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Self-managed super funds (SMSFs), also known as DIY super funds, have been in the news lately regarding their alleged propensity for borrowing to invest in property.
Proponents of both sides of the argument have put forward their case and, needless to say, the sector will continue to come under scrutiny from the regulators, including the ATO and ASIC.
For its part, as the main regulator of SMSFs, the Tax Office says it tries to help super fund trustees and the professionals who assist them to <a href="https://www.smartcompany.com.au/big-money/057730-big-money-the-reason-our-superannuation-system-doesn-t-work">understand their obligations</a>(and there are plenty of those!) and comply with these voluntarily.
While the ATO considers that SMSFs “generally operate in a well-run market”, ATO assistant deputy commissioner in charge of superannuation Stuart Forsyth says there are however a number of risk areas it is keeping an eye on. These include:
<ul>
<li>
Trustees and SMSF professionals who fail to understand SMSF obligations
</li>
<li>
Trustees who fail to voluntarily comply with their SMSF obligations, including lodgement of returns
</li>
<li>
Approved SMSF auditors who fail to undertake audits appropriately or fail to report contraventions of the rules to the ATO
</li>
<li>
Trustees who intentionally take inappropriate actions with their SMSFs, such as setting them up for illegal early release or down the track obtaining early access to money in the fund without meeting a condition of release
</li>
<li>
Professionals who promote and assist in the establishment of SMSFs for inappropriate reasons
</li>
</ul>
SMSFs have a myriad of rules to comply with. These include reporting of payments of fund member benefits, appointing an approved auditor, and maintaining the appropriate records. In the current environment, perhaps the most notable requirement is complying with the numerous investment restrictions that the law imposes, for example:
<ul>
<li>
The ‘sole purpose test’ – the law requires an SMSF to be maintained solely for at least one of the legislated core purposes, i.e. the provision of benefits upon retirement, attaining age 65 or death.
</li>
<li>
Trustees of an SMSF are prohibited from intentionally acquiring assets from fund members or a related party (although some limited exceptions apply).
</li>
<li>
An SMSF is generally restricted from having more than 5% of its total assets invested in so-called ‘in-house’ assets – these include a loan to a related party, an investment in a related trust of the fund, and an asset of the fund subject to a lease with a related party.
</li>
</ul>
The law generally prohibits funds from borrowing money, but there is an exception for so-called limited recourse borrowing arrangements (e.g. instalment warrants). Assets acquired with these borrowings must be kept separate from other assets of the fund. Money borrowed under these rules can be used in maintaining or repairing an asset. An SMSF trustee looking to acquire property via a limited recourse borrowing arrangement should obtain independent advice in relation to the borrowing agreement and the establishment of the holding trust structure.
Forsyth said the ATO is planning more comprehensive audits and closer scrutiny of annual returns and auditor contravention reports. He said the annual independent SMSF audit is a critical factor in the ongoing tax concessional treatment of SMSFs, satisfying the government and the community that SMSFs are meeting their obligations.
Forsyth said SMSF trustees should comply, lodge on time and (reflecting the comments made above) ensure that transactions such as limited recourse borrowing arrangements are undertaken with care. Limited recourse borrowing is an area where there are risks of breaches which can be very expensive and may not be easily rectified if professional advice had not been sought, he said.
SMSF fund trustees should check and understand the deed of the fund to ensure they are clear in what it allows and does not allow.
The ATO will review breaches of trustee obligations reported to it by approved SMSF auditors.
Other issues for SMSF trustees to be aware of are that they are now are required to value their fund’s assets at market value. They must also regularly review the fund’s investment strategy, and should consider the needs of insurance for members. The ATO is sure to be checking on these requirements.
One of the main changes affecting SMSF trustees this year has been that, from July 1, 2013, auditors have had to be registered with ASIC to undertake an SMSF audit. Forsyth said that from now on, when an SMSF annual return is lodged with the ATO, the ATO will check that the return has an SMSF auditor number (SAN) on it and that the number has been registered by ASIC. If there is no SAN or the number is not recognised as a registered auditor, the ATO will not accept the lodgment. SMSF trustees need to be particularly careful about this requirement.
From July 1, 2014, large and medium employers (those with more than 20 employees) will start paying super contributions using the new superannuation data and payment standard. SMSFs receiving contributions from these employers will need to receive them using the new standard. This requires being able to receive electronic contribution payments (paid to a nominated bank account) and messages (sent to a nominated electronic address). The ATO intends to publish more detailed information explaining the standard, how it applies to SMSFs and what trustees need to do to comply.
The attractions of SMSFs mean we are seeing continuing strong growth in these types of super funds. The many rules and regulations surrounding the running of these funds however should not be overlooked or underestimated.

<hr>
Terry Hayes is the editor-in-chief of tax news reporting at <a href="https://www.thomsonreuters.com.au/" rel="nofollow">Thomson Reuters</a>, a leading Australian provider of tax, accounting and legal information solutions.
This article originally appeared on <a href="https://www.smartcompany.com.au/" target="_parent" rel="nofollow">SmartCompany</a>.
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Beware of the risk areas surrounding self-managed super funds: Terry Hayes

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The sale of a property has GST implications and, potentially, income tax consequences. The GST implications can catch out those who are not fully conversant with how the GST laws apply.

