T a x  T e c h n i c a l  –  M o n t h l y  N e w s

– April 2016 Developments –

This is a collection of developments in Australian tax law and practice that occurred in March 2016
which aims to be relevant to tax practitioners.[i]

Compiled By

F John Morgan
A member of the Victorian Bar (www.FJMtax.com)

Table of Contents

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ACTS, BILLS AND ANNOUNCEMES

Acts, Bills & Draft Legislation

Intangible asset depreciation: draft legislation released to implement ‘Innovation’ statement – self-assess ‘effective life’ etc.

New DTA between Australia and Germany (signed 12 November 2015) – draft legislation to enact it into domestic law released for comment

Innovation Agenda: Easier access to company losses – draft legislation adding a ‘similar’ business test to the ‘same business test’ to pass a ‘business continuity test’

Announcements

European Commission announces proposal to require large multi-nationals to publish CbC profit, tax, turnover, number of employees and nature of activities

IMF, World Bank, UN, OECD form new group to stop tax erosion

Government plans – Public register of beneficial ownership of ‘shell’ (??) companies and other initiatives – Asst. Treasurer interviewed by the ‘Guardian’

Multinational Tax Avoidance – Part 2 of the Senate Economics References Committee report: ‘Gaming the System’

ABS releases tax figures for the 2014/5 year – taxes on income represented 50.5% of all taxes collected and taxes on provision of goods and services was 23.4%

Higher education loan scheme (HECS): repayment income and rates

CASES AND APPEALS

High Court

Fischer & Ors v Nemeske Pty Ltd & Ors – distribution of capital from asset revaluation reserve was a valid exercise of the trustee’s discretion and recoverable, including in law as a ‘debt’

Full Federal Court

Federal Court

Lee Group Charters Pty Ltd & Anor v FCT – ‘super yacht’ losses deductible – quarantining rule in s26-47 held not to apply because letting for hire was in the ordinary course of a business

FCT v Rawson Finances Pty Ltd (No 2) – claims that receipts and payments were loan advances and interest deduction claims – Court orders evidence be taken from foreign bank and documents be produced

Administrative Appeals Tribunal (AAT)

Re Zeqaj and FCT – taxpayer failed to show the source of funds for fund purchases of properties and did not discharge his onus to show that the amended assessments were excessive

Re Homeowner 1 & Anor and FCT – private ruling about one section (s118-145) couldn’t be reviewed as applying to another section (118-135) once the taxpayer thought it more relevant

Other Courts & Tribunals

DCT v Rablin; DCT v Shaw – summary judgment given for directors’ penalties of $1.7m

FCT v 4 Doonan Street Collinsville Pty Ltd (in Liq) – test case on Commissioner’s power to set off tax debts owed against tax credits (under the RBA system) for companies in liquidation

Davan Developments Pty Ltd v HLB Mann Judd (SE Qld) Pty Ltd – taxpayer unsuccessful in obtaining damages for alleged negligence by its accountants

Appeals

Financial Synergy Holdings Pty Ltd v FCT – Commissioner seeks leave to appeal – FFC decision that pre-CGT deeming did not affect the ‘allocable cost amount’ – $30m amount used instead of $1.5m at 19 September 1985

Seymour v FCT – taxpayers seek leave to appeal the FFC decision that they could not give video evidence from outside Australia

COMMISSIONER’S PUBLICATIONS & NEWS

Decision Impact statements

Rulings

TR 2016/D1 – Commercial websites – tax treatment: s8-1 general deductions; capital allowances (inc. ‘in-house software’); small business entities; capital gains tax; ‘black hole’ write-offs

Determinations

TD 2016/6 – s25-90 deductions available for obtaining a 10% stake in a foreign company but not if acquired through a foreign branch (where income is NANE under s23AH)

Law Companion Guides

Class Rulings

CR 2016/21 & 22 – Flinders University Early Retirement Schemes & PR 2016/3 – Indian Sandalwood Project

CR 2016/23 – ordinary shareholders of Caltex Australia Ltd who disposed of their ordinary shares under the off-market share buyback announced on 23 February 2016

ATO Interpretative Decisions

Practice Statements

PS LA 2016/1 – Transfer pricing adjustments with potential customs implications – adjustments to be allocated to particular goods

Practical Compliance Guides

PCG 2016/5 – SMSFs and arm’s length loan terms for related party Limited Recourse Borrowing Arrangements: ATO auditing “safe harbour” terms

PCG 2016/6 – practical guidance on determining the source of hedging gains for the purposes of the cap on ‘Foreign Income Tax Offsets’

