directions

THE FEDERAL GOVERNMENT’S“HOUSE-CLEANING” INITIATIVE

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Introducing Chris Farmer

Managing Deceased Estates

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Client Case Study:

Couran Cove Island Resort

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Welcome to the Team!

Congratulations

Pilot Community

Over the past 12 years we have seen more than 90 tax

proposals introduced by various Federal Governments

that have not become law. This has at times caused

uncertainly for individuals and businesses as the

“effective date” of the legislation passes without further

details or confirmation on the new law.

On 6 November 2013, the Treasurer and Assistant

Treasurer announced that they were “cleaning house”

and proposed to review all unenacted proposals. From

that point they would either:

1. Proceed with the proposal;

2. Dump the proposal; or

3. Table it for further review.

The Government has expressed it would like the bulk of

legislation that will be progressed to be passed by the

Parliament by 1 July 2014.

What is likely to proceed?

One of the main proposals that the Government is

likely to proceed is the changes to personal income tax

through the phase out of the net medical expenses tax

offset (NMETO).

The NMETO will be phased out from 1 July 2013 with

transitional arrangements for current claimants. This will

mean that if you did not claim the NMETO in the 2013

financial year, you will not be able to claim it in the future.

What can we expect to be dumped?

We believe that the Federal Government will most likely

move to scrap the following proposals:

• Proposed $2,000 self-education expenses cap (i.e. taxpayers’ deduction for self-education

expenses, training and educational courses,

textbooks and other accreditation expenses will

not be limited to $2,000 a year);

• Proposed increase of Fringe Benefits Tax on cars (i.e. the statutory method of calculating FBT will

not be abolished); and

• Proposed tax on Superannuation pension earnings 1

Volume 28 2013

above $100,000 in the draw-down phase (i.e.

pension earnings will remain tax free).

What proposals will be tabled for further review?

Some of the other larger proposals that may be subject

to more consultation are:

• Capital Gains Tax - Proposed look-through treatment for earnout arrangements (i.e. where

businesses are sold and the selling price is

determined by an upfront payment as well as

income streams);

• Proposed not-for-profit sector reforms:• Better targeting not-for -profit tax concessions:

Protects the revenue base by ensuring that tax

concessions provided to not-for-profit entities

are targeted only at those activities which

further their altruistic purposes;

• Reforming the ‘in Australia’ requirements that apply to tax exempt entities: Re-states and

clarifies the ‘in Australia’ special conditions for

income tax exempt entities and deductible

gift recipients to ensure that the relevant

entities operate principally in Australia; and

• Definition of ‘not-for-profit’ in the tax laws: Provides a definition of ‘not-for-profit’ in the tax laws.

It is still early days and only time will tell how many of

these proposals will actually be made law. However, this

“house-cleaning” initiative from the Government should

be welcomed by businesses.

We have only noted several of the outstanding 90

proposals that will be reviewed. We will keep you up

to date as to when there are any more significant

developments in this area.

If you have any questions about these proposals please

contact Murray Howlett from our Taxation services

Division on (07) 3023 1300 or

mhowlett@pilotpartners.com.au.

WELCOME TO PILOT DIRECTIONS, OUR NEWSLETTER THAT PROVIDES NEWS, INDUSTRY ALERTS AND STAFF UPDATES. Since the Federal election we have noticed a general

increase in optimism among our business clients.

We are starting to see signs of increased activity as

business owners seem prepared to make longer term

investments for the future.

We have also witnessed an increased appetite from

the financial institutions to take on new business. This

has enabled business owners to source the necessary

funding to grow their businesses. We hope to see the

momentum continue to build in 2014.

In this issue we welcome Christopher Farmer, a

Manager in the firm’s Corporate Advisory Division. Chris

joins us after emigrating to Australia from the United

Kingdom. He brings to the firm a wealth of experience

and we are proud to have him on board.

