M o r g a n’ s   T a x   M o n t h

– March 2013 Developments –

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

*Federal Parliament adjourns till Budget Day – leaving many significant tax bills unlegislated [1]

*The Tax Laws Amendment (2012 Measures No 6) Bill 2012 was passed by the House of Reps [2]

*Tax and Superannuation Laws Amendment (2013 Measures No 2) Bill 2013 – GST instalments; reduced Super Co-contribution; TOFA changes etc. [3]

Car expenses – rates per km for 2012-13 [4]

*Removal of CGT discount for foreign individuals: draft legislation released [5]

*Changes to CGT scrip-for-scrip rollover and small business concessions: draft legislation released [6]

*Part IVA and transfer pricing amendments [7]

Tax and Superannuation Laws Amendment (2013 Measures No 1) Bill 2013 – Joint Committee recommends passing Bill but split on party lines [8]

International Organisations Privileges and Immunities Amendment Bill introduced [9]

*Australia-Chile tax Double Tax Treaty – entered into force on 8 February 2013 [10]

Monthly PAYG instalments for large taxpayers: draft legislation released [11]

International Tax Agreements Amendment Bill 2012 – receives Assent to implement protocol to Australia-India Double Tax Agreement [12]

 

Announcements

Multinationals erode our ‘tax base’ and create ‘stateless income’ – according to the Assistant Treasurer [13]

Native title tax treatment to be further examined [14]

Treasury updates Forward Work Program on tax measures [15]

Australia/Saudi Arabia DTA in prospect [16]

 

 

CASES AND APPEALS

High Court

Justice Keane officially sworn as new High Court judge [17]

Fortescue Metals Group Limited & Ors – High Court transcript of 3 day hearing in constitutional challenge to the Minerals Rent Resource Tax released [18]

 

Full Federal Court

*Rawson Finances Pty Ltd v FCT – Overseas bank deposits were loans, not income – taxpayer wins appeal [19]

*Hua Wang Bank Berhad v FCT – No leave to appeal against decision to produce documents from Samoa [20]

Gashi v FCT – Asset betterment assessments affirmed against both Mr and Mrs Gashi [21]

Bell v FCT – Full Federal Court confirms net asset value test failed – credit balance didn’t ‘off-set’ excluded housing loan, and $2m loan not a related liability [22]

 

Federal Court

*FCT v Ludekens & Anor – Commissioner fails in applying civil penalty rules to “promoters” of tax schemes [23]

*DCT v Murray – Court makes orders for recovery of almost $1m where taxpayer had not filed a Part IVC appeal or opposed the collection of the tax [24]

FCT v Boyn – Federal Court finds Commissioner correctly calculated tax payable on ETP [25]

*VN Railway Pty Ltd & Anor v FCT – Understatement of income by supermarket business: penalties upheld; super deductions denied [27]

 

Federal Circuit Court

Administrative Appeals Tribunal (AAT)

Moneys in personal account assessable as dividends or ordinary income [28]

*Re Picton Finance Ltd and FCT – Vanuatu share trader company has partial win [29]

*Re Mayhew and FCT – Taxpayer held to be non-resident for tax purposes [30]

Re Hadrian Fraval Nominees Pty Ltd and FCT – R&D tax offset claims denied [31]

*Re Carter and FCT – Small business benchmarks bring florist undone re income tax and GST [32]

Re Walters and FCT – AAT has power to review objection decision despite objection being lodged before amended assessment [33]

 

Other Courts & Tribunals

*R v Seller; R v McCarthy – Wickenby case: permanent stay for releasing privileged material to the DPP overturned – back to the trial [34]

*DCT v McGuire & Anor – Even limited partners jointly and severally liabile to the tax debts of the limited partnership without limit [35]

DCT v Ciccarello & Ors – DPN valid despite “horizontal” errors (lining up the period, amount withheld and liability to remit) – not misleading [36]

*Reardon & Anor v DCT – Court confirms grant of summary judgment for DPNs which turned on retrospective legislation to reverse the Soong case [37]

 

Appeals

*Agius v The Queen – High Court gives the accused special leave to appeal in Wickenby case, where 2 conspiracies alleged (before and after Criminal Code) [38]

*Re Batchelor and FCT – Taxpayer appeals decision that a refunded deposit on a retirement village was an assessable recoupment [39]

 

 

COMMISSIONER’S PUBLICATIONS

Decision Impact statements

*Visy Packaging Holdings Pty Ltd v FCT – losses on sales of unwanted businesses were deductible as they were to be on-sold at a profit [40]

