M o r g a n’ s   T a x   M o n t h

– July 2013 Developments –

This is a collection of developments in Australian tax law and practice that occurred in July 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

*Tax and Superannuation Bills received Royal Assent [1]

*More tax and superannuation Bills receive Royal Assent [2]

PRRT amending regulation to extends pricing framework to onshore petroleum projects [3]

*Tax incentives for designated infrastructure projects – 11 July 2013 start date proclaimed [4]

Tax loss incentive for designated infrastructure projects – rules for designating projects [5]

*Australia and Switzerland sign a revised tax treaty [6]

*Australian-Mauritius and Australian-Turkey tax Double Tax Agreements enter into force as Australian laws [7]

*Emissions trading scheme – exposure draft legislation to end the carbon tax and accelerating a traded price [8]

*Investment Manager Regime – third and final element: updated draft legislation for comment by 13 September 2013 [9]

 

Announcements

*Treasurer to take responsibility of financial services and superannuation and the Assistant Treasurer will assist him [10]

*Neil Olesen has been appointed as a full-time Second Commissioner of the ATO for a 5-year period from 1 July 2013 [11]

Offshore Banking Unit regime changes – Government releases a discussion paper and postpones start date from 1 July to 1 October 2013 [12]

Peak professional bodies oppose $2,000 self-education cap [13]

*Emissions Trading Scheme with flexible (market linked) price to commence one year early – PM and Treasurer announce [15]

*FBT statutory formula method for calculating motor vehicle benefits will be abolished to partly fund the earlier conversion of the Carbon Tax into an ETS [16]

*Coalition opposes FBT changes re company cars [17]

*US FATCA withholding and other deadlines extended to 30 June 2014 [18]

Greens would seek to increase revenue from mining tax and tax the big banks [19]

Tax loss incentive for infrastructure projects: workshops available [20]

*OECD Action Plan on Base Erosion and Profit Shifting (BEPS) released [21]

*Australia and Britain agreement to combat tax avoidance and evasion [22]

*Treasury scoping paper released examining risks to Australia’s corporate tax base through multinational profit shifting and tax base erosion [23]

 

CASES AND APPEALS

High Court

Full Federal Court

*Sea Shepherd Australia Ltd v FCT & Anor – taxpayer not DGR – did not provide direct care to animals (not just wildlife) that have been mistreated etc. [24]

*Fowler v FCT – Share option rights acquisition date was not on making employment contract but later on shareholder approval of options [25]

*Collection Point Pty Ltd v FCT – FOI request denied – no obligation to create new computer program to produce document [26]

*FCT v Messenger Press Proprietary Limited – News Group entitled to deduction for $2bn foreign exchange loss under old Div 3B on exchange of promissory notes [27]

 

Federal Court

*The Hunger Project Australia v FCT – Organisation that raises funds for charity in Australia a PBI for FBT purposes even though no direct relief in Australia [28]

*FCT v Residence Riverside Proprietary Limited atf the D&J Discretionary Trust and atf the D&J Investment Trust – no grounds for transferring tax dispute to family court under cross-vesting rules [29]

*McCarthy v FCT – Federal s39B matter not transferred to the NSW Supreme Court where criminal proceedings were instituted but it was stood over [30]

*Hancox v FCT – court confirms that allowance a LAFHA and therefore no deductions claimable against it and 50% penalties unappealable [31]

Oswal v FCT – CGT: Declaration over part of corpus of discretionary trust triggers CGT event E1: creation of (new) trust – not E5 ‘absolutely entitled’ event (because of the trustee’s lien) [32]

 

Federal Circuit Court

Administrative Appeals Tribunal (AAT)

*Re Lambert and FCT – taxpayer’s plan to get negative gearing advantages through a discretionary trust failed [33]

*Re Theglory v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs – Legal expenses were capital and not an allowable deduction [34]

*Re Pillay and FCT – Taxpayer worked in East Timor for 9-11 months but was resident in Australia because of his continuity of association in other months [35]