A recent AAT decision held that, for the purposes of the GST law, all of the consideration in relation to the sale of a property was received by the taxpayer at the time of settlement on May 16, 2008, despite not all the consideration being received at that time.
Broadly, the case concerned the liability of the taxpayer (a trust, Rod Mathiesen Truck Hire Pty Ltd as trustee for the Matheson Family Trust) for GST in connection with the taxable supply of vacant land in Queensland. The tax commissioner assessed the trust on the basis that it received full consideration on the transfer of the property in the 2008 tax year in part through a vendor finance agreement (described as the settlement balance facility agreement). A director of Rod Mathiesen Truck Hire Pty Ltd, Mrs Mathiesen, signed the settlement balance facility agreement.
The trust had issued a tax invoice to the purchaser for $3.495 million, including $317,753.50 in GST. However, the trust argued that it was only liable for GST to the extent of two payments actually received for the property (around $2 million and $500,000), made in the 2008 and 2009 tax periods, and amounting to less than the full consideration.
The tribunal considered that the agreement clearly provided for a loan from the trust to the purchaser. It was of the view that Mrs Mathiesen had not formed any particular intention about lending money to the purchaser at the time the agreement was executed. The AAT said its impression was that “she signed what was presented to her as a means of ensuring the sale went ahead without considering what precisely the trust was agreeing to”.
After taking into account all of the circumstances referred to by the trust, the AAT said it did not accept that the loan, or creation of the loan debt, between the trust and the purchaser was incidental or ancillary to the supply under the contract for sale as envisaged in the cases and the commissioner’s ruling, but were distinct transactions.
In the result, the AAT found that for the purposes of the GST Act, all of the consideration in relation to the sale of the property was received by the trust at the time of settlement on May 16, 2008.
The ATO said the findings made by the tribunal were consistent with the principles set out in GST Rulings GSTR 2001/8 and 2003/12 and GST Determination GSTD 2004/4, and the commissioner’s submission made to the tribunal that:
<ul>
<li>
For a taxpayer who accounts on a cash basis, attribution of GST or an input tax credit is determined by the meaning of ‘consideration’ and whether ‘consideration’ was received or provided and not by reference to the ordinary meaning of ‘cash’;
</li>
<li>
In a vendor-financing arrangement, consideration is received by a supplier on set-off of the loan against amounts owing to the supplier by the purchaser;
</li>
<li>
The postponement of payment of a debt does not constitute a loan where the recipient remains obliged to pay for the supply under the original supply contract;
</li>
<li>
Where there is a contract for sale of land and a vendor-financing agreement, the financing agreement is not ancillary or incidental to the contract for the sale of land.
</li>
</ul>
At the risk of understatement, the application of GST in the context of property transactions is not always straightforward. Financial dealings between vendor and purchaser related to a sale can only serve to complicate matters. As always, good professional advice should be sought … and don’t sign anything without reading and understanding it first.
 
<hr>
 Terry Hayes is the editor-in-chief of tax news reporting at <a href="https://www.thomsonreuters.com.au/" rel="nofollow">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" rel="nofollow">here</a>.
This article originally appeared on <a href="https://www.smartcompany.com.au" target="_parent">SmartCompany</a>.
 
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It's a trap! Watch out for GST on property transactions: Terry Hayes

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The biggest 'sleeper' issue in Australian taxation is capital gains tax. Capital gains tax (CGT) has been around for over 25 years now but it continues to bedevil SMEs (and others).
As time goes on, more and more assets will fall into the CGT net. We may not have a death duty in the strict sense, but wealth and asset transfers by an ageing population will cause CGT to become an issue for many.
Among other things, the tax law provides a range of concessions to reduce, eliminate or roll over a capital gain made on a CGT asset that has been used in a small business. These concessions are as follows:
<ul>
<li>The 15-year exemption – an individual small business taxpayer is entitled to a full exemption from CGT, for example, the sale of an asset that is subject to CGT, where the asset has been continuously held for 15 years, the taxpayer is at least 55-years-old, and the sale of the asset occurs in connection with the retirement of the taxpayer. The 15-year exemption has priority over the other small business CGT concessions.</li>
<li>50% concession – a capital gain on an “active asset” (ie. an asset used in carrying on the business) used in the business can be reduced by 50% if certain conditions are met.</li>
<li>Retirement exemption – basically, a taxpayer can elect to disregard a capital gain on the sale of a business asset up to a lifetime limit of $500,000. If the taxpayer is under 55 at the time of choosing to apply this concession, the amount of the gain must be rolled over to a complying super fund or retirement savings account within the specified time limits. If the taxpayer was 55-years or over, the gain can be taken tax-free. This exemption cannot be used if the 15-year exemption applies.</li>
<li>Rollover for replacement assets – in essence, where assets are sold and replaced by new assets, any capital gain on the sale of the old assets can be ignored up to the value of the replacement asset. </li>
</ul>
As usual, and as expected, there are numerous hoops (i.e., basic conditions) that need to be jumped through before access can be gained to these concessions.
There are two basic conditions that must be met for a capital gain made by a business to qualify for the small business concessions:
(1)  The business must satisfy either (a) the "maximum net asset value" test, or (b) the "small business entity" test, or (c) be a partner in a partnership that is a "small business entity" where the CGT asset is an interest in an asset of the partnership.
(2)  The CGT asset that gives rise to the gain must be an "active asset" that is, an asset used in carrying on the business.
It is the maximum net asset value test I will look at in this column. In general, under the maximum net asset value test, in order to access the concessions, the net value of all the CGT assets of the business must not exceed $6 million (it used to be $5 million some years ago).
A recent case before the Administrative Appeals Tribunal (AAT) highlighted the difficulties that can arise in meeting this test.
As might be expected, meeting this basic test requires obtaining valuations of assets, and that's where difficulties can arise.
 
