1. www.pkf.com.au Tax issues Presented by Stephen Bladwell Indirect Tax Partner

2. www.pkf.com.au SETTING THE SCENE  $6b IN DISTRESSED CLUB/PUB ASSETS  LAND = PRINCIPAL CLUB ASSET  LAND/LOCALITY – KEY TO – EXISTENCE/ OPERATION  CLUB STRUCTURE DIFFICULTIES IN LAND DEALINGS  DEGREE OF DISTRESSABILITY TO EXTRACT VALUE

3. www.pkf.com.au PRE TAX CONSIDERATIONS  DEVELOPMENT NO PANECEA FOR BAD BUSINESS  BAD BUSINESS + DEVELOPMENT = DISASTER  NATURE OF DEVELOPMENT IMPORTANT  TRAFFIC FLOWS?  RENTAL STREAM / TIMING / QUANTUM  CASH INJECTION / TIMING / QUANTUM  JV BUSINESS / CALCULATION OF REVENUE  SALE / LEASE BACK / CALCULATION OF LONG TERM COST  “BEWARE GREEKS BARING GIFTS”

4. www.pkf.com.au TAX ISSUES CGT / INCOME TAX  LAND = CAPITAL ASSET = SALE SUBJECT TO CGT  LEASE/JB INCOME NOT MUTUAL  AGED CARE NO TAXABLE INCOME? GST  TIMING OF PAYMENTS EARLIER OF INCOME OR (PART) RECEIPT  TIMING OF CREDIT EARLIER OF INCOME OR (PART) PAYMENT  QUANTUM OF LIABILITY/CREDITCASH + MARKET VALUE OF NON CASH CONSIDERATION

5. www.pkf.com.au vP Sale of Property $3.25M Lease of Premises $1 P.A. for 5yrs Vendor sells property for cash and lease back agreement GST and the Clubs’ Industry 5. Land

6. www.pkf.com.au vP Sale (1) (a) Lease Back (2) (b) (1) $475,000 (2) $15,000 (1) $475,000 (2)(b) $15,000 GST and the Clubs’ Industry a)Total consideration for land $4.75M? Stamp duty payable on $4.75M? b)Leaseback valued at market $150k+ pa c)When are liabilities met and credits claimed? d)Will both parties issue invoices? e)Will issue of invoice for (2) trigger an income tax liability? 5. Land

7. www.pkf.com.au EXAMPLE 2 (a)  DEVELOPER TO BUILD 50 UNITS  CLUB TO RETAIN 7  42 REGISTERED IN D’S NAME  GST GROSS UP ON ALL CONSIDERATION  BROAD PROPOSAL = LAND FOR UNITS

8. www.pkf.com.au EXAMPLE 2 (b) ATO QCC Individual NIL $1,289,392 GST on Transfer of units **$1,544,086 Sale of units $16,929,000 Building Services (Net sale proceeds plus GST CashUNITS GST $1,692,900 Assuming all units are sold for$220,000 Input tax credits in relation to development$1,436,364 Building expenses for Units$15,800,000 Market valueGST $16,929,000plus$1,692,900

9. www.pkf.com.au EXAMPLE 2 (c) – ECONOMIC ANALYSIS  VALUE OF LAND ($3.5M) ≈ VALUE OF 8 UNITS  CASH COST  GST PAYABLE OF T’FTO D$1,544,086  GST PAYABLE ON SUPPLY BY D$1,692,900  GST INPUT CREDIT($1,413,659) $1,823,327 CASH COST