*Re Home Health Pty Ltd and FCT – Pty Ltd company with only 2 shareholders was not an ‘institution’ and thus not a PBI and not tax-exempt [36]

*Re Chowdary and FCT – Penalties imposed for failing to take reasonable care confirmed despite “honest mistake” [37]

*Re Fox and FCT – Work-related expenses deduction claim denied, but penalty remitted [38]

*Re Boyd and FCT – s23AG exemption excludes annual and LSL component from assessable ETP [39]

*Re Fay and FCT – Release of taxpayer from tax debt on “serious hardship” grounds denied [40]

*Re WJBS & Anor and FCT – Payment from ex-husband’s company was assessable income [41]

*Re Jakjoy Pty Ltd and FCT – CGT – properties used in ‘carrying on business’ of deriving rent not “active assets” – because of the ‘deriving rent’ exclusion [42]

*Re Vision Intelligence Pty Ltd and FCT – R&D outgoing not incurred: taxpayer liable for shortfall penalties [43]

 

Other Courts & Tribunals

*DCT v Ekelmans & Ors – Final asset freezing orders postponed as they were “without legitimate purpose” until recovery process identified [44]

*Symond v Gadens Lawyers Sydney Pty Ltd – solicitors gave negligent advice re withdrawing funds from company for tax purposes [45]

Appeals

 

 

COMMISSIONER’S PUBLICATIONS

Decision Impact statements

*FCT v Bargwanna & Anor as Trustees of the Kalos Metron Charitable Trust – trust lost its exemption as fund not applied for purposes it was established [46]

*ATO view on Greenhatch case – CGT discounted gain and trusts [47]

*ATO view on Rawson Finances case – Bank deposits were loans not income [48]

*ATO Decision Impact Statements: Weeks and Reardon cases [49]

 

Rulings

 

Determinations

TD 2013/16 – Reasonable travel and meal allowance amounts for 2013-14 [50]

*TD 2013/17 – Div 7A benchmark interest rate for 2013-14 down from 7.05% to 6.20% [51]

 

Class Rulings & Product Rulings

CR 2013/48-50 – Exchange of shares; capital reallocation; early retirement [52]

CR 2013/51-53 – Early retirement schemes [53]

CR 2013/54-55 – FBT and car log book; bank capital notes [54]

CR 2013/56-60 – Transfer payments; return of capital; scrip-for-scrip; sport support scheme; performance rights [55]

 

ATO Interpretive Decisions (ATOIDs)

ATO ID 2013/42 – FBT and housing provided by third party

 

Practice Statements

 

Tax Alerts

 

Other Commissioner news or statements

*Monthly PAYG installments for large corporate tax entities to commence from 1 January 2014 – ATO action [57]

 

 

GST DEVELOPMENTS

 

Legislation & Announcements (GST)

 

GST-free supplies under the NDIS [58]

 

Cases (GST)

*Re Naidoo and FCT – GST: partnership not carrying on an enterprise; not entitled to input tax credits [59]

*Re Rod Mathiesen Truck Hire Pty Ltd as trustee for the Mathiesen Family Trust – GST: consideration re property sale received at settlement [60]

*Re AJJJ’s Emporium Pty Ltd and FCT – Incorrect input tax credit claim; 50% administrative penalty affirmed [61]

 

Rulings & Other things (GST)

*GST and timing of a margin scheme: ATO view on Cyonara Snowfox case [62]

Paying final remuneration of insolvency practitioners from GST refunds [63]

 

 

SUPERANNUATION DEVELOPMENTS

Legislation, Announcements etc. (Super)

Government announces no major changes to super for 5-years; releases a draft Super Charter: fewer changes better outcomes and a Council to oversee it [64]

 

Cases (Super)

 

Rulings & Other things (Super)

*ATO view on Young v FCT case – Constitutional limits of Super surcharge assessments [65]

*ATS Pacific Travel case – Supplies to non-resident travel agents mostly taxable – Interim Decision Impact Statement until appeal result known [66]

