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

– April 2017 Developments –

This is a collection of developments in Australian tax law and practice that occurred in April 2017
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 ANNOUNCEMENTS

Acts, Bills & Draft Legislation

Treasury Laws Amendment (2017 Enterprise Incentives (No 1) Bill 2017 introduced – adding a ‘similar’ business test for carry forward of tax losses and to allow self-assessed ‘effective life’ depreciation of intangible assets

Diverted Profits Tax Bills receive Royal Assent and become Australian Act No. 27 – 40% tax on diverted profits; 30% franking; pay tax to object; 12 months to supply documents in defense; limited rights of appeal

Treasury Laws Amendment (2016 Measures No 1) Bill 2016 – amendments to Corporations Act 2001 to ensure that ‘employee share scheme’ documents for ‘start ups’ are not made public

Treasury Laws Amendment (2017 Measures No 1) Bill 2017 – allowing ‘Innovation tax concessions’ to flow through an interposed trust and facilitating ASIC disclosure of information to the ATO

Foreign resident capital gains withholding: legislative instrument reduces withholding to nil for tax exempt vendors

CRP 2017/D1 – Commissioner’s remedial power – amending the Foreign Resident CGT withholding regime so vendors get the benefit of withholding credits in the year the CGT is payable – for sales that straddle year end

Treasury Laws Amendment (2017 Measures No. 2) Bill 2017 – exposure draft Super reforms: TRIS rules; CGT relief; pension cap etc

Super reforms: capped defined benefit income streams to be expanded – draft regs released

Announcements

BASE EROSION & PROFIT SHIFTING (BEPS)

Country-by-Country reporting: ATO releases further detail on the ‘local file / master file’ detail and design

UN updates transfer pricing manual, including: additional chapters on services, intangibles; taking account of the OECD/G20 BEPS project; revised guidance on comparability analysis; revised guidance on documentation

CASES AND APPEALS

High Court

Full Federal Court

Thomas & Anor v FCT – franked dividends and the franking credits/off-sets distributed separately disproportionately between beneficiaries – not how tax law works but bound by QSC’s declaration on effect of distributions

Federal Court

Binqld Finances Pty Ltd (In Liq) v Tamarama Fresh Juices Australia Pty Limited; In the Matter of Binqld Finances Pty Ltd (In Liq) – FCT required to produce documents to Binetter interests – secrecy exception applied

DCT v Club Culture Pty Ltd – Company fails to obtain review of winding-up order over $124 million tax debt from the Commissioner denying R&D off-sets and imposing huge shortfall penalties and GIC

Zappia v FCT – Taxpayer’s default assessments on unexplained $2 million receipt upheld – the taxpayer ‘did not even come close’ to discharging her onus of establishing what the correct taxable income should be

Administrative Appeals Tribunal (AAT)

Re Banks and FCT – Truck driver loses claim for work-related travel expenses above the maximum reasonable amount that can be claimed without formal substantiation per TD 2010/19 and TD 2011/17

Other Courts & Tribunals

Peter Sleiman Investments Pty Ltd as trustee for the Sleiman Family Trust v DCT – Winding up order for large tax debts confirmed, but stay continued

Ralston v Jurisich – Solicitors failed to advise client to get tax advice regarding a $1.3m share buy-back, which was deemed a dividend, when a voluntary liquidation would have been tax free – liable $608k for the tax

Appeals

Sandini Pty Ltd v FCT – Commissioner appeals from decision holding that a CGT rollover, on break-down in marriage, doesn’t have to be to the former spouse (though there’s a separate rollover from a related entity to a spouse)

COMMISSIONER’S PUBLICATIONS & NEWS

Decision Impact statements

Rulings

Determinations

TD 2017/10 – ‘Incidental costs’ can be included in the ‘cost base’ of an asset even though they are incurred after the relevant CGT event – they can still ‘relate to’ the CGT event under s110-35(1)(b)

Law Companion Guides

Class Rulings & Product Rulings

CR 2017/26-28 – Income tax: scrip-for-scrip roll-over; variation of class units rights; early retirement scheme

PR 2017/3 – Interest linked to CPI remains non-deductible if used to fund the purchase of a home loan (which is obvious) but changes in total rate of interest on refinancing is not assessable or deductible

ATO Interpretative Decisions

Practice Statements

Practical Compliance Guides

Tax Alerts

Other ATO news or statements

Retrospective franking measure announced in last years MYEFO – ATO reminds taxpayers that distributions funded by capital raisings, outside the normal dividend cycle, from 19.12.16 can’t be franked

ATO 2014/15 Taxation Statistics released – highest earning occupations & postcodes; highest donations; breakdowns by taxpayer type and tax type; compliance costs and industry benchmarks

GST DEVELOPMENTS

Legislation & Announcements (GST)

GST refunds – IGT to review ATO performance after the Multi-flex case prompted the change in the law (s8AAZLGA) to allow refunds to be held back for the time it takes to investigate

Supplies of ‘child-care’ are GST-free, despite not being approved under family assistance legislation – by legislative determination made by the Minister (under s38–150)

GST Legislative Instruments registered varying Attribution Rules; tax invoice requirements; recipient created tax invoices and cash basis determination

OECD releases its ‘The International VAT/GST Guidelines’ – setting a internationally agreed standards and recommended approaches to avoid growing risks of double taxation and unintended non-taxation

Cases (GST)

Rulings, Etc. (GST)

SUPERANNUATION DEVELOPMENTS

Legislation, Announcements etc. (Super)

Treasury Laws Amendment (2017 Measures No. 2) Bill 2017 – exposure draft Super reforms: TRIS rules; CGT relief; pension cap etc.

Super reforms: capped defined benefit income streams to be expanded – draft regs released

Transfers from default funds to ‘MySuper’ funds by 1 July 2017 – draft legislation to extend asset rollover relief and loss transfers to transfers within the same fund

Cases (Super)

Rulings & Other things (Super)

SGD 2017/1 ATO rules that SGC is payable on ‘advances’ paid to former employees of a company in liquidation, under the Fair Entitlements Guarantee Act but it is only the employer (not the liquidator) who is liable

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

BOARD OF TAXATION

CEO update from latest Board of Taxation meeting – voluntary tax transparency disclosure has 38 reporting and a total of 76 signed up; 2017 work program includes the ‘black economy project and the ‘sharing economy’

EXTERNAL SUPERVISORS – IGT, JCPAA & ANAO etc.

GST refunds – IGT to review ATO performance after the Multi-flex case prompted the change in the law (s8AAZLGA) to allow refunds to be held back for the time it takes to investigate

TAX PRACTITIONERS BOARD & LEGISLATION

Tax Practioners Board – Advice on “who needs to register as a tax (financial) adviser?”

STATE TAXES

Legislation & Announcements (State)

Tas: Taxation and Related Legislation (Miscellaneous Amendments) Bill 2017 – awaits Assent – facilitates info to ATO; harmonized motor vehicle allowance for payroll tax; abolish duty on instruments that don’t affect land, etc.

Cases (State)

NSW: payroll tax, land tax, duty – Omnibus Bill awaits Assent – duty exemption for transfer to SMSF nominee (limited recourse financing); to new trustee and to SMSF member (primary production land)

Rulings & Other (State)

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; TX: Tax Week (Thomson Reuters); ‘Vine’: The Tax Institute’s Tax Vine.

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