<hr class="system-pagebreak">
In the AAT case, a company owned three properties. During the 2005 income year, a "CGT event" happened in relation to the company when it disposed of a property it owned. The company claimed small business relief from capital gains tax on the basis that it satisfied the then $5 million maximum net asset value test. However, the valuation of the property concerned ultimately caused the business to fail that test.
Unless the company's valuation was accepted in each case, the net value of all relevant CGT assets would exceed the $5 million limit and the CGT relief claimed would not be available. In the end, the company's valuations were not accepted.
The matter turned on the valuation by the business' valuer and the Commissioner's valuer of one industrial and two residential blocks of units owned by related entities. The three properties were all located in the Illawarra area. One was an industrial site in Albion Park and the other two properties were residential sites, each of them containing a block of residential home units.
The AAT said valuation was not an exact science – a true but unfortunate statement given the importance of valuations in so many tax matters. In this case, the valuers used three valuation methodologies:
Direct comparison – where reasonably contemporaneous sales of other properties are used to estimate the value of the subject property.
Capitalisation – where the value of a property is derived by dividing the presumed rental income achievable, by a “capitalisation rate”. For example, a capitalisation rate of 5% represents an expectation that the value of the property would be recovered over 20 years. If the income capable of being generated is $100,000 per annum, then the estimated value of the property would be $2 million ($100,000 multiplied by 20).
Summation – where the estimated value of the land is added to the estimated value of the improvements on it, to produce an estimated value of the property as a whole.
The AAT preferred the Commissioner's valuation, and found that the taxpayer's valuations were not reasonable in the circumstances, despite concerns with various aspects of the Commissioner's valuations (for example, assumptions made by the valuer).
Among other things, the AAT found the following problems with the approach adopted by the taxpayer's valuer:
<ul>
<li>the lack of suitability of the comparison properties selected;</li>
<li>the lack of evidence of recent sales for the direct comparison method;</li>
<li>the use of estimates of income-generating potential for one of the properties rather than actual figures that were available;</li>
<li>the application of the comparable sales method was not transparent; and</li>
<li>failure to explain why he used a particular value per square metre for the land of one of the properties.</li>
</ul>
Accordingly, the AAT concluded that the valuations relied on by the company were not reasonable. The difference between the valuations by the Commissioner and the company was over $650,000.
In tax law, the taxpayer bears the burden of proving that the Tax Commissioner's assessments were excessive, and in cases where valuations were at issue, a taxpayer could not do this by simply proving that the valuations relied on by the Commissioner were wrong. Rather, the AAT said a taxpayer must positively establish that its own valuations are right, or at least more reasonable than the Commissioner's valuations.
This case is a useful reminder to SMEs about the importance of obtaining accurate and supportable valuations of assets where the CGT small business concessions are being sought.
Terry Hayes is the senior tax writer at <a 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 href="https://www.smartcompany.com.au/index.php" target="_blank">SmartCompany</a>.
Image courtesy of Flickr.
 
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Understanding capital gains tax: Terry Hayes

