax Office is ever expanding. Businesses should not underestimate the use to which this data will be put. It's trite to say, but Big Brother is alive and well – even if that data does help with the pre-filling of tax returns.
Terry Hayes is the editor-in-chief of tax news reporting at <a href="https://www.thomsonreuters.com.au/" target="_blank">Thomson Reuters</a>, a leading Australian provider of tax, accounting and legal information solutions.
This article first appeared on <a target="_blank" href="https://www.SmartCompany.com.au">SmartCompany</a>.<a target="_blank" href="https://www.SmartCompany.com.au"></a>
            
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New data reporting regimes for tax compliance will extend ATO's reach

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Scams involving tax are not uncommon. They <a href="https://www.smartcompany.com.au/finance/tax/1656-tax-office-warns-against-tax-refund-scam" target="_blank">surface regularly</a>. The scams range from the very basic to the quite sophisticated. People and businesses need to be on their toes not to be fooled by the scammers.
Most recently, NSW Fair Trading Minister Stuart Ayres said Fair Trading had received a report of a <a href="https://www.propertyobserver.com.au/news/ato-scam-alert-fake-landlord-tax-exemption/2014013067441" target="_blank">scam letter offering landlords living overseas the opportunity to claim a tax exemption on rental income</a>.
He said the letter advises agencies managing landlords to forward forms to them to complete and return to the scammers. The forms require detailed personal information as well as photocopies of passports and mortgage account numbers. The covering letter in the scam email is badly written with numerous errors of grammar and spelling (this is not uncommon).
The letters aim to harvest details from real estate agents about Australian properties they manage on behalf of non-residents. The scammers may then seek to assume the identities of the non-residents and sell their Australian properties without the real owners' knowledge.
Ayres said Fair Trading had issued a warning about the same scam in July last year after it was reported by a real estate agent in Lennox Head. The ATO confirmed the scam to Fair Trading and that identical fake Her Majesty’s Revenue and Customs letters had been sent to real estate agents in the United Kingdom since at least March 2012, he said.
The scam letter may also feature fake ATO branding, as well as branding from other revenue jurisdictions (e.g. from HMRC in the UK). Ayres said these types of widely circulated scams are regularly sent to other international jurisdictions and the perpetrators often fail to change all details. A similar scam was identified in Western Australia in 2012.
The HMRC and ATO signature on the scam letters is identical and in some places in the ATO letter, the scammers have failed to replace the HMRC references, he said.
ATO Chief Technology Officer Todd Heather said the ATO's brand was often employed in scams due to the Tax Office's intensive interaction with the community and their willingness to comply with requests from the ATO. “Scammers are relying on more sophisticated methods to trick people into handing over their financial or personal contact details,” he said.
The scam flagged by Fair Trading, as with many others reported to the ATO, asks people for their personal details so they can likely commit identity theft and other types of fraud. Heather said the ATO has seen this scam over the past two years and have dealt with it by informing real estate industry associations and asking them to warn their members.
In 2013 alone, the ATO received almost 50,000 reports from the public about ATO branded scams.
To avoid being scammed, NSW Fair Trading offers some sensible advice:
<ul>
<li>
Don't respond to offers, deals or requests for your personal details. Stop. Take time to independently check the request or offer.
</li>
<li>
Never send money or give credit card, account or other personal details to anyone who makes unsolicited offers or requests for your information.
</li>
<li>
Don't rely on glowing testimonials: find solid evidence from independent sources (not those provided with the offer).
</li>
<li>
Never respond to out of the blue requests for your personal details.
</li>
<li>
Always type in the address of the website of a bank, business or authority you are interested in to ensure you are logging onto the genuine website.
</li>
<li>
Don't open unsolicited emails.
</li>
</ul>
Regularly updated information on tax-related scams and online security is available on the <a href="https://www.ato.gov.au/General/Online-services/In-detail/Online/Online-security/">ATO website</a>. 
Terry Hayes is the editor-in-chief of tax news reporting at <a href="https://www.thomsonreuters.com.au/">Thomson Reuters</a>, a leading Australian provider of tax, accounting and legal information solutions.
This article first appeared on <a target="_blank" href="https://www.SmartCompany.com.au">SmartCompany.</a>
 
