M o r g a n’ s   T a x   M o n t h

– August 2013 Developments –

This is a collection of developments in Australian tax law and practice that occurred in August 2013 and which aims at being of relevance to tax lawyers.*

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

Coalition wins Federal Election (Stop Press) [1]

Federal Election means tax and other-related Bills have lapsed [2]

Privileges and Immunities Determinations amended re tax concessions [3]

 

Announcements

Prime Minister announces 7 September 2013 as the election date [4]

Coalition’s plan to scrap the carbon tax (starting from ‘Day 1’) [5]

*Coalition pledges cut to company tax rate by 1.5%; no changes to GST [6]

*Greens propose 2% point cut to company tax rate (to 28%) for small businesses from 1 July 2014 [7]

*Coalition’s paid parental leave scheme – details revealed [8]

*Coalition policy on manufacturing – R&D tax incentive review flagged [9]

Coalition budget ‘savings’ plan: loss-carry back, other business tax breaks to be removed [10]

Transfer pricing documentation and requirements for intangibles: OECD papers for consultation [11]

OECD reports on 13 jurisdictions re tax information exchange [12]

Government’s Economic Statement: budget surplus in 2016-17; tax and super changes including deferring $2k deduction cap for self-education expenses [13]

*Taxing of Employee Share Scheme shares for ‘start-up companies’: discussion paper released [14]

*Further changes to proposed new MIT regime: Assistant Treasurer [15]

*Section 23AG changes limiting tax concessions on residents’ foreign services income – Treasury post implementation review [16]

Incorporation of barristers’ practices: no tax advantage, says senior counsel [17]

 

 

CASES AND APPEALS

High Court

*Fortescue Metals Group Limited and Ors v The Commonwealth of Australia – High Court dismisses challenge to constitutional validity of the mining tax [18]

*FCT v Macquarie Bank Limited (Mongoose case) stands – consolidated company could not have a Part IVA ‘tax benefit’ on shares sold [19]

*ACE Insurance Limited v Trifunovski & Ors stands – civil penalty for not treating insurance agents employees for SGC purposes [20]

*Bell v FCT stands – family trust failed the $5m test for small business relief (in part due to a mortgage interest offset account) [21]

Gashi v FCT asset betterment assessments stand [22]

 

Full Federal Court

*Pratt Holdings Proprietary Limited v FCT – No deduction for transfer of losses under mining provisions – taxpayer loses appeal [23]

Pratt Holdings Proprietary Limited v FCT (No 2) – Full Court dismisses further grounds re no deduction for mining losses and penalties [24]

*August v FCT – profits on sale of commercial property assessable as ordinary income as profit making scheme [25]

*Kelly v FCT – Full Court confirms assignment of partnership interest partly valid [26]

FCT v Fabig – CGT scrip-for-scrip rollover: Commissioner’s appeal allowed – participation not “available on substantially the same terms” [27]

*FCT v Ludekens – Commissioner wins appeal – civil penalties apply to “promoters” of tax scheme [28]

 

Federal Court

New appointments to Federal Court, Federal Circuit Court, AAT announced [29]

Further Federal Court appointment announced [30]

*FCT v Rigoli – Taxpayer did not discharge burden of proof re deemed assessments [31]

*Resource Capital Fund IV LP & Anor v FCT & Anor – s255 notices requiring Aust Co to pay Canadian currency it allegedly ‘controlled’ for vendor shareholders held ineffective [32]

*DCT v Songa Offshore Pte Ltd – Commissioner successful in application for summary judgment for $38.5m, and no stay either [33]

 

Federal Circuit Court

Tettis v DCT – Tax debt compromise and GIC remission – taxpayer applications refused [34]

 

Administrative Appeals Tribunal (AAT)

*Re Harste and FCT – No genuine redundancy payment because of the statutory requirement that the taxpayer not have turned 65 (he was 67) [35]

*Income tax and GST assessments affirmed – rival ‘T accounts’ did not satisfy the burden of proof as the factual assumptions were not proved on balance of probabilities [36]

