M o r g a n’ s   T a x   M o n t h

– February 2015 Developments –

This is a collection of developments in Australian tax law and practice that occurred in February 2015 and which aims at being of relevance to tax lawyers.*

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

Liability limited by a scheme approved under Professional Standards Legislation

Table of Contents

________________________________________________________________________

Acts & Bills

*Taxation Laws Amendment (Research and Development Bill 2013 –amendments to replace $20b turnover limit with R&D cap for incentives [1]

Developing country relief funds declared and revoked [2]

*Treasury Legislation (Repeal Day) Day Bill 2014 passed by Senate – payslip reporting; evidence powers; repeal; regs into Act; definition of Australia [3]

*Taxation and Superannuation Laws Amendment (2014 Measures No 7) Bill 2014 – IGT takes over from Ombudsman; excess contribution refund etc [4]

*Royal Assent – Repeal Acts; Statute Law Revision and Unexplained Wealth Acts [5]

 

Announcements

PPL scheme “off the table”; small business company tax cut – Prime Minister pledge [6]

Corporate tax compliance issues investigated by Senate Committee – ATO submission identifies risks: transfer pricing, thin cap, stateless income etc [7]

 

 

CASES AND APPEALS

High Court

*SPI Powernet (now AusNet Transmission Group) gets special leave to appeal decision that purchase related payment was ‘capital’ in nature [8]

 

Full Federal Court

 

Federal Court

*FCT v Arnold (No 2) – Tax promoter penalties of $1.5m imposed – 92.5% of cost purchase price of donated pharmaceuticals delayed 50 years at low interest [9]

*Krok v FCT – privilege in legal advice impliedly waived by disclosing its ‘gist’ for forensic advantage which otherwise could not be tested [10]

*Financial Synergy Holdings Pty Ltd v FCT – Consolidation: ACA for shares with deemed pre-CGT acquisition date under rollover is their market value on 19.9.85 (not at ‘joining time’) [11]

*Rio Tinto Services Ltd v FCT – Taxpayer fails to get ‘input tax credits’ for provision of remote area residences to mining staff [12]

*LHRC & Ors v DCT (No 3) – Wickenby case: Evidence from ACC examination can be used by ATO in s 264 interview [13]

LHRC & Ors v DCT (No 4) – but taxpayers obtain “confidentiality orders” re parties’ identities, documents, etc [14]

 

Administrative Appeals Tribunal (AAT)

*Re Track and Ors and FCT – Pt IVA applies to scheme to qualify for CGT small business concessions [15]

*Re CZRS and FCT – Employer’s lump sum paid for negotiated resignation was fully assessable as an ETP and was not a ‘bona fide redundancy payment’ [16]

*Re Caporale and FCT – GST and default ITX assessments upheld – no enterprise and explanations inadequate [17]

*Re Wu and FCT – Australian resident Chinese citizen discloses only Australian, not foreign, business income – appeal succeeds on 1 issue [18]

 

Other Courts & Tribunals

 

Appeals

*Hua Wang Bank Berhad & Ors v FCT – taxpayers appeal Court’s decision that they were resident and taxable on sale of ASX listed shares [19]

*Seven Network Limited v FCT – Commissioner appeals decision that payment for Winter Olympics television feed was not a ‘royalty’ [20]

Upson and FCT – taxpayer appeals default assessments [21]

DCT v Vasiliades & Ors – taxpayers appeal ‘freezing orders’ obtained by FCT in seeking to collect $33m in tax debts [22]

*Kocharyan v FCT – Taxpayer appeals to Full Federal Court against decision denying deductions for his investment in a forestry (Ludekins) scheme [23]

 

 

COMMISSIONER’S PUBLICATIONS & NEWS

 

Decision Impact statements

 

Rulings

*TR 2015/1 – exempt income conditions: (1) comply with governing rules; (2) apply income/assets for the purpose for which it was established [24]

 

Determinations

Class Rulings & Product Rulings

Class Rulings – University Clubs; Special Dividend; Health and Fitness Equipment services [25]

CR 2015/10 on accommodation to employees; addendum to CR 2002/83 on exempt prizes; addendum on GSTR 2012/2 on financial assistance [26]

Class Rulings, Addendum and Errata [27]

Class Rulings on 25 February 2015 [28]

 

ATO Interpretive Decisions (ATOIDs)