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Beware of tax scams: How to make sure you don’t get fleeced

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The GST laws can apply to a weird and wonderful range of things, and some fine distinctions are often sought to be made by the Tax Office in applying those laws.
Feeling sleepy already (at the mention of distinctions in tax law)? I can't blame you, but a recent decision by the Administrative Appeals Tribunal showed how the law can work in favour of a business, although not as it may have thought.
The Tax Commissioner had made a decision that a sleep positioning system produced by a company which assists users to control sleep apnoea was subject to GST. The company objected and the matter came before the AAT.
The AAT set aside a decision by the Tax Commissioner and held that the system was GST-free under provisions of of the GST Act as it was a medical aid. This is good news for customers who won't have to pay GST on the item. But the way the AAT reached its conclusion is interesting.
The company in this case, Snugfit Australia, is registered for GST and supplies a sleep positioning product known as "SnoreBeGone", which assists users to control sleep apnoea. The product is designed to support the body when a person is sleeping in such a way as to prevent the person snoring. It is made of foam with a fabric cover, and is designed to be used in conjunction with a mattress to encourage side sleeping.
The Tax Commissioner issued a private ruling, sought by the company, which found the product was subject to GST. The company's objection to the ruling was disallowed. Before the AAT, the company argued that the product was GST-free as it was covered by Items 82 ("night-time positioning equipment modifications"), 64 (bed restraints), 67 (backrests, leg rests and footboards for bed use), or 87 (cushions specifically designed for people with disabilities) of Schedule 3 to s 38-45(1) of the GST Act. That's enough technicalities for the moment!
According to the AAT, it is the modifications to "night-time positioning equipment" (ie a mattress) that are exempted under Item 82, not the equipment itself. It said from the marketing material and from an examination of the product, it was clear that it was designed to be used in conjunction with another sleeping surface, thereby modifying it.
Therefore, the AAT held the product came within the description contained in Item 82 as the product modifies the shape of a mattress to accommodate the requirements of a person with a disability and is GST-free.
The Tax Office considers that the AAT's decision that the product modifies a mattress turned solely upon the facts of the case, and the description of the product forming part of the scheme set out in the private binding ruling made by the Commissioner. The ATO considers the AAT decision does not have any broader impact on the meaning of the term "modification" in other contexts.
However, the ATO said it is reviewing its view, given in a 2002 Interpretative Decision about the GST treatment of contoured pillows to determine whether it ought to be revised or withdrawn in light of the AAT's decision. The ATO noted that, in order to be GST-free under the GST laws, the relevant product must also be specifically designed for people with an illness or disability, and not widely used by people without an illness or disability.
As I said at the beginning, the GST laws deal with some weird and wonderful things. But it's not difficult to argue that the GST law itself is at times a weird and wonderful thing. The GST law, and the old sales tax that preceded it, were full of "fine line" distinctions on whether various products and services were or were not subject to tax. Those calling for simplification of tax and GST laws have a point.
Terry Hayes is the editor-in-chief of tax news reporting at <a target="_blank" href="https://www.thomsonreuters.com.au/">Thomson Reuters</a>, a leading Australian provider of tax, accounting and legal information solutions.
 
 
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The weird and wonderful applications of the GST law