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Last year brought the usual proverbial "truckload" of tax and superannuation changes either passed by Federal Parliament or proposed to commence this year. It's difficult to keep up with it all, but below I set out some of the changes that might be of interest to small and medium-sized businesses, including property businesses.
This year's federal election is sure to bring more changes promised.
Significantly, January 1 brought something of a changing of the guard in that a new Tax Commissioner, Chris Jordan, took up his role, and a new chairwoman of the Board of Taxation, Teresa Dyson, commenced. They both have a very busy year ahead of them.
The following tax changes commence, or are expected to commence, during 2013.
<ul>
<li>Medical expenses rebate: legislation still before Parliament proposes that an income test will apply to the rebate for medical expenses from July 1, 2012 i.e. for 2012-13 tax returns. For taxpayers with adjusted taxable income above the Medicare Levy Surcharge thresholds ($84,000 for singles or $168,000 for couples or families in 2012-13), the threshold above which they may claim the net medical expenses tax offset will increase from the current $2,120 to $5,000 and the rate of reimbursement will be reduced from 20% to 10%. The claim threshold will be indexed annually to the CPI. Tax returns for the 2012-13 year (i.e. ending on June 30, 2013) will first reflect the changes.</li>
<li>Mature age worker tax offset: the mature age worker tax offset has been phased out from July 1, 2012 for taxpayers born on or after July 1, 1957. Again, tax returns for the 2012-13 year will first reflect the changes.</li>
</ul>
<h3>Superannuation</h3>
There are lots of changes here, particularly for small and medium-sized businesses that have self-managed super funds (SMSFs) – and it seems from stats just released that SMSFs continue to grow strongly and are now a major component of the superannuation sector holding over 30% of total superannuation assets. SMEs should particularly take note of the following.
<ul>
<li>All employers should note that the compulsory super contribution rate will rise by 0.25% to 9.25% from 1 July 2013 i.e. for the 2013-14 year. This is first phase of the scheduled increase from 9% to reach 12% from 2019-20. There will be increments of 0.25% in the first two years and 0.5% thereafter (i.e. from 2015-16) until the rate reaches 12% (from 2019-20).</li>
<li>SMSFs and related party asset acquisitions and disposals: Draft legislation proposes new rules requiring that a trustee or investment manager of an SMSF could acquire an asset from a related party if the asset is business real property acquired at market value, as determined by a qualified independent valuer. The valuer must also be independent and therefore cannot be a member of the fund or a related party of the fund. It will still be possible to acquire business real property and certain in-house assets (not exceeding 5%) from a related party, provided that the asset is acquired at market value as determined by a qualified independent valuer. However, it will only be possible for an SMSF to acquire a "listed security" from a related party in a way prescribed by regulations (yet to be released as at January 1, 2013). The changes are intended to apply from July 1, 2013.</li>
<li>A new registration regime for approved SMSF auditors applies from January 31, 2013. SMSF auditors are required to apply to ASIC for registration as an "approved SMSF auditor". Auditors can apply for registration from January 31, 2013. All auditors will be required to be registered with ASIC by July 1, 2013 to audit SMSFs after that time. All SMEs that have self-managed super funds should be aware of this requirement concerning auditors of their funds.</li>
<li>SMSF approved auditors: From July 1, 2013, draft regulations propose to require SMSF trustees to appoint an approved auditor no later than 45 days before the due date for lodgment of the fund's annual return. The draft regulations (yet to be finalised) also provide that the prescribed period for which an audit report in respect of an SMSF must be given is 28 days after the trustee of the fund has provided all documents relevant to the preparation of the report to the auditor.</li>
<li>The MySuper application and authorisation process commenced from January 1, 2013. Authorised superannuation entities will be able to offer a MySuper product from July 1, 2013. Employers will be required to make superannuation guarantee contributions (for employees that do not have a chosen fund) to a default fund that offers a MySuper product from January 1, 2014.</li>
<li>A trans-Tasman portability scheme will permit transfers between certain Australian superannuation funds and New Zealand KiwiSaver schemes from July 1, 2013. The proposed scheme will enable Australians and New Zealanders to consolidate their retirement savings in their country of residence when they emigrate and intend to stay indefinitely or permanently in the host country. Currently, Australians and New Zealanders working in Australia cannot take their superannuation with them when they permanently leave Australia. Note that New Zealand-sourced retirement savings from KiwiSaver schemes held in Australian superannuation funds will not be able to be transferred to or held in a self-managed superannuation fund.</li>
</ul>
<h3>Other changes</h3>
<ul>
<li>Private health insurance rebate: From July 1, 2013, the private health insurance rebate will no longer be paid on any lifetime health cover loading applied to the cost of a private health insurance policy for lifetime health cover. Legislation to implement this is still before Parliament, but is expected to pass before June 30, 2013.</li>
<li>The education tax refund has been abolished and replaced by the Schoolkids Bonus from January 1, 2013. For those eligible, the first instalment of the Bonus ($205 per primary student and $410 per secondary student) will be paid by Centrelink or the Department of Veterans' Affairs, directly into their bank accounts between January 9 and 22, 2013 to help with back-to-school expenses. Eligibility requirements for the Bonus are that the student must be undertaking primary or secondary studies and be under 20 years of age, and the parent or carer must be receiving one of several government payments, including Family Tax Benefit Part A or Youth Allowance or Disability Support Pension.</li>
<li>Social Security benefits: From January 1, 2013, the length of time many payments and concession cards can continue while a recipient is temporarily overseas was reduced from 13 weeks to 6 weeks. Payments affected include Pension Supplement, Disability Support Pension, Carer Payment, Wife Pension, or if a person is a Commonwealth Seniors Health Card Holder.</li>
</ul>
This article originally appeared on <a href="https://www.smartcompany.com.au/index.php" target="_blank">SmartCompany</a>. 
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A truckload of superannuation reforms coming for property owners in 2013

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Tax in 2013 is certain to be as lively as ever, probably more so with a federal election looming. The tax promises are sure to flow thick and fast.
I'd like to start this year with an old favourite – ATO data-matching. This technique is now regularly used by the ATO to gather a wide range of information it can then trawl through to detect compliance with the tax laws. No one should underestimate the sheer volume of data the ATO now collects and with the ever-increasing sophistication of techniques to analyse and "slice-and-dice" that data, the tax affairs of Australians will come under closer scrutiny.
In its latest endeavours, the ATO has announced data-matching programs targeting offshore bank accounts, credit and debit card sales, and real property transactions. The information collected will be electronically matched with certain sections of ATO data holdings to identify non-compliance with lodgment and payment obligations under taxation laws.
The ATO intends to collect data relating to credit and debit card sales of entities for the period July 1, 2011 to June 30, 2012 from various banks and credit card companies, including the Commonwealth Bank, St George, Westpac, ANZ, NAB, American Express and Diners Club.
Small and medium businesses likely to be data-matched
The program is designed to enable the ATO to better understand and address the compliance behaviour of taxpayers through electronic bulk data-matching to identify potential ATO administrative action. This might include checks on whether tax returns or BASs have been lodged, whether all sales have correctly been returned by the merchant and/or whether GST has been correctly collected and recorded. It is expected that records relating to approximately 900,000 merchants will be matched. Many SMEs may find themselves included in this matching.
Buying and selling property won't escape the taxman's gaze either. The ATO plans to collect the names and addresses of individuals and entities transacting with real property from various sources, including state revenue offices, residential tenancy authorities, and other government agencies. The ATO aims to address non-compliance with lodgment and debt payment through electronic bulk data-matching to identify potential ATO activity.
 