*ATO ID 2015/7 – Receiving a lump sum from foreign superannuation fund – correct currency translation rule for ‘applicable fund earnings’ [29]

 

Practice Statements

*PS LA 2015/2 – Commissioner directs staff to not assess later than other amendment time limits – 4 years and 2 years for small business entities [30]

*PS LA 2015/3 – ATO approval process re application of arm’s length conditions: transfer pricing (ie. using the ‘reconstruction power’) [31]

 

Tax Alerts

 

Other ATO news or statements

‘Independent Review’ hitting mark with large taxpayer disputes – ATO speech [32]

 

 

GST DEVELOPMENTS

 

Legislation & Announcements (GST)

 

Cases (GST)

Garrett v FCT – GST input tax credits: no standing to act on behalf of another entity [33]

Rio Tinto Services Ltd v FCT – Taxpayer fails to get ‘input tax credits’ for provision of remote area residences to mining staff [34]

*Re Caporale and FCT – GST and default ITX assessments upheld – no enterprise and explanations inadequate [35]

*Re Bryxl Pty Ltd as Trustee for the Kypu Trust and FCT – GST: no enterprise of land development, so ITC’s denied and ABN/GST registration cancelled [36]

 

Rulings, Determinations & Other things (GST)

OECD International VAT/GST Guidelines – place of taxation rules and supporting provisions – comments on discussion drafts [37]

 

SUPERANNUATION DEVELOPMENTS

 

Legislation, Announcements etc. (Super)

SGC changes announced in the MYEFO 2014/15 [38]

Super excess non-concessional contributions – option to withdraw: draft regulations [39]

 

Cases (Super)

*Re: HWBB Loan – sham back to back loan to members assessed on defacto premature benefit, evasion not fraud (Mr Gould again) [40]

 

Rulings & Other things (Super)

*SMSF borrowings – Government to consider full range of options [41]

*Superannuation rates and thresholds for 2015-16 [42]

 

 

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

Charities 2014 Annual Information Statement now overdue: ACNC reminder [43]

*ACNC plans to revoke registration of 1,400 charities that have not lodged annual returns for 2 years running (2013 and 2014) [44]

 

 

BOARD OF TAXATION

 

EXTERNAL SUPERVISORS – IGT; OMBUDSMAN, JCPAA & ANAO

*IGT recommends ATO set up a separate Appeals Group under a new Second Commissioner to deal with tax disputes – report on tax disputes released [45]

 

 

TAX PRACTITIONERS BOARD & LEGISLATION

 

STATE TAXES

 

Legislation & Announcements (State)

*SA Government open to “radical” tax system reform: Government Discussion Paper [46]

Vic: Back to Work Bill – Legislative Assembly passes Bill [47]

WA: modernisation of primary production land tax exemption – to include primary production land though processed on site [48]

 

Cases (State)

NSW landholder duty: Milstern Nominees Pty Ltd v Chief Comr of State Revenue – discretion to grant exemption [49]

NSW payroll tax: Edgely Pty Ltd v Chief Comr of State Revenue – company with no wage payments, deriving rent from 2 related companies, grouped [50]

NSW Payroll Tax: Qualweld Australia Pty Limited v Chief Comm’r of State Revenue – taxpayer held to be an employment agency for welders [51]

NSW Payroll Tax: Levitch Design Associates Pty Ltd ATF Levco Unit Trust v Chief Comm’r of State Revenue – ‘relevant contract’ exceptions [52]

NSW Payroll Tax: Chief Comm’r of State Revenue v Seovic Civil Engineering Pty Ltd – Commissioner not required to de-group Administration Company [53]

Qld land rich duty: Sojitz Coal Resources Pty Ltd v Comr of State Revenue – mining leases not included in corporation’s land-holdings [54]

WA land tax: Teissier v Comr of State Revenue – taxpayer’s application for further documents dismissed [55]

 

Rulings & Other (State)

ACT payroll tax: exemptions for employment agents – Revenue Circular [56]

 

 

OTHER DEVELOPMENTS

Foreign purchases of agricultural land – Government announces reduction in screening threshold from $252m to $15m & ATO to gather info for register [57]

Foreign investment in residential real estate – proposed ATO compliance / enforcement area [58]

Register established for all ‘financial advisers’ – Corporations Regulations 2001 amended [59]

 

THE END
_______________________________________________________________________________


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

About the author