The ATO has introduced a new online tool to help facilitate the calculations of capital gains tax (CGT) discount with their new online CGT discount calculator.

In order to facilitate the changes that occurred last year in respect of the application of the CGT general discount, previously known as the CGT 50 per cent discount, the ATO’s online CGT calculator helps determine whether a taxpayer is eligible for a discount, as well as how much discount they can apply for their capital gain.

On 22 October 2014 the Corporations Legislation Amendments (Deregulatory and Other Measures) Bill 2014 (the Bill) was introduced into Parliament. The Bill comprises of minor deregulatory proposals to improve the efficiency and operation of Australia’s corporation laws. This update seeks to outline three of the areas that affect corporations. These include:

  1. the change in the rights of 100 members;
  2. remuneration reporting requirements; and
  3. auditor appointment requirements for companies limited by guarantee.

The Power of Members

The Bill proposes to abolish the right for 100 members to call a general meeting under section 249 of the Corporations Act [2001] (Cth) (the Act). The call to abolish this right stems from the understanding that 100 members, in light of all shareholder voting rights of large corporations, represents a very small portion of voting power – this is often below 1%. The consequence of this right, as it stands, is that a very small percentage of shareholders can force companies to hold a general meeting and to incur the subsequent costs.

If the Bill is passed, section 249D of the Act will be amended so that a general meeting must only be arranged where at least 5% of voting shares makes the request. However, these amendments – if incorporated in the Act – do not abolish the rights of ‘100 shareholders’ in their entirety. 100 shareholders will be able to put a resolution on the agenda of general meetings and further, circulate material to other members at the expense of the company.

Remuneration reporting

Remuneration reporting for unlisted and listed disclosing entities is set to change through the introduction of the Bill. Significantly, if the Bill is passed, unlisted entities will not have to produce a remuneration report under section 300A(2) of the Act.

As the law currently stands, disclosing entities that are companies must disclose the value of options that lapse during the financial year for each member of the key management personnel. In addition, they must also disclose the percentage value of remuneration that consists of options for each member of the key management. However, if the Bill is passed, listed disclosing entities that are companies will only need to disclose the number of options that lapse during a financial year in which those options were granted, for each key management personnel. This is to say, listed disclosing entities that are companies will no longer be required to disclose the value of the options that lapse. Moreover, there will no longer be an obligation to disclose the percentage value that consists of options for each member of the key management personnel, in respect of listed disclosing entities that are companies.

Auditor appointment requirements for companies limited by guarantee

As the current law stands, section 327A requires public companies, including companies limited by guarantee, to appoint an auditor within one month of registration. However, the Bill introduces a more relaxed approach to the retention of auditors in respect of companies limited by guarantee. If the Bill is passed into law, small companies limited by guarantee, and those companies limited by guarantee that have their financial reports reviewed, will no longer be required to appoint or retain an auditor. However, other public companies will still be required to appoint and retain an auditor.

Key Lessons

These proposed changes are important for commercial entities to watch as they propose purportedly an opportunity to reduce costs and streamline compliance with Australia’s corporation laws.