<hr class="system-pagebreak">
 
It's not too difficult to imagine what might catch the ATO's eye. Outstanding tax return and activity statement lodgments would be high on the list. Capital gains tax issues also spring to mind, as does return of rental income, correctly claiming property deductions, ownership of property issues, and more.
Last year, the ATO flagged an increasing focus on property developers who have a history of non-compliance with GST. The ATO said some developers claim input tax credits throughout the life of the development, but then avoid paying GST when they sell.
<h3>A large-scale data-matching program</h3>
With records relating to approximately 10.4 million individuals to be matched, the data-matching project is a large-scale exercise, and the data will come from all states and territories. The property market might have its ups and downs, but is does keep moving – and the taxman won't be far behind!
Australians with offshore bank accounts will also come under the ATO spotlight. Approximately 50,000 offshore account records will be matched.
The ATO says it will collect account details of bank customers to identify Australian resident taxpayers with offshore bank accounts which may evidence undeclared income and/or gains in the 2008-09 to 2010-11 financial years, that is, effectively from 1 July 2008 to 30 June 2011. The ATO will request the account details from a wide range of banks such as: ANZ, Commonwealth Bank, Westpac, Bank of Qld, Macquarie Bank, Bank of China (Australia) Limited, Citigroup, HSBC, Investec Bank, Rabobank Australia Limited, Citibank, Union Bank of Switzerland.
The data-matching is intended to help the ATO identify any non-compliance with lodgment and payment obligations under the tax laws. Of course, offshore bank accounts may have been established quite legally and for legitimate business or other reasons. The ATO's data-matching may, however, result in a query that taxpayers will have to answer.
The detection of offshore bank accounts is now a key activity of revenue authorities around the world. It is not limited to Australian residents and has also been a major focus of the U.S. Internal Revenue Service as well concerning U.S. residents.
Data-matching is well and truly here to stay. Doubtless the ATO will conduct more of these programs throughout the coming year. Stay tuned for more details.
Terry Hayes is the editor-in-chief of tax news reporting at <a href="https://www.thomsonreuters.com.au/" rel="nofollow">Thomson Reuters</a>, a leading Australian provider of tax, accounting and legal information solutions.
This article originally appeared on <a href="https://www.smartcompany.com.au/index.php" target="_blank">SmartCompany</a>.
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ATO data-matching targets property deals

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The clock is now running on the new taxable payments reporting regime for the building and construction industry, which came into effect on July 1.
While the first report to the ATO under this new system is not due until July 21, 2013, collecting the records necessary to prepare that report should already be under way.
Broadly, under the new system, businesses in the building and construction industry are required to report payments if they:
<ul>
<li>make payments to contractors for building and construction services;</li>
<li>have an ABN.</li>
</ul>
The system is aimed at improving contractor compliance with their tax obligations, particularly non-lodgment of income tax returns, omitted contact income and GST non-compliance.
The taxable payment reporting system is confined to business-to-business transactions, so home owners are not affected.
Businesses affected are required to report payments and must prepare and lodge an annual report each year, the first one being due on July 21, 2013 (covering the period July 1, 2012 to June 30, 2013). The report must include the following details for each contractor:
<ul>
<li>ABN;</li>
<li>name and address;</li>
<li>total gross amount paid;</li>
<li>total GST included in gross amount paid.</li>
</ul>
The ATO expects the information that must be reported will generally be included on invoices received by the business.
Payments to contractors for building and construction services are required to be reported for the year in which they are actually paid. Where payments include labour and materials, the total amount is to be reported. However, in something of a concession, payments that relate only to materials do not need to be reported.
The annual reports can be lodged either online or by paper. Where business software has been updated to produce the new annual report, the ATO says the report can be lodged online. Further information will be made available on the ATO's website in early 2013. Businesses lodging paper reports will need to use the ATO form currently being developed.
The ATO said taxable payments reporting would only apply to currently operating businesses, and not to insolvent businesses. It has provided a comprehensive (although not exhaustive) <a rel="nofollow" href="https://www.ato.gov.au/businesses/content.aspx?menuid=0&amp;doc=/content/00313486.htm&amp;page=13&amp;H13" target="_blank">list of occupations and work activities</a> which satisfy the definition of building and construction services, which means that the listed occupations fall under the taxable payments reporting regime.
 
<hr>
According to the Tax Office, where there are discrepancies between the payment information reported by businesses and contractors, it will issue letters to contractors to seek rectification of the discrepancy. Where necessary, it will also amend tax returns of the contractors, or in cases of non-lodgment of tax returns, it will issue assessments based on the information it holds and impose penalties.
Some concerns have been raised about potential problems that might arise with information received by the ATO under the new reporting system being different from data matching exercises such as the building and construction industry data matching program announced in February 2012.
The ATO said the information that will be reported under taxable reporting payments has not been previously collected, therefore not data matched. The building industry data-matching program includes collecting data on individuals and businesses holding a hardware store trade account with annual purchases of $10,000 or more and is being run as a pilot program.
The ATO will also be given data on complaints and licensing information from NSW Fair Trading, Queensland Building Services Authority and Government of South Australia Consumer and Business Services.
Under the taxable reporting payments system, payers will generally not have to verify the Australian Business Number (ABN) provided to them by contractors. The ATO says that generally, proof of identity is not required. However, payers can verify ABNs if they wish by using tools available on the <a rel="nofollow" href="https://www.abr.business.gov.au/Index.aspx" target="_blank">ABN Lookup web site</a>.
This new reporting regime will impose another compliance burden on what many would rightly claim is a struggling industry. However, the fact that the information required is expected to be generally included on invoices received by the business might lessen the compliance cost. Although July 1, 2013 is still almost a year away, business affected should be preparing now to be able to provide the information required.
Terry Hayes is the editor-in-chief of tax news reporting at <a href="https://www.thomsonreuters.com.au/" rel="nofollow">Thomson Reuters</a>, a leading Australian provider of tax, accounting and legal information solutions. This article originally appeared on <a target="_blank" href="https://www.smartcompany.com.au/index.php">SmartCompany</a>.
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What the new taxable payments reporting regime means for the construction industry

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As it does around this time of year, the ATO recently released its 2012-13 Compliance Program outlining those it intends to target in the coming year. Small and medium-sized enterprises (SMEs) figure prominently.