*Departure from private ruling; housing fringe benefit decision affirmed [37]

*Re B.E.R.T. Pty Ltd as Trustee for the B.E.R.T. Fund No 2 – Approved worker entitlement fund at 46.5% and could not be taxed at 30% as a public unit trust [38]

*Re Hartley and FCT – Not carrying on a business of share trading [39]

*Re ZKBN and FCT – Taxpayer an Australian resident; assessments affirmed [40]

 

Other Courts & Tribunals

*Council of the Law Society of NSW v Healey – No grounds to strike off solicitor for delayed superannuation payments [41]

*Re, in the matter of the Alan Synman Family Trust – Family trust: Court refuses to grant trustee power of variation [42]

*DCT v Karas & Ors – Deputy Commissioner has standing to enforce judgment debt against properties [43]

*DCT v Roche – Summary judgment for Commissioner in respect of DPN liabilities [44]

 

Appeals

*The Hunger Project Australia v FCT – Commissioner appeals decision that Australian fund raising branch was a PBI despite no direct relief [45]

*Oswal v FCT – Taxpayers have appealed a decision that the exercise of a special power of appointment in favour of 2 beneficiaries triggered CGT Event E1 [46]

 

COMMISSIONER’S PUBLICATIONS

Decision Impact statements

*Yazbek case: amend individual’s assessment outside the 2 year period because mere object was a ‘beneficiary’ and amendment didn’t have to be as a ‘beneficiary’ [47]

*Collection Point Case – FOI request refused because Act did not require the Commissioner to create software to comply [48]

McWilliam case – relevant Div 13A date of acquisition was date of contract of employment and there was no shortfall [49]

Fowler v FCT – Full Federal Court found that the Div 13A acquisition date was not the date of the contract of employment but later when the shares were worth more [50]

Esso Australia Resources Pty Ltd v FCT – Full Federal Court upheld the Commissioner’s views about ‘taxing point’ and the ‘take or pay’ issue [51]

Caporale v DCT – ‘Model litigant’ challenge [52]

 

Rulings

TR 2013/D4 – PRRT: meaning of the phrase ‘involved in or in connection with petroleum exploration’ [53]

TR 2013/D5 – Allocation of taxing rights: ships and aircraft [54]

 

Determinations

TD 2013/18 – Illness related foreign earnings and s 23AG exemption [55]

 

Class Rulings & Product Rulings

CR 2013/61-66 – Simplifying stapled structure; deductions; assessable income; FBT log book [56]

PR 2013/15 – Tax consequences of the Macquarie Geared Equities Investment plus [57]

 

ATO Interpretive Decisions (ATOIDs)

ATO ID 2013/43 – ‘Living Away From Home Allowance’ (LAFHA) requirements for ‘Fly in Fly Out’ (FIFO) and ‘Drive in Drive Out’ (DIDO) – must work 7th day [58]

ATO ID 2013/44 – person in the business of money lending is not assessable on interest already accrued (even if it later appears it should not have been) [59]

ATO ID 2013/45 – Ordinary income from shipping activities can be excluded from ‘instalment income’ to the extent that it is expected to be exempt [60]

 

Practice Statements

*PS LA 2013/3 – New PS LA on alternative dispute resolution (ADR) [61]

 

Tax Alerts

*ATO warns of artificial arrangements to deliberately exploit a mismatch between trust law ‘income’ and tax law ‘net income’ [62]

 

Other Commissioner news or statements

 

 

GST DEVELOPMENTS

Legislation & Announcements (GST)

GST: adjustment note information requirements – Determination amended [63]

 

Cases (GST)

Re The Hotel Apartment Purchaser and FCT – GST: purchasers acquired apartments subject to lease to hotel operator GST-free in 2006 & 2008 but had increasing adjustment in 2011 [64]

*ATO view on Naidoo case – GST partnership not carrying on an enterprise [65]

 

Rulings & Other things (GST)

PS LA (GA) – Input tax credits will not be disallowed where the supplier wrongly treated the sale as taxable, but acquisition was creditable [66]

