Keeping up with tax rule changes

[GreatPig]

It can sometimes be alarming what little rules you come across searching through the ATO legal database.

Some time ago, while generally researching family trust elections, I happened to come across ID 2005/173 which stated that step-children are no longer considered part of the family of the test individual if the spouse (ie. parent of the children) dies. This could potentially apply to me, as my wife's three children are all my step-children and we've made an FTE for one of the trusts with me as the test individual.

That had me somewhat concerned about building up assets in that trust, as if my wife died, all distributions to the children would then be effectively at the top marginal rate.

I was about to post a message here to ask for suggestions about this, and on going back to look at that decision, find that it's been withdrawn. From 1st July 2007 step-children remain in the test individual's family even if the spouse dies, apparently a new provision in 272-95(2) which states that a person does not cease to be a family member due to the death of any other member.

So it's all good again

But how do you keep up with all this? Regularly browsing the ATO database is pretty hit-and-miss, and about as exciting as reading the phone book.

GP

 

[coastymike]

GreatPig,

I would generally say why waste your time. Obviously I need to keep up-to-date and do so through the Taxation Institute, continual study programs, NTAA courses, parliamentary submissions and monitoring their progress, AUSTLII and most importantly discussion with colleagues.

I have the same view with developments. I let the engineers and architects keep up to date with any building code regulations, let the lawyers keep up to date with construction legal issues and I concentrate on doing what I am good at. Putting my funds in and paying people to do the rest. I even pay someone to find land for me (and they do a bloody good job).

Concentrate on what you are good at and outsource the rest. Reading tax law changes is boring unless you are an accountant or lawyer. Maybe you are bored. Do some developments. At least it can be profitable. This is not directed at you GreatPig but I am amazed at people who learn about things which they will never use to earn income and which are fundamentally not the most exciting. Learning a new language, travelling overseas and using that language to meet new people would be far more interesting than ready the latest tax law changes or changes to building codes.

 

[GreatPig]

Hi Coastymike,

I agree wholeheartedly, but wonder what expectation I should have for my professional advisors to keep me advised of developments like this that affect me. In this case I'm not even sure my accountant was aware that the children are my step-children until I asked him about this particular ID. It's not something I had thought would make any difference until seeing this (along with probably a number of other things that could be relevant that I haven't thought about).

With my current accountant, I purchased the trusts from him, he does my tax returns (or his business does at least), and he replies to any questions I have. Should I expect to be advised automatically of any changes in tax rules that affect me in any way? Of course if it was something major, like trusts were made illegal, I'd expect to be notified, but there must be hundreds of IDs like this one that might affect one or two clients occasionally. I'm not an accountant and don't know what process you guys have for keeping abreast of these sorts of changes (other than what you mention above), but I can imagine it might be a full time job monitoring them all, and other small changes to tax rules, and then checking all client records to see who they might affect.

I'm all for just doing what I like doing, but past experience has shown that some level of knowledge of things that affect me can be beneficial, even with professional advisors looking after them. If I just left everything to professional advisors, I'd probably have most of my capital locked away in super by now, and own a pile of timber in WA.

Cheers,
GP