While much has already been written about the program, it is worth exploring a little more deeply what the ATO will be looking at. It's something of a roadmap for SMEs in the tax compliance cut and thrust.
There are around three million so-called micro enterprises i.e. businesses with an annual turnover of under $2 million or superannuation funds with less than $2 million in assets. They represent a significant part of the taxpaying population, employing 1 in 5 Australian workers.
Over the coming year, the ATO says it will focus particularly on the following compliance risks:
<ul>
<li>unrecorded and unreported cash transactions;</li>
<li>employer obligations eg. super;</li>
<li>GST refund integrity and GST evasion;</li>
<li>ensuring businesses are correctly registered in the tax system;</li>
<li>supporting businesses in meeting their lodgment obligations; and</li>
<li>incorrect fuel tax credit claims following implementation of the clean energy measure.</li>
</ul>
The ATO said profiling is used to identify potential tax risks such as businesses operating outside industry or economic benchmarks.
Information matching forms a key part of the ATO's arsenal. It matches information in tax returns and business activity statements (BASs) with details of transactions reported to it by a wide range of third parties, including:
<ul>
<li>payments and grants by other government agencies;</li>
<li>payments by businesses to contractors especially the new building and construction industry reporting system;</li>
<li>income from investments and partnership and trust distributions;</li>
<li>property and share transactions;</li>
<li>cross-border transactions and international funds transfer.</li>
</ul>
<h3>Unrecorded and unreported cash transactions</h3>
The ATO said the plastering and cafe sectors have been selected for more intensive activity for 2012-13. In relation to the plastering sector, the use of cash along with historical weaknesses in tax compliance and high number of information referrals from the public has prompted the increase in ATO activity.
The ATO said it will review both business-to-business and business-to-consumer transactions, comparing information from hardware store accounts against their customers' purchasing records to detect cases where businesses are skimming cash or are outside the system.
In relation to cafes, the ATO said it is expanding its compliance program of comparing information from coffee-supplier trade accounts against their customers' purchasing records to detect cases where cafe businesses are skimming cash or are outside the system.
<h3>Employee vs contractor</h3>
The ATO will continue the compliance program on contractor arrangements. Trying to present an employment relationship as a contract between two businesses by, for example, forcing the worker to supply invoices and quote an ABN, does not in the ATO's view override an underlying relationship of employment. The ATO is concerned this threatens the welfare and entitlements of workers and creates unfair competition for honest employers.
The statistics paint their own picture on this issue. In 2011-12, the ATO conducted approximately 1,100 audits on businesses where it suspected that the business may have incorrectly treated employees as contractors. From the resultant audits, the ATO collected details of approximately 51,000 payments made to around 41,000 contractors, about 18,000 of which were individuals. It found that 48% of businesses that engaged contractors were wrongly treating individuals as contractors.
This is an ongoing major issue for the ATO, and SMEs should also be aware that Fair Work Australia also looks closely at this issue of employee vs contractor.
<h3>Small business benchmarks</h3>
The ATO has developed benchmarks for over 900,000 small businesses in over 100 industries. According to the ATO, approximately 90% of businesses in benchmarked industries fall within a benchmark range.
The benchmarks can be a two-way street. While they are a valuable tool for the ATO to check tax compliance, they can be useful for SMEs too. For example, where a business is reporting significantly more net income than its industry peers, this can alert the business to consider if it has forgotten to claim all of its business tax deductions. It isn't always that simple, but the potential exists for these benchmarks to actually help some SMEs.
On the flip side, where a business is reporting significantly less income than the benchmark range for its industry, the ATO may ask a few questions. However, if the business had good evidence to explain all its income and expenses, the ATO says it will not be subject to tax adjustments.
<h3>Employer obligations</h3>
For the 2012-13 year, the ATO expects to:
<ul>
<li>review the tax affairs of more than 20,000 businesses across all markets to ensure they are reporting the correct amounts of PAYG withholding;</li>
<li>conduct a range of education and assistance activities regarding reporting of payments to contractors in the building and construction industry;</li>
<li>use third-party data to income match taxable government grants and payments with reported amounts in tax returns;</li>
<li>conduct an outbound phone campaign and 500 enterprise reviews with the aim of ensuring that businesses register for PAYG withholding when they take on staff for the first time and register for GST when their turnover exceeds the $75,000 threshold.</li>
</ul>
<h3>GST refund integrity and GST evasion</h3>
With the recent passage of new laws that give the Commissioner a discretion to retain high risk refunds, the ATO may stop a small percentage of BASs for verification where anomalies, discrepancies, unusual behaviour, or change in patterns occurs. It said to minimise the number of businesses having refunds delayed, it may also check some refunds after they have been paid.
In addition, the ATO said it will review 35,000 GST registration applications to ensure that new registrants are legitimate. It will review around 500 serious cases of fraud involving identity theft and groups of entities established with no intention of undertaking an enterprise.
The ATO will monitor and investigate taxpayers who dispose of real property and fail to report the transaction on their BASs or misclassify the transaction for GST purposes.
The ATO said it has recently identified cases of fraud involving groups of entities established with no intention of undertaking an enterprise. Stolen identities were used to falsely register ABNs and make fraudulent refund claims on 1,670 activity statements totalling more than $17.5 million. An additional 600 entities associated with this fraud were detected before lodgement and subjected to enhanced registration check processes preventing additional claims being lodged. The ATO expects to review around 500 of these more serious cases in 2012-13.
<h3>Fuel tax credit claims</h3>
While this does not affect all SMEs, the ATO said incorrect or ineligible fuel tax credit claims continue to be made as a result of taxpayers misunderstanding their entitlements or poor record keeping.
In 2012-13, it will continue to provide claimants with information and assistance. However, in cases of serious breaches, it said it will consider cancellation of registration, prosecution and debt recovery.
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 first appeared on <a href="https://www.SmartCompany.com.au">SmartCompany</a>. 
</body></html>