*GSTR 2013/2 – GST: adjustment notes [67]

GSTD 2013/2 – GST and acquisition of second-hand goods [68]

OECD International VAT/GST Guidelines – comments on draft elements [69]

 

 

SUPERANNUATION DEVELOPMENTS

Legislation, Announcements etc. (Super)

Cases (Super)

*Kelly v FCT – the taxpayer’s family trust was not entitled to a deduction for $100k super contributions for husband and wife directors – not ‘employees’ [70]

Re KFBC and FCT – Super excess non-concessional contributions tax assessment affirmed on amount withdrawn and re-deposited [71]

 

Rulings & Other things (Super)

*Super income streams: ATO flags concessions not mentioned in Ruling [72]

TD 2013/D7 – Segregation of superannuation pension assets [73]

Accountants providing SMSF advice: SPAA outlines licensing options [74]

*Div 293 super contributions tax (surcharge on those earning over $300k) – assessments for 2012/13 year to issue in January 2014 [75]

SMSF update from ASIC: disclosure requirements; ASIC compliance focus [76]

 

CARBON TAX

MINERALS & PETROLEUM RENT RESOURCE RENT TAX

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

BOARD OF TAXATION

EXTERNAL SUPERVISORS – IGoT; OMBUDSMAN, JCPAA & ANAO

TAX PRACTITIONERS BOARD & LEGISLATION

Tax Practioners Board issues exposure drafts of information sheets relating to 3 items in the ‘Code of Professional Conduct’ for Tax Agents under TASA [77]

Tax Practitioners Board v Shanahan – Court confirms civil penalties for not being a registered tax agent [78]

BAS agent qualification list updated: TPB [79]

TPB says beware of identity theft when approached to lodge income tax returns on behalf of others [80]

 

 

STATE TAXES

Legislation & Announcements (State)

ACT: Duty Deferral to be reinstated after changes to retargeting the First Home Owner’s Scheme to new and substantially renovated properties inadvertently disqualified some [81]

ACT: First Home Owner Grant Amendment Bill receives notification [82]

Qld: Duties Regulation 2013 gazetted [83]

SA: Housing Construction Grant – Budget Bill awaits Assent [84]

SA: Stamp Duties Regulations 2013 gazetted [85]

WA Budget 2013-14: payroll tax threshold increase and other changes [86]

WA: Budget Bill introduced [87]

WA: land tax changes – Budget Bill introduced [88]

 

Cases (State)

NSW stamp duty – CCM Holdings Trust Pty Ltd & Anor v Chief Comr of State Revenue – Sydney cross city tunnel “ transfers exempt [89]

SA land rich provisions Growthpoint Properties Ltd v Comr of State Taxation – land rich provisions catch an acquisition same time as entity became land rich [90]

Vic stamp duty – Lend Lease Development Pty Ltd & Ors v Comr of State Revenue – consideration for transfer does not include payments made under Development Agreements [91]

 

Rulings & Other (State)

Qld payroll tax: OSR compliance program in the mining sector [92]

SA: Housing Construction Grant to owner (if both owner and builder apply) – Revenue Ruling released [93]

Vic land tax: updated SRO land tax trust form catalogue [94]

WA stamp duty: nominal duty re deceased estates – Commissioner’s Practice issued [95]

 

OTHER DEVELOPMENTS

Code of ethics for professional accountants: APESB proposes revisions [97]

 

 

THE END

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NB: I have gathered these articles from various sources for the purposes of study and teaching and I have acknowledged the sources. None of this publication should reproduced in breach of copyright belonging to the acknowledged source. The headings to the articles are often mine (and shouldn’t necessarily be attributed to the publisher).

Source Abbreviations: ‘EDTN’ = Electronic Daily Tax News, published by CCH; ‘LTN’ = Latest Tax News published by Thomsons; and ‘Taxvine’ is the weekly publication by the Tax Institute of Australia; Greenfields = Greenfields Financial Services; TaxBar = Melbourne Tax Bar Association Newsletter at www.vicbar.com.au / Members / Bar Associations / Tax

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