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Under the GST law, a person or a business can claim input tax credits (ITCs) for acquiring things for a creditable purpose. A taxpayer acquires a thing for a “creditable purpose” to the extent he or she acquires it in carrying on his or her enterprise.
However, the GST law provides that a taxpayer does not acquire a thing for creditable purpose to the extent the acquisition is of a private or domestic nature.
Seems relatively straightforward – if that can ever be said about taxation matters! But, spending money on acquiring things of a private or domestic nature can be an area that confuses many.
In a recent AAT case, the Tribunal upheld GST and penalty assessments against a taxpayer concerning incorrect claims for ITCs.
The taxpayer carried on a computer repair business. Following an audit of the taxpayer's BASs for the period March 31, 2007 to February 28, 2011, the ATO issued GST net amount assessments, penalty assessments and cancelled the taxpayer's GST registration.
The Tax Commissioner disallowed many (although not all) of the taxpayer's ITC claims on the basis that he did not consider the taxpayer was carrying on an enterprise during the relevant tax periods, that the expenses on which the ITC claims were based appeared to be private in nature (e.g. certain legal and health expenses) and were considered not to have any obvious links to commercial activity, and that the taxpayer did not provide tax invoices for the expenses as claimed creditable acquisitions.
In an along-the-way win for the taxpayer, the Tribunal noted that the Commissioner reconsidered the matter in light of additional information since provided by the taxpayer, and now accepted that the taxpayer was carrying on an enterprise during the relevant tax periods and that the decision to cancel his GST registration should be set aside. For this reason, the Commissioner also accepted that some (but not all) of the input tax credits claimed were properly allowable.
In the taxpayer's case, the Tribunal said the reasons for the relevant supplies (ie made to him) not being taxable included that either it had not been established that the person making the supplies was registered or required to be registered and/or that the supplies by that person were GST-free or input taxed.
The Tribunal said the taxpayer claimed an ITC in respect of his purchase of a second-hand motor vehicle pursuant to a "private sale". No invoice was produced for this transaction. As no GST liability would have been incurred by the seller, the taxpayer was not entitled to any input tax credit.
The taxpayer also claimed a number of items for "occupancy expenses". The AAT said the Commissioner understood those expenses related to the taxpayer's personal accommodation, particularly in a private home in Perth. He did not accept the expenses were "creditable acquisitions". The Tribunal said no invoices were provided by the taxpayer in respect of the claims, so it had not been established that any GST was paid or incurred by the person that supplied the accommodation to the taxpayer.
The Tribunal worked through a number of other ITC claims that had been made by the taxpayer, finding that most were not allowable. It worked through the taxpayer's exercise book ledgers in the process. These included:
<ul>
<li>
Running expenses – the AAT said there was no evidence that any GST was incurred by the relevant supplier of those expenses.
</li>
<li>
Legal expenses – understood to relate to expenses connected to an assault the taxpayer suffered at a hotel. The AAT saw no connection with the taxpayer's business activity.
</li>
<li>
Health expenses, including gym expenses – the AAT considered that the items claimed are clearly private or domestic in nature and were insufficiently connected to the taxpayer's business.
</li>
<li>
Finance expenses – the Tax Commissioner said he was unable to match most of those items to invoices so that he could not be sure exactly what they relate to. In addition, some items related to cash advances made to the taxpayer but the AAT said the documents relating to these made no reference to any GST payable by anyone.
</li>
<li>
Electronic goods – again, the Tax Commissioner said he was unable to match most of those items to documentary evidence.
</li>
<li>
Reference magazines – the Commissioner accepted that the taxpayer's purchases of relevant information technology magazines were sufficiently related to his enterprise to be properly regarded as creditable acquisitions for GST purposes. But the same could not be said of other magazines the taxpayer purchased.
</li>
<li>
Event "hosting" - The items claimed under this characterisation related to functions held by the taxpayer in his room at the house for friends and/or clients. The Tax Commissioner's understanding was that attendance at these functions was by invitation only and was not open to the public generally. If that is the case, then these expenses cannot be creditable acquisitions because they are excluded by a specific provision in the GST Act.
</li>
<li>
Imported items - The taxpayer made a number of claims for imported items described as "reference-magazine" or "reference-book" and so on. The relevant invoices in each case showed that the relevant item was imported and do not record any GST component. The AAT said that, as stated, each acquisition was “A non-taxable importation” pursuant to the GST Act and the Customs Tariff Act 1995 – essentially because the value of the goods imported did not exceed $1000. Any such importation will not be a “creditable importation” pursuant to the GST Act. As such, there is no entitlement to an input tax credit for that importation.
</li>
</ul>
The Tax Commissioner allowed part of the taxpayer's claims concerning travel and telephone expenses.
After reviewing the case, the Tribunal considered that the GST net amount assessments in relation to each of the 48 individual monthly tax periods ended March 31, 2007 to February 28, 2011 inclusive were not open to review.
The AAT said it accepted that the inference from the evidence and the taxpayer's conduct throughout was that it showed a disregard of or indifference to a risk foreseeable by a reasonable person. The Tribunal saw no basis to counter the Commissioner's submission that the taxpayer's behaviour was reckless in that he claimed input tax credits for items clearly private or personal in nature and/or not acquired in the carrying on of the enterprise.
Taxpayers in business can validly claim input tax credits for many expenses they incur that relate to the business. However, it must be proved that GST was incurred or paid by the supplier of the goods/services and that they relate to carrying on an enterprise. The taxpayer in the above AAT case was not able to prove this to the satisfaction of the Tribunal in regard to many of the expenses he claimed. SMEs should take note.
For those interested in knowing more about how the GST system operates, the Thomson Reuters Australian GST Handbook 2013-14 contains an excellent explanation of the GST system, covering all aspects of the GST legislation – simply <a href="https://www.propertyobserver.com.au/https://www.thomsonreuters.com.au/australian-gst-handbook-2013-14-book/productdetail/120389">visit our website for details</a>.