Small businesses under ATO compliance microscope: Terry Hayes

<html><body>
The regulation of self-managed super funds (DIY funds) shows no signs of easing. Given their importance in terms of the total superannuation sector, perhaps that is not surprising. But regulation changes may catch some DIY fund trustees out if they are not aware of what's coming.
Most recently, the federal government has released draft regulations proposing to require trustees of self-managed superannuation funds (SMSFs) to:
<ul>
<li>value the assets of the fund at "net market value" for reporting purposes;</li>
<li>consider whether to hold a contract of insurance for one or more of their members;</li>
<li>"review regularly" and document the investment strategy; and</li>
<li>keep money or other assets of an SMSF separate from money and assets held by a trustee personally or by a standard employer-sponsor (or an associate).</li>
</ul>
These are important changes and once the regulations are finalised they would apply from July 1, 2012, only a few weeks away. So what do the changes mean?
<h3>Net market value</h3>
The draft regulations propose to require trustees of SMSFs to value the assets of the fund at "net market value" for reporting purposes from the 2012-13 year of income i.e. from July 1, 2012.
"Net market value" will be defined to mean the amount that could be expected to be received from the disposal of an asset, in an orderly market, after deducting the costs expected to be incurred in realising the proceeds of such a disposal. This definition of "net market value" is the same as that used in Australian Accounting Standard AAS 25 which requires large APRA-regulated superannuation funds, as reporting entities, to value their assets at net market value as at the reporting date.
Currently, SMSFs are generally able to choose either historical cost or market valuation accounting methods to value their assets when preparing a statement of financial position and an operating statement in respect of each year of income. SMSFs in pension phase (and in-house assets) are already required to value assets at "market value" (defined in s 10(1) of the SIS Act) each year. Note that a person commits an offence if they contravene the laws regarding preparing a statement of financial position and an operating statement with a maximum penalty of $11,000.
<h3>Separation of assets</h3>
A proposed new operating standard in the super regulations will require a trustee to keep money and other assets of an SMSF separate from any money or assets held by a trustee personally or by a standard employer-sponsor (or an associate).
This requirement is currently established by way of a covenant under the law which is deemed to be incorporated into the governing rules of the fund. However, the Tax Office is currently unable to enforce compliance with covenants and relies on voluntary compliance by trustees.
The proposal to make this requirement an operating standard will mean that a person who intentionally or recklessly contravenes the new regulation will be guilty of an offence punishable on conviction by a fine up to $11,000.
<h3>Investment strategy review</h3>
SMSF trustees will also be required to "review regularly" the fund's investment strategy. Trustees will be able to substantiate compliance of this requirement to "review regularly" by documenting decisions in the minutes of trustee meetings that are held during the income year.
Many SMSFs may only have what could be described as a very "loose" investment strategy that is not even documented. They will need to be aware of the changes and the need to have a properly documented strategy that is reviewed regularly and documented in the minutes of trustee meetings.
Other funds may already be properly documenting their investment strategy reviews, so the changes may have less impact on them.
Either way, from July 1, 2012, there will be no choice in the matter. Funds must have an investment strategy and it must be reviewed and documented regularly.
<h3>Insurance strategy</h3>
The draft regulations also propose to amend the investment strategy operating standard in the superannuation regulations to require SMSF trustees to consider whether to hold a contract of insurance that provides insurance cover for one or more of their members. SMSF trustees will be required to consider whether to hold insurance for their members when they formulate, regularly review and give effect to the fund's investment strategy.
The government expects trustees of SMSFs to be self-reliant in determining the type and level of insurance cover their funds' members might require whether within or outside their SMSFs.
As the investment strategy requirement is a prescribed operating standard, a person who intentionally or recklessly contravenes this standard is guilty of an offence punishable on conviction by a fine up to $11,000.
SMSFs are facing increasing regulation. The days are gone when someone could set up such a fund almost on the back of an envelope. The SMSF sector now holds growing billions of dollars in funds, so it's not surprising the government is keen to see those funds properly managed. SMSF trustees will have to get used to that.
Terry Hayes is the senior tax writer at <a href="https://www.thomsonreuters.com.au/" rel="nofollow">Thomson Reuters</a>, a leading Australian provider of tax, accounting and legal information solutions.
This article originally appeared on <a target="_blank" href="https://www.smartcompany.com.au/index.php">SmartCompany</a>
</body></html>