We profile the Ramada Couran Cove Island Resort. The

beautiful retreat on South Stradbroke Island is one of

our Business Advisory and Taxation Services clients.

Brad Ryan has assisted the owner and developer with

managing the development of short and long-term

business strategies associated with the resort.

On behalf of the team at Pilot, we wish you a merry

Christmas and a safe and prosperous new year.

We look forward to working with you again in 2014!

Brian McDonald

Managing Partner

PILOTPARTNERS.COM.AU

MERRY CHRISTMAS FROM THE TEAM AT PILOT!

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As with most things in life as well as death, there are

always taxation implications for consideration.

In the case of managing the tax affairs of a deceased

estate the following applies:

• The executors of the estate are responsible for lodging a final income tax return reporting any

income or capital gains derived by the deceased

up to the date of death and in respect of any

years in which no tax return has been lodged. The

deceased is assessed at marginal tax rates on

the reported taxable income.

• The trustees of the estate must apply for a tax

MANAGING DECEASED ESTATES

Pilot is proud to welcome Christopher Farmer

to its Corporate Advisory Division. Chris

emigrated from the UK with his wife, a local

Brisbane girl, to work at Pilot and escape the

cruel British weather.

Chris has a unique skill set. He is a Corporate

Advisory Accountant who also holds a UK

Insolvency licence. He has had significant

exposure to companies at all stages of

their business life cycles and understands

the different financial, legal and strategic

challenges they face.

HOW DO YOU HELP CLIENTS?We basically act as problem solvers for our

clients. Pilot’s Corporate Advisory Division

employs a wide range of talented individuals

who work with our clients to help them deliver

their corporate goals. We offer clients a

bespoke service because to us, each client has

a different set of needs and requires individual

attention.

I believe there are no limits to how we can help

our clients.

WHAT DO YOU LIKE MOST ABOUT PILOT? I really enjoy the enthusiasm the people I

work with have for their clients and their jobs.

The firm has an entrepreneurial feel. We are

encouraged to deliver solutions not just identify

problems.

I also really like the view from Waterfront

Place.....if anyone has ever been to Euston,

where I was based for a time in the UK, they will

certainly appreciate where I am coming from!

TELL US SOMETHING ABOUT YOURSELF THAT WE WOULDN’T FIND ON THE PILOT WEBSITE. I am a keen skier. Moving from the UK where

I could wake up in the morning and be on the

slopes in Italy by the afternoon is something

that I am going to miss. On the other hand,

the commute into work in the morning (where

invariably it is sunny) is much nicer than being

stuffed into a northern line tube with a few

thousand other very unhappy looking people.

Chris can be contacted on (07) 3023 1300 or

cfarmer@pilotpartners.com.au.

INTRODUCING CHRIS FARMER

file number and lodge an income tax return from

the date of death to the end of the financial year,

and in each subsequent financial year, until the

estate is wound up.

• The deceased estate is assessed at marginal tax rates for the first 3 years and beyond that, at the

highest marginal tax rate (currently 46.5%).

• For pre-Capital Gains Tax (CGT) assets (acquired prior to 20.9.1985) the cost base of the asset to

the beneficiary will be the market value of the

asset on the day of the deceased’s death.

• For assets acquired on or after 20.9.85, the cost base of the asset is inherited on the day of the

deceased’s death. The exception to this is the

deceased’s main residence, which is deemed to

be acquired at market value at the date of death.

• A full exemption from tax is generally provided if the pre-CGT or post CGT main residence of the

deceased at the date of death is disposed of

within 2 years of the deceased’s death.

What about Superannuation?

Superannuation does not automatically form as a part

of a person’s estate. It is generally the superannuation

fund trustee who will have discretion as to how the

superannuation will be distributed. As such, it may

be appropriate to execute a Binding Death Benefit

Nomination to provide certainty as to how the trustee

will distribute the superannuation following the death.

The Importance of a Will

It is important to regularly review your will to ensure it

is current. This will also assist the executors or lawyer

administering the estate to ensure that all property has

been identified.