Tax Alerts

TA 2016/1 – 4: Warnings about revaluing internally generated assets to pass ‘thin capitalisation’ tests; interim arrangements to avoid the MAAL; related party currency swap fees & havens in leases of movable assets

TA 2016/6 – Arrangement where individuals divert personal services income to an SMSF to access concessional tax rates – may offend PSI and NALI provisions

Interpretation of statutes – guidance from Courts (TCN)

Other ATO news or statements

The ‘Panamanian law firm’ leaks – ATO confirms it has received a large number of documents, identifying over 800 individual taxpayers, who they are now investigating

‘Panama Papers’ – OECD tax administrations (JITSIC) meet in Paris to plan a coordinated approach to this ‘unprecedented’ leak

‘Panama Papers’ prompt call for further measures – German finance minister calls for world networking of company registers and for havens to join the global sharing of tax information starting in 2017

ATO shares ‘Panama Papers’ with Austrac to better investigate the information and persons of interest

GST DEVELOPMENTS

Legislation & Announcements (GST)

2016 Measures No 1 Regulation 2016 – amends GST Regs to treat foreign offered bank accounts and superannuation interests as ‘financial supplies’ and the SIS Regs to allow contributions from ‘earn-outs’

Cases (GST)

SAMM Property Holdings Pty Ltd v Shaye Properties Pty Ltd – NSW Supreme Court ‘rectifies’ contract to make the price ‘plus GST’ despite contract saying it was ‘inclusive of GST’

Crown Estates (sales) Pty Ltd Crown Estates Pty Ltd as Trustee for Crown Estates unit trust V Commissioner of Taxation – No ‘input tax credits’ for agent purchaser

Rulings, Announcements, Etc (GST)

SUPERANNUATION DEVELOPMENTS

Legislation, Announcements etc. (Super)

2016 Measures No 1 Regulation 2016 – amends GST Regs to treat foreign offered bank accounts and superannuation interests as ‘financial supplies’ and the SIS Regs to allow contributions from ‘earn-outs’

Cases (Super)

Re TBCL & Anor and FCT – Super death benefit: ‘interdependency relationship’ not found on ruling facts but further ruling request ordered to cover further facts

Rulings & Other things (Super)

SMSF’s may have their registrations cancelled – if they have not lodged their annual return and the ATO has no information as to whether they have assets (via a request for a ‘Return Not Necessary’)

AUSTRALIAN CHARITIES & NOT-FOR-PROFITS (ACNC) SECTOR

Meaning of ‘Public Benevolent Institution’ (PBI) – ACNC’s draft ‘Interpretation Statement’

BOARD OF TAXATION

Board of Taxation launches “Sounding board” platform seeking ideas on tax regulation

EXTERNAL SUPERVISORS – IGT, JCPAA & ANAO etc.

Inspector General’s further submission on the scrutiny of the ATO – being conducted by the House of Representatives Standing Committee on Tax and Revenue

TAX PRACTITIONERS BOARD & LEGISLATION

Oleshko and Tax Practitioners Board – Registration as tax agent denied – lack of relevant experience

STATE TAXES

Legislation & Announcements (State)

Victorian Budget 2016-17: payroll tax cut; stamp duty increase on foreign buyers; etc.

Vic: State Taxation and Other Acts Amendment Bill – introduced into the Victorian Lower House

Cases (State)

NSW Land Tax: Metricon Qld Pty Ltd v Chief Commr of State Revenue (No. 2) – exempt because the dominant [current] use was primary production and intention to subsequently use it for property development was irrelevant

Vic landholder duty: BPG Caulfield Village Pty Ltd v Comr of State Revenue – no “economic entitlement” acquired – developer only acquired an right to participate in the development of some of the Club’s land

WA landholder duty: Alacer Gold Corp and Hill 51 Pty Ltd and Comr of State Revenue – valuation of mining tenements, reassessment ordered

Rulings & Other (State)

WA payroll tax: 1 July 2016 change to threshold – limit increasing from $800k to $850k but tapering less generous

OTHER DEVELOPMENTS

 

[i]           Sources – abbreviations: ‘ATOlpr’: ATO Legal Professions Relationships emails; ‘IT’: Inteliconnect Tracker (CCH); ‘LCA’: Law Council of Australia; ‘LTN’: Latest Tax News (Thomson Reuters); ‘Sievers’: Chris Sievers’ GST post (www. http://chrissievers.com); ‘TBA’: Tax Bar Association Newsletter; ‘Vine’: The Tax Institute’s Tax Vine.

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