<hr>
Terry Hayes is the editor-in-chief of tax news reporting at <a href="https://www.thomsonreuters.com.au/">Thomson Reuters</a>, a leading Australian provider of tax, accounting and legal information solutions. Featured product is the 2013-14 edition of "The Essential SMSF Guide", written by Tony Negline – see details <a href="https://www.propertyobserver.com.au/https://www.thomsonreuters.com.au/the-essential-smsf-guide-2013-14/productdetail/120644?utm_source=smartcompany&amp;utm_medium=webpage&amp;utm_campaign=smsf">here</a>.
This article first appeared on <a href="https://SmartCompany.com.au" target="_blank">SmartCompany</a>.
 
 
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Claiming GST credits can be very costly without a ‘creditable purpose'

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The tax law contains exemptions from capital gains tax (CGT) for a person's principal or main residence. But, as always, it's not as simple as it sounds. The rules can be tricky to understand.
The Administrative Appeals Tribunal (AAT) recently upheld the Tax Commissioner's decision denying a man's claim for the CGT main residence exemption in relation to a disposal of a property he claimed was his home.
The issues revolved around whether the house became the man's main residence as soon as practicable after the completion of its construction, and whether the house continued to be his main residence for at least three months after that (as the law requires in order to get the CGT exemption).
The man submitted that he had purchased land in July 2002 for $174,000 with his then de facto partner. The construction of the house commenced in April 2004; however, his relationship with his then partner ended in September 2004. In approximately May or June 2005, he and his then ex-partner moved into the house "to enable us to meet the requirements to sell the property 'without' being subject to CGT". In the first week of September 2005, the man moved out of the house and went to live with his sister in Queensland, and in November 2005, the house was sold for $703,000. On December 23, 2005, the man told the AAT that he left Australia “with a three week open (return) ticket, met [his] (now wife) and resettled in the UK”.
A net capital gain of $114,675 on the sale of the property was included as income in the man's tax assessment for the 2006 income year. He disputed the inclusion of the capital gain in his income for the 2006 year on the basis that he was entitled to the CGT main residence exemption. Before the hearing, the man provided the Commissioner with documentary evidence of certain construction, holding and sale costs, which the Commissioner accepted – this reduced the net capital gain to $66,271.
The AAT held the evidence before it failed to establish that the house became the man's main residence as soon as practicable after the completion of its construction and that the house continued to be the taxpayer's main residence for at least three months after that, as required by the relevant tax law.
The Tribunal noted an email the taxpayer had sent to the ATO which indicated that he had moved out of the house in the first week of September 2005, which left open the possibility that he lived in the house for a period of less than three months (i.e. from the second week in June 2005 to the first week of September 2005). The Tribunal also noted the taxpayer had not provided evidence (such as a Certificate of Occupancy, the date that final building inspection approval was granted or any “hand-over” documents from the builder) that the house became his main residence "as soon as practicable" after the completion of the house. Further, it noted there was no evidence of any gas or electricity accounts for the house in the taxpayer's name.
Although the man claimed he moved his personal belongings into the house when he moved into it in about May or June 2005, the Tribunal said the evidence indicated his main residence was at his sister's home in Queensland (and not the house in question) from at least the time of his separation from his ex-partner in September 2004. Other factors noted by the Tribunal included:
<ul>
<li>
from 2002 to September 2005, the man worked as a mine worker on a fly-in fly-out basis which involved working two weeks on and one week off;
</li>
<li>
in October 2004, the man redirected his mail to the Queensland address;
</li>
<li>
in December 2004, the man obtained a Queensland driver's licence (which nominated the Queensland address as his residential address); and
</li>
<li>
in the man's 2004-05 tax return, he nominated the Queensland address as his home address.
</li>
</ul>
Accordingly, the AAT held that the man had failed to discharge the burden of proof that the assessment should not have been made or should have been made differently.
In this particular case, the tax laws surrounding the CGT main residence exemption were relatively straightforward, but the individual in the case simply could not prove to the satisfaction of the AAT that the Tax Commissioner was wrong and that he qualified for the exemption.
For those wanting to know more about how CGT works, including the main residence exemption, the forthcoming Thomson Reuters CGT Guide for SME Practitioners is a very helpful guide. Among other things, it explains how CGT rules are applied to transaction-based issues, and contains useful tips, warnings and checklists. For details, see the <a href="https://www.propertyobserver.com.au/https://www.thomsonreuters.com.au/cgt-guide-for-sme-practitioners-checkpoint/productdetail/120523" rel="nofollow">Thomson Reuters website</a>.
 