We recommend seeking advice from an accountant

or lawyer when drafting or updating a will to ensure

any tax implications which may be incurred by the

beneficiaries under the will or the deceased estate are

considered.

For more information please contact Jason Bayliss

from our Business Advisory Division on (07) 3023

1300 or jbayliss@pilotpartners.com.au.

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BACKGROUND

The Ramada Couran Cove Island Resort (“Couran

Cove”) is the perfect get away for couples, families,

business conferences and nature enthusiasts.

Situated on South Stradbroke Island, the resort offers

a peaceful island experience while still only a short 15

minute ferry ride from the Gold Coast.

The style of the resort is typically Queensland,

characterised by the use of light and natural materials.

The design, construction and operation of Couran

Cove has earned the resort national and international

awards and an Advanced Ecotourism certification.

BUSINESS CHALLANGE

Craig Dowling, a property owner and developer

identified the opportunity to purchase Couran Cove in

2012. The established resort had 300 units and cabins

built on the premises with more than half of the cabins

already privately owned.

Craig saw a lot of growth potential associated with

the investment. Couran Cove was an ideal place for

families and business conferences wanting to escape

to a Queensland island paradise while still having the

accessibility to the tourist attractions and airport at

the Gold Coast.

He also realised that the there was significant

opportunity to grow the existing site by building

additional cabins and upgrading the current resort

facilities.

In order to seek funding to acquire the property,

Craig had to ensure that his personal finances were

appropriately structured.

In 2012 Craig commenced working with Brad Ryan. A

Partner in the Business Advisory and Taxation Services

Divisions, Brad was introduced to Craig through a

mutual business acquaintance.

Craig decided to start working with Pilot because of

the relationships and knowledge in Advisory and Tax.

“I know a number of business associates who spoke

highly on the quality of work and the improvements

created for their businesses," said Craig. “After

meeting with Brad I felt Pilot had the correct culture

fit for me.”

BUSINESS SOLUTIONS FROM A BUSINESS

NAVIGATOR

Brad’s first order of business was to restructure Craig’s

company and personal structures plus reorganise

his administration. “There was some residual work

that had to be done to ensure Craig was in the best

possible position to obtain finance and secure the

resort,” said Brad.

Brad and the Business Advisory team also assisted

Craig with the finance application, cash flow modelling

and tax structuring to achieve optimum outcomes.

Pilot’s role in Craig’s preparation ensured that he was

able to secure the property and also gain additional

financing for future development.

After the acquisition, Brad and Craig reviewed the

existing internal controls and processes on the island.

“A resort is quite a complex structure and it has many

operating components,” commented Brad. “It is easy

to overlook a small issue that could grow quickly or get

out of hand.”

After a complex review, Brad and Craig were able

to implement certain measures to improve overall

operating procedures and efficiencies on the island as

well as coordinating the flow of information across the

different divisions within the resort.

Since acquiring the resort, Craig has spent his time and

efforts on an exciting refurbishment program. This has

included updating the day spa and restaurant as well

as building bike tracks, watersports programmes and

a general store.

In addition to assisting Craig with accounting, tax and

advisory services, Brad has also introduced a large

client to the resort.

“At Pilot, we pride ourselves on looking for new growth

opportunities for our clients,” said Brad. “After learning

that a business associate was looking for a new

national conference venue, Couran Cove was the first

place that came to my mind.”

Brad’s introduction resulted in a weekend conference

booking for more than 300 people with the potential

for annual conferences and future sales.

“With the assistance of Brad and the Pilot team, I

have been able to set upon the right path towards

fulfilling my vision for the island resort.”