More regulation on the way for self-managed super funds: Terry Hayes

<html><body>
Property valuations (and valuations of equipment and other assets for that matter) are relevant in many tax contexts, including capital gains tax (CGT) and GST. Getting a valuation wrong can mean more tax to pay.
A disagreement with the Tax Office on a valuation can materially alter the tax consequences of a transaction. Indeed, a recent decision by the Administrative Appeals Tribunal saw a taxpayer fail the CGT maximum net asset value test (so the CGT small business concessions could not be accessed) because of a valuation issue. My recent article <a href="https://www.smartcompany.com.au/tax/20111215-another-year-and-capital-gains-still-causes-problems?utm_source=SmartCompany&amp;utm_campaign=b8d9118ba4-Monday_12_December_201112_12_2011&amp;utm_medium=email">Another year and capital gains still cause problems</a> discussed this case further.
Hand in hand with the need for valuations is the corresponding need to keep good records. In the CGT context for example, an asset that may be subject to CGT when it is later sold, needs to have records kept about its purchase price, any improvements to the asset, etc. If an asset is inherited, it is highly prudent to obtain a valuation of it, in case tax consequences later arise.
The Tax Office has released a paper highlighting what it says are recurring issues it has found concerning valuations of property in relation to the application of the GST margin scheme provisions. The margin scheme essentially allows less GST to be paid where sales of land or strata units are involved, provided certain conditions are met.
The Tax Office does not automatically accept every valuation submitted to it. Many valuations it receives are referred to the Australian Valuation Office (AVO) for evaluation, particularly as to whether or not the valuation specifies a value that is within a range that is reasonable.
Often, when certain elements of a valuation are outside an acceptable range, the Tax Office says the ultimate valuation is higher than it should be resulting in a lower margin and less GST payable.
The paper sets outs the main issues regarding what the ATO considers are non-complying valuations it has identified and its position when those issues occur. Some issues include the following.
<table style="width: 470px;" border="1" cellpadding="0">
<thead><tr>
<td valign="top">
Issue
</td>
<td valign="top">
ATO position
</td>
</tr></thead>
<tbody>
<tr>
<td valign="top">
Profit and risk ratios: When valuing a property on the basis of a hypothetical development approach, the anticipated profit and risk margins are determined after consideration of the level of risk associated with a project as at the date of valuation. In many cases, the ATO says profit and risk ratios are not supported in the valuation report and appear to be well below what could reasonably be expected.
</td>
<td valign="top">
Valuers need to determine profit and risk ratios that are reflective of the characteristics and condition of the subject property at the valuation date. The ATO says these ratios need to reflect realistic profit expectations with appropriate and reasonable weightings for risks apparent at the date the property is required to be valued.
</td>
</tr>
<tr>
<td valign="top">
Market interest rates: Valuations need to reflect an open market interest rate. The ATO considers the use of negotiated commercial rates, "in-house" finance rates or special discounted rates may not be appropriate as these rates are not reflective of open market rates but, rather, are specific to a particular entity or a set of circumstances.
</td>
<td valign="top">
Valuers need to apply appropriate interest rates at the date the property is to be valued. The ATO says these rates should reflect commercially available rates supported by evidence from within the industry at that point in time or alternatively based on the rates published by the Reserve Bank of Australia.
</td>
</tr>
<tr>
<td valign="top">
Comparable sales: These are often unavailable at valuation date and pre and post valuation date sales are used as a reference point for a valuation. Also, there are instances where purported comparable sales from a geographically different area or different market segment to that of the subject property are referenced in a valuation. Often, supporting sales data in property valuations is provided to the ATO without any explanation as to why the data is comparable.
</td>
<td valign="top">
Comparable sales must withstand objective scrutiny of their comparability. If post valuation date sales or remote area sales are to be used, the ATO says these must have commentary as to why the valuer considers it reasonable to use these sales to establish the subject property value.
</td>
</tr>
<tr>
<td valign="top">
Development costs: Many valuers undertaking hypothetical development valuations have completed these valuations with the exclusion of important development costs such as acquisition costs, legal costs and holding costs.
</td>
<td valign="top">
The ATO says all relevant costs with appropriate weighting should be included in a hypothetical development valuation.
</td>
</tr>
</tbody>
</table>
The Tax Office says that valuations also need to reflect reasonable allowances for commencement and completion dates as well as selling timeframes, etc as these factors will affect holding costs, financing costs and overall project risk. In examining valuations, the AVO found that in a number of cases, lead times for example were unrealistic given the size and the peculiar characteristics of the property development. The ATO view is that project lead times, selling timeframes and completion timeframes must reflect the commercial, market and planning reality of a project.
Many valuations reflect a value of the real property interest that is being sold rather than the interest that existed at the valuation date. In these situations, the ATO considers that if the valuer is asked to value a real property interest that did not exist at the valuation date but was derived from another interest that existed at that date, the valuation must be made as follows:
<ul style="list-style-type: none;">
<li>
a valuation of the interest in existence at the valuation date must be made;
</li>
<li>
the valuation of that interest must be apportioned on a fair and reasonable basis, to ascertain the part of the valuation that relates to the interest that is being sold. The ATO requires all factors taken into account in the apportionment to be explained to show why the apportionment is fair and reasonable.
</li>
</ul>
The ATO said it accepts that valuations can, by their very nature, be a subjective assessment of a property's value and in many cases there are interpretive assessments of impacts on the property value. However, it said that regardless of this subjectivity, it still has an expectation that values will fall within a "reasonable range".
Where the AVO opinions are supported by evidence, and also align with the ATO's perception of reasonableness, the ATO said these will be referred to the relevant valuer to enable those noted elements of the valuation to be reviewed. If there is sufficient merit in the valuer's adopted assumptions and conclusions, such that these can be considered reasonable, the ATO said the valuation can be accepted as a complying valuation.
Where the valuer's assumptions and conclusions are not sustainable based on evidence, or are not reasonable, the ATO said the valuation cannot be considered a complying professional valuation. This, in turn, can have tax flow-on implications.
Getting valuations is important in a tax context. But not every valuation will necessarily be acceptable to the Tax Office.
Terry Hayes is the senior tax writer at <a 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 target="_blank" href="https://www.smartcompany.com.au/">SmartCompany.</a>
 
 
</body></html>

How to get property valuations right: 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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