<hr>
Terry Hayes is the editor-in-chief of tax news reporting at <a rel="nofollow" href="https://www.thomsonreuters.com.au/">Thomson Reuters</a>, a leading Australian provider of tax, accounting and legal information solutions.
This article originally appeared on <a rel="nofollow" target="_parent" href="https://www.smartcompany.com.au/">SmartCompany</a>.
 
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Get your house in order, what you need to know about capital gains tax: Terry Hayes

<a href="https://www.apartments.com.au/developers/consolidated-properties">Consolidated Properties Group</a> (CPG) is approaching the launch of its latest Brisbane riverfront development, Castile, on the dress circle Skyring Terrace in Newstead.

VIP buyers are now being engaged, with a full public sales launch coming later this year.

Positioned as the final opportunity to secure a new absolute riverfront residence on the East bank of Newstead, Teneriffe or New Farm, Castile at 47 Skyring Terrace has been designed by <a href="https://www.apartments.com.au/architects/woods-bagot">Woods Bagot</a> as a timeless addition to the Brisbane skyline.&nbsp;

[smartcode_project:default project_id=150489 project_image_fid=371113]

The name Castile draws on themes of permanence, sophistication and legacy, reflecting a broader vision centred on enduring architecture and timelessness in the rarest of riverfront positions.&nbsp;

CPG Chairman and CEO Don O’Rorke said the project had been envisioned as a future Brisbane icon.&nbsp;

“With 47 metres of direct river frontage and never to be built out views, 47 Skyring Terrace is the definitive address on the Brisbane River,” O’Rorke said.&nbsp;

[smartcode_project:default project_id=150489 project_image_fid=371114]

“Rather than following trend-based apartment design, Castile draws inspiration from Brisbane’s great heritage buildings, reinterpreting classical architecture into a contemporary riverfront landmark designed to stand proudly for the next 100 years,” he said.&nbsp;

The approved development will comprise 227 apartments across a 25-storey tower alongside a boutique six-storey riverfront building of just 12 residences.&nbsp;

Construction is scheduled to commence in September 2026.

[smartcode_project_cta:default project_id=150489]

Joel Robinson

CPG unveils Castile Newstead ahead of upcoming sales launch

Australia’s online shopping habits have shifted dramatically over the last decade. As eCommerce volumes surged, so too did the frustrations that came with traditional parcel delivery: missed deliveries, long Post Office queues, parcel theft and the challenge of being home during business hours.

Australia Post’s Parcel Lockers emerged as one of the more practical responses to that changing consumer behaviour.

What started as a relatively niche delivery option has evolved into a nationwide network of more than 1,400 self-service Parcel Lockers positioned at train stations, shopping centres, supermarkets and Post Offices across the country. The system allows Australians to send, collect and return parcels 24 hours a day, fundamentally changing how many people interact with deliveries.