Craig Dowling

FINANCIAL AND OPERATIONAL IMPROVEMENTS

• Created the right financial structures to purchase a large property

• Assisted the client with finance applications and cash flow modelling

• Developed internal controls to improve operating procedures and efficiencies on the island

• Introductions to business contacts that resulted in new business opportunities for the resort

• The resort is structured for future growth

For more information contact Brad Ryan from our

Business Advisory and Taxation Services Divisions

on (07) 3023 1300 or

bryan@pilotpartners.com.au.

www.courancove.com.au

Chartered AccountantsLevel 10, Waterfront Place 1 Eagle St, Brisbane QLD 4000 Australia

P +61 7 3023 1300 I F +61 7 3229 1227 I pilotpartners.com.au

DISCLAIMER: This publication contains general information only and is not intended to constitute financial advice. Any information provided or conclusions made, whether expressed or implied, do not take into account individual circumstances. It should not be relied upon as a substitute for professional advice.

Pilot is a trade mark of Pilot Nexia Pty Ltd ACN 105 267 061 ABN 58 144 064 946 Liability limited by a scheme approved under Professional Standards Legislation.Member of Nexia International, a worldwide network of independent accounting and consulting firms.

chartered accountants

WELCOME TO THE TEAM!Pilot welcomes the following new team members:

BUSINESS ADVISORY Catherine Choy is a Senior Accountant in the Business Advisory Division. She has more than eight years of experience working in accounting firms with a particular emphasis working with owner managed businesses. Catherine is a CA and she has a double degree from the University of Queensland. She holds a Bachelor of Commerce majoring in Accounting and a Bachelor of Arts majoring in Information Management.

CONGRATULATIONS The Chartered Accountants (CA) program is a challenging time for our young professionals

as they balance full-time work with an arduous academic program. Congratulations to the

following members of the Pilot team who recently passed their exams:

• Courtney Bella • Diarmuid Burke • Kristine Hall • Sam Hall • Robert Morton • Adam Trew• Andrea Von Lingen • Simone Zhao

A special mention to Greg Bell who passed with a Merit for his CA Taxation exam. Greg’s

results placed him first in Queensland and second in Australia!

Also, congratulations to Josh Meggs who recently completed his Graduate Diploma of

Financial Planning.

We appreciate the dedication and commitment to your careers.

PILOT COMMUNITY PWC Cool Night Classic

Pilot again participated in the annual fun run. Job well done to all our runners.

(L-R) Kristine Hall, Emma Dolphin, Josh Meggs, Craig Seaton, Jennie McGill, Cameron

Woodcroft, Kylee Smith, Jude Van Raalte, Cain Hammond, Murray Howlett, Kaitlyn Bennett,

Eliza Jones, Adam Trew, Holly Dixon, Brian McDonald and Andrea Von Lingen.

Pilot Mo Bros

Pilot has brought the moustache back in an effort to raise funds for men’s health. The

Movember Mo Bros raised over $3,000 for this important cause.

Thank you to Allan Godbee, Brendan Marland, Angus Boyd, Robert Morton, Matthew Arvier,

Daniel O’Reilly, Lachlan Ballinger, Luke Stewart, Greg Bell, Steve Wang, Sam Hall, Craig Seaton,

Regan Nguon, Cain Hammond and Will Nason for getting behind the cause and letting us

poke fun at you for the entire month of November!

Ella Woelke has joined the firm as a Secretary in the Business Advisory Division. She has more than seven years of experience and she was previously an Office Manager at a boutique accounting firm on the Gold Coast.

CORPORATE ADVISORY Welcome to Christopher Farmer, a Manager in

the Corporate Advisory Division. Chris has recently

moved to Australia from the UK. He brings to the

firm more than 10 years of experience, primarily

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working in a large international accounting

practice. He commenced his career in the Audit

Division and moved to Corporate Advisory and

Restructuring. He has advised clients in a wide

range of industries.

Nina Elwart is a Design Coordinator with more

than eight years experience. She has previously

held design roles within large multinational

companies and state government departments.

Brian McDonald congratulates Greg on his outstanding CA exam results

Pilot’s PWC Cool Night Classic Run Team

The Pilot Mo Bros