*TR 2013/5 – Superannuation income streams: commencement and cessation [67]

 

 

CARBON TAX

 

 

MINERALS & PETROLEUM RENT RESOURCE RENT TAX

TD 2013/D6 – Mining expenditure to protect aboriginal cultural heritage can be included in an entity’s pre-mining expenditure for a pre-mining project interest [68]

 

 

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

*Government launches the national online ‘Australian Charities and Not-for-profits Commission Register’ with details of over 57,000 charities [69]

 

 

BOARD OF TAXATION

 

 

EXTERNAL SUPERVISORS – IGoT; OMBUDSMAN, JCPAA & ANAO

*Inspector-General of Taxation: Ali Noroozi reappointed for 5 years [70]

 

 

TAX PRACTITIONERS BOARD & LEGISLATION

*Tax and BAS agents failing to meet their personal tax obligations: TPB investigations [71]

Commercial law course requirement removed for tax agents who were registered under State Tax Agents’ Boards – TASA amending regs [72]

*BAS services can be widened by legislative instrument – TPB preparing such instrument to include SGC and taxable payment reporting [73]

*Financial planners’ tax advice to be regulated under TASA from 1.7.14 – Tax Practitioners Board consulting in the interim [74]

Tax Practitioners Board has released a FAQ (frequently asked questions) sheet regarding re-registration of Tax Agents and BAS agents [75]

*Frugtniet v Tax Practitioners Board – Court dismisses judicial review of AAT’s decision not to stay Board’s decision to terminate agents registration [76]

 

 

STATE TAXES

Legislation & Announcements (State)

Federal Treasurer calls on States to abolish minor irritant taxes, but precludes GST review [77]

NT Budget Bill receives Assent [78]

SA land tax: exemption for association of a prescribed kind – regs varied [79]

Tas: Budget Bill receives Royal Assent [80]

Vic: State Tax Laws Amendment (Budget and Other Measures) – Bill receives Assent [81]

WA: Duties Legislation Amendment Bill receives Royal Assent [82]

Cases (State)

NSW stamp duty – Al-Saeed & Associates Pty Ltd ATF Al-Saeed Education and Welfare Trust v Chief Comr of State Revenue – trust deed dutiable as a “declaration of trust” [83]

NSW land tax Metricon Qld Pty Ltd v Chief Comr of State Revenue – reassessment not invalidated by existing proceedings before Tribunal [84]

NSW payroll tax: Bilquip Pty Ltd & Ors v Chief Comr of State Revenue (NSW) (RD) – grouping decision affirmed – taxpayers lose appeal [85]

Vic land tax: Ventura Motors Pty Ltd & Ors v Comr of State Revenue – land held by a lease and subject to land tax [86]

Vic land tax: Decleah Investments Pty Ltd v Comr of State Revenue – land developer deemed owner of land [87]

WA stamp duty: Hazel Holdings Pty Ltd and Comr of State Revenue – taxpayer’s valuation as a single sale of 32 lots preferred for duty purposes [88]

WA payroll tax – Chamber of Commerce and Industry of WA (Inc) and Comr of State Revenue – interest on refund commencement of reassessment period determined [89]

Rulings & Other (State)

Joint ‘Payroll Tax’ website launched for harmonized law and rulings [90]

NSW: legal professional privilege – guidelines applied by OSR

Qld stamp duty: exemption for ‘farm-in’ transactions in the resources sector – Public Ruling [92]

Vic stamp duty: motor vehicles drive-away-deals [93]

Vic stamp duty: aggregation provisions – draft Revenue Ruling [94]

WA stamp duty: aggregation of dutiable transactions – Revenue Ruling [95]

 

OTHER DEVELOPMENTS

NZ to introduce legislation to allow Accounting bodies to merge and accountants to incorporate [96]

Trans-Tasman Proceedings Act 2010 proclaimed to start on 11 October 2013 [97]

*CPI: June quarter 2013 inflation up 0.4% over March 2013 and 2.4% over June 2012 [98]

 

 

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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