The appeal is relatively straightforward: flexibility.

Instead of waiting at home for a delivery driver or rushing to a Post Office before closing time, users can direct eligible parcels to a Parcel Locker location of their choice. Once the parcel arrives, Australia Post sends a notification with a collection code or QR access through the AusPost app, allowing customers to retrieve their package at any time within the collection window.

For apartment residents in particular, the system has become increasingly valuable.

Higher-density living has created logistical challenges around deliveries, especially in buildings without concierge services or secure parcel rooms. Missed deliveries are common, while parcel theft has become an increasing concern as online shopping volumes continue to rise.

Australia Post itself has repeatedly highlighted the growing issue of “porch pirates” during peak shopping periods, encouraging customers to use Parcel Lockers as a safer alternative to unattended home deliveries.

That security aspect is one of the key reasons the Australia Post Parcel Locker network has grown so rapidly.

Parcel Lockers are positioned as secure, monitored collection points that reduce the risk of theft while also improving delivery efficiency for Australia Post. Instead of multiple redelivery attempts, parcels can be consolidated into a single secure destination.

The Parcel Lockers themselves are free to use through a MyPost account and support a range of parcel sizes up to 16 kilograms and dimensions of approximately 35 x 44 x 61 centimetres.

Beyond receiving parcels, the system has increasingly become integrated into the broader eCommerce ecosystem.

Customers can now use Parcel Lockers to return online purchases, while retailers have embraced the model as a way to improve delivery success rates and reduce friction in the shopping process. Australia Post has actively expanded partnerships with major retailers and promoted Parcel Lockers as part of a broader out-of-home strategy.

The timing of that expansion aligns with broader changes in Australian shopping behaviour.

The acceleration of online retail during and after the pandemic placed enormous pressure on delivery infrastructure. Parcel volumes reached record highs, particularly during Black Friday and Christmas periods, with Australia Post delivering more than 100 million parcels during peak festive seasons.

That growth forced logistics providers to rethink the “last mile” of delivery, widely regarded as the most expensive and operationally difficult stage of the process.

Parcel Locker systems have increasingly been viewed as part of the long-term solution.

The concept itself is not unique to Australia. Parcel Locker networks have become common globally, particularly across Europe and Asia, where dense urban environments and apartment living create similar logistical challenges. But Australia’s geography and suburban sprawl made adoption slower initially.

Now, however, the convenience factor is driving mainstream usage.

For commuters, Parcel Lockers near train stations allow parcels to be collected on the way home from work. For apartment dwellers, they remove the uncertainty around access and missed deliveries.

The rise of the AusPost app has also streamlined the experience, centralising notifications, tracking and Parcel Locker access into a single platform. Australia Post has increasingly pushed customers toward app-based delivery management, partly as a way to combat phishing scams and fake delivery notifications, which have become more sophisticated in recent years.

The Parcel Locker model is also beginning to influence property development itself.

Parcel management has become a growing consideration in apartment building design, particularly as online shopping becomes embedded in everyday life. Many new residential developments are now incorporating dedicated parcel rooms or Parcel Locker systems into foyers and communal spaces.

For developers, parcel management is increasingly viewed as part of the broader resident amenity offering, alongside gyms, wellness spaces and communal work areas.

That reflects a wider evolution in how residential buildings are designed.

Apartment buyers are placing greater emphasis on convenience, security and operational functionality, particularly in higher-density urban environments. Parcel delivery, once considered a minor operational detail, has become an increasingly important part of that equation.

Australia Post’s Parcel Locker network sits at the centre of that behavioural shift.

What began as a simple alternative delivery option has evolved into a key piece of infrastructure supporting Australia’s growing eCommerce economy and changing urban lifestyles.

And as online shopping continues to expand, the role of Parcel Lockers is likely to become even more embedded in how Australians live, shop and receive goods.

How Australia Post Parcel Lockers changed parcel delivery convenience in Australia

Perth’s new apartment market recorded its strongest quarter of sales since Q4 2021, with 412 apartments sold in Q1 2026 and a record quarterly sold value of $537 million, according to Urbis’ latest Apartment Essentials results.

