Sky Update – December 2019

Gaming Machine Entitlements Not Tax Deductible

The High Court has handed down its decision in the Sharpcan Case as to whether payments to the Victorian Government to acquire Gaming Machine Entitlements were tax deductible.

The High Court has overturned the previous Full Federal Court decision and has held that the payments were capital and not tax deductible. It also held that no deductions are able to be claimed under the “black-hole” provisions that allow certain capital expenditure to be written-off over a 5 year period.

The High Court decision is not unexpected and is in keeping with the approach that the majority of gaming venues had previously taken. As such, those venues that have not previously claimed a tax deduction need not take any action. Any venues that have claimed a tax deduction should get in touch to discuss the implications of the High Court decision.

The decision provides welcome clarity to pubs and clubs who have elected to purchase the new Gaming Machine Entitlements that commence in August 2022.

If you would like further information on how the High Court decision affects your pub or club, please get in touch at [email protected] or 1300 328 855.

NSW Discretionary Trusts – Surcharge Purchaser Duty & Surcharge Land Tax

At the time of writing, the State Revenue Legislation Further Amendment Bill 2019 remains before the NSW Parliament. If this Bill is passed, a discretionary trust will be deemed to be a “foreign person” unless its trust deed prevents (or is amended to prevent) foreign persons from being beneficiaries of the trust by 31 December 2019.

If a discretionary trust holds residential land in New South Wales and its trust deed does not prevent (or has not been amended to prevent) foreign persons from being a beneficiary of the trust, then it may be liable to pay surcharge land tax (currently 2%). Surcharge purchaser duty may also be payable on any future residential property acquisitions.

As the Bill is yet to be passed into law, the NSW Government has expressed an intention to extend the 31 December 2019 deadline. However, they are still encouraging trusts to try and meet the 31 December 2019 deadline to avoid incurring a land tax surcharge liability and having to subsequently apply for an exemption or refund.

If you have a discretionary trust that holds residential property in NSW, and have not already amended your trust deed, please get in touch at [email protected] or 1300 328 855 to discuss your options.

Fair Work Ombudsman (FWO) Continuing to Target Hospitality Industry

As at the 13^th of December, the FWO had published ten media releases so far for December. Eight out of the ten media releases involve café’s and restaurants. This serves to illustrate the current and ongoing focus of the FWO on cleaning up the non-compliance that is rife in the hospitality industry.

Hospitality industry operators who think that they can “fly under the radar” and get away with non-compliance are taking a very big risk. All that it takes is one disgruntled employee or a visit from a FWO inspector for it all to come undone.

In the FWO Annual Report published back in October, it was noted that over 50 per cent of litigations filed involved businesses in the fast food, restaurants and cafe sector and that the FWO had secured $1.6 million in court penalties against employers in the sector.

We encourage businesses operating in the hospitality industry to take compliance seriously. Particularly over the busy holiday season. If you need assistance to ensure that your business is compliant with its FWO requirements, please get in touch at [email protected] or 1300 328 855.

Holiday Message

Please note that our offices will be closed from Friday the 20^th of December and will re-open on Monday the 6^th of January.

From all of the team at Sky Accountants, we would like to wish you a safe and enjoyable holiday period. And for those in the retail, tourism and hospitality industries who will not get a break – we would like to extend our gratitude.

Email Address: [email protected]