Urbis said the March quarter result reflects strong, highly product‑specific demand across both ends of the market, from more attainable projects delivering at scale, through to premium stock being absorbed by equity‑rich downsizers.&nbsp;

David Cresp, Partner at Urbis, said the key story in Perth is not demand, it is the market’s ability to convert demand into delivered housing.&nbsp;

“This is the strongest sales quarter since Q4 2021, and it reinforces that demand in Perth is real and it’s local,” David Cresp said. “But the task now is delivery, turning that demand into projects that can actually be built and completed.”&nbsp;

[smartcode_project:default project_id=110291 project_image_fid=302785]

<h2>Affordable product leads, premium demand remains resilient</h2>

Sales in Q1 were led by more affordable projects, with The Boulevard (SKS Group) recording 115 sales in the quarter, the presentation noting this is only the second time a single project has surpassed 100 quarterly sales. The project was able to offer more affordable housing product right next to a train station.&nbsp;

Palmyra West (Finbar) also delivered strong results with 28 sales in Q1, following 84 sales in Q4, with an average price of under $800,000, underscoring depth of demand for well‑located, attainable new stock.&nbsp;

At the premium end, Urbis said downsizer demand is continuing, with the results highlighting Romeo (Applecross, Finbar) recording 75 sales and reaching almost 50% sold in one quarter.

Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.

Urbis noted that Perth apartment demand is not speculative, not investor‑led, and not uniform, describing it as localised, often equity‑driven and highly product‑specific, a pattern reflected in the polarisation between strong “attainable” performers and premium downsizer product.&nbsp;

[smartcode_project:default project_id=148957 project_image_fid=364102]

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

Urbis said pricing pressure is cost not demand‑driven: construction costs and delivery risk are now a central constraint, with the results noting build costs remain elevated and volatile, and that energy, fuel and labour uncertainty weigh on feasibility.

David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.

“Developers are really feeling the pressure from a building market that was operating at capacity and securing a builder is challenging,” David Cresp said, adding that even where a builder can be secured, “trying to get to the price that makes the development financially viable is incredibly challenging in the current market.”&nbsp;

Urbis’ broader WA commentary also notes that industry remains at or above capacity with lot and housing creation, and that many builders are limiting new sales to manage stretched workforces and fixed‑price contract pressures, conditions that flow directly into apartment feasibility and delivery timing.

[smartcode_project:default project_id=108869 project_image_fid=317905]

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

While near‑term supply remains constrained, Urbis’ forecast shows completions lifting “Supply is forecast to be back above 1,500 apartments per annum for the first time since 2019”, with 1,775 completions forecast for 2026, and volumes remaining above that level over the following years.&nbsp;

Looking further ahead, completions are forecast to reach 2,500 in 2028, with the report noting 32% of that total is social/affordable, reflecting the role of government‑supported delivery in rebuilding the pipeline.&nbsp;

However, Urbis said Perth remains behind comparable markets on pipeline scale. In a national comparison of projects under construction, the report shows under construction Perth Build‑to‑Sell (BTS) at 3,446 apartments versus the Gold Coast at 7,922. Mr Cresp said “The challenge for Perth is how to we grow the delivery pipeline”.

Urbis’ conclusion is that Perth’s market is increasingly defined by product discipline and delivery certainty, with the research identifying “delivery certainty is key” and calling out builder risk and procurement models as core success factors, alongside “timing and staging”.&nbsp;

Perth apartment sales hit strongest pace since late 2021 as builder capacity tightens

<a href="https://www.apartments.com.au/developers/sammut-developments">Sammut Group</a> has secured development approval for its latest Brisbane apartment project, marking the Sydney developer’s next step in expanding its Queensland pipeline following the success of its debut Gold Coast development, Coast.

The approved project at <a href="https://www.apartments.com.au/new-apartments/44-glen-road-toowong-qld-4066">44 Glen Road, </a><a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> will deliver a 15-storey riverfront apartment building with 42 residences, significantly increasing the scale of the site’s previous approval for a smaller luxury scheme. Designed by Bureau^proberts, the development will comprise a mix of predominantly four-bedroom and two-bedroom apartments positioned to maximise Brisbane River and city views.

Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.

“Brisbane was the right step for Sammut,” Sammut said.

“With the success of Coast we thought we should definitely look to do more in Queensland alone. We then pushed up to look at Brisbane. We've been looking for I'd say two to three years actually and it was hard to find the right location.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-23%20at%203.27.14%E2%80%AFPM.png?VersionId=dYAVIL7qdcGA8ojvkslSrLjczXFejSSx" />

Sammut said suburbs including New Farm and Teneriffe were considered before the group ultimately focused on Toowong due to its strong downsizer demographic and limited supply of developable riverfront land.

The site was acquired off-market after what Sammut described as a lengthy negotiation and planning process, with the developer pursuing an uplift to the original approval.

“We are DA approved now which is very exciting,” Sammut said.

“We've had our change approval come through and we've obviously doubled the height, 15 storeys plus rooftop. We've got 42 amazing apartments that are going to be coming to market soon.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.27.26%E2%80%AFPM.png?VersionId=ohkRkY0dIZlqdfME2EZePsCQavRiBadE" />

Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.

“A place where traditional Queensland living has taken place for centuries; Toowong is seeing a shift of contemporary influence, commercial and retail hubs mixed with well-considered residential offerings – all the while maintaining its character and charm,” the architect noted in planning documents submitted to Brisbane City Council.

The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.

“They said the mix of four and two-bedroom apartments capture the ‘fundamental qualities of Queenslander living,’ translated into the context of a contemporary subtropical building.”

The development sits just off Coronation Drive within walking distance of Toowong’s retail precinct and the upgraded Regatta ferry terminal, while also benefiting from proximity to the incoming green bridge connection to West End. Sammut said the accessibility and amenity offering were central to the site’s appeal.

The approval adds to growing residential activity along the Toowong riverfront, joining nearby projects including Consolidated Properties’ Monarch Residences and Spyre Group’s ARC Residences.

Sammut secures approval for debut Brisbane apartment development in Toowong

Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.

Lanevick, founded and directed by Steve Maroun, is expecting to receive approval in the coming months for a new apartment development in Gladesville, with the aim to launch it to the market later this year.

The 51-apartment project, designed by Studio Johnston, will comprise a mix of one-, two-, and three-bedroom apartments positioned toward the Hunters Hill downsizer market.

“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.

“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.

“They still want good spacious entertaining areas, they still want quality design, but they also want flexibility and the ability to enjoy life a bit more after working hard for a long time.”

The project sits near Boronia Park and within close proximity to the Parramatta River foreshore, an area Maroun says offers more of a Hunters Hill lifestyle than a traditional apartment precinct.

“From a lifestyle perspective, it’s really more Hunters Hill than Gladesville,” Maroun said. “You’re close to the foreshore, close to parklands, and still connected back into the village precinct.”

From level four and above, apartments will capture water views&nbsp;toward Sydney Harbour. Communal amenity will include rooftop entertaining areas, wellness spaces, and a gym tailored toward owner-occupier buyers.

“We’ve really designed these apartments around that buyer coming from the Hunters Hill LGA and what they’re actually looking for in their next chapter.”

The proposed development has also been designed to respond to the changing character of the broader Gladesville town centre, where a growing number of mixed-use and residential proposals are expected to emerge over the coming years.

“Gladesville presented a rare opportunity to deliver a genuinely design-led residential project within an evolving lifestyle precinct, just moments from the growing Gladesville town centre, and we’ve approached the project with a strong focus on architecture, liveability and long-term community value,” Maroun said.

Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.

“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.

“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”

The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.

“A big part of the thinking was how do you activate that area properly and create more vibrancy and amenity, which is what Hunters Hill has been looking for,” Maroun said.

Lanevick’s focus since 2020 has largely been on smaller-scale luxury townhouse and terrace developments. The developer recently completed Royale Randwick, also designed by Studio Johnston, where prices reached $3.65 million. The project was featured in the UDIA NSW 2026 Professional Development Prospectus and was also named a finalist for Development of the Year.

&nbsp;

Terry Hayes

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