*Denlay v FCT – Commissioner can use illegally obtained information in raising Amended/Assessments without affecting their validity – Full Federal Court [41]

 

Rulings

 

Determinations

TD 2013/5-8 – FBT rates, thresholds and other amounts for 2013-14 – benchmark interest rate: 6.45%; private use of <2,501cc car: 49 cents/km [43]

TD 2013/D1 – Meaning of “deployment” under s 23AG [44]

 

Class Rulings & Product Rulings

CR 2013/17-18 – Issues of capital notes and convertible preference shares by Banks [45]

CR 2013/20 – Merger of property group – when CGT event A1 occurred for units in trust [46]

CR 2013/21-23 – Return of capital; early retirement; demerger [47]

 

ATO Interpretive Decisions (ATOIDs)

 

Practice Statements

 

Tax Alerts

 

Other Commissioner news

*ATO to join new National Anti-Gang Taskforce (eg. bikie gangs) [48]

GIC and SIC rates released for April-June 2013 quarter – 9.95% and 5.95% respectively [49]

Tax Commissioner gives his first speech – early thinking on what he wants from the ATO and the Tax System [50]

Tax compliance for large taxpayers: ATO looking closely at 170 taxpayers [51]

 

 

GST DEVELOPMENTS

Legislation & Announcements (GST)

*GST: waiver of tax invoice requirement re bare trusts [52]

*GST: waiver of tax invoice requirement re lessees and commercial premises after the reversion has been sold [53]

GST: waiver of tax invoice requirements in various circumstances [54]

Refunding overpayments of GST: latest draft better but still not good enough, per ASFA submission [55]

 

Cases (GST)

*DCT v Bayconnection case – no adjournment of winding-up, despite Pt IVC appeal being on foot – priority to collecting revenue and poor prospects [57]

*The Private Tutor and FCT – GST: tutor carrying on an enterprise, but input tax credits claims denied – no GST in acquisition price or private in nature [58]

Edwards v R – Jail sentence for falsely claiming GST refunds upheld (4 years and 3 months with a non-parole period of 2 years and 2 months) [59]

Re Brookdale Investments Pty Ltd and FCT – No written agreement, so not a GST-free supply of a going concern [60]

 

Rulings & Other things (GST)

GST low value import threshold not likely to be reduced any time soon [61]

CR 2013/19 – Kerbside waste collection and management services provided by NSW Councils are GST-free [62]

Draft PS LA 3618: GST treatment of Australian taxes, fees and charges [63]

GSTR 2013/1 – Requirements for GST tax invoices [64]

 

 

SUPERANNUATION DEVELOPMENTS

Legislation (Super)

*Tax and Superannuation Laws Amendment (2013 Measures No 2) Bill 2013 – GST instalments; reduced Super Co-contribution; TOFA changes etc. [65]

Stronger Super – MySuper and insurance: regulations registered [66]

Super fund levy to recoup grants for Trio collapse: Regulation registered [67]

*SMSF supervisory levy: Parliamentary Committee recommends Bill be passed [68]

 

Cases (Super)

Excess super contributions tax upheld: ignorance of rules not “special circumstances” – 2 Cases [69]

Commissioner appeals AAT case of Re Dowling and FCT – regarding an order to disregard a non-concessional superannuation contribution [70]

Re Trantino and FCT – Excess non-concessional super contributions tax assessments upheld – as two contributions by ‘associates’ had to be aggregated [71]

 

Rulings & Announcements etc. (Super)

 

Superannuation rates and thresholds for 2013-14 [72]

*2013 Independence guide for accountants and auditors – can’t audit your own accounts, your own fund, and must have 7 year rotation of auditors [73]

*ATO to write to employers re superannuation changes – including SGC increase to 9.25% and removal of upper age limit of 70 from 1 July 2013 [74]

*ASIC takes further action against 2 companies making unauthorized offers to 200 SMSFs of shares in US distressed property and a BVI company [75]

ASIC consults on reforms to super fund retirement estimates [76]

ATO reminder to APRA regulated funds about SuperStream rules – validation by 2 April and transition to electronic rollover 1 July to 31 December 2013 [77]

 

 

CARBON TAX

 

MINERALS & PETROLEUM RENT RESOURCE RENT TAX

Fortescue Metals Group Limited & Ors – High Court transcript of 3 day hearing in constitutional challenge to the Minerals Rent Resource Tax released [78]

*Coalition introduces Bill to allow disclosure of MRRT tax collections [79]

 

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

Government to introduce a ‘Freedom to Advocate’ Bill for the Not-for-Profit sector [80]

*Australian Charities and Not-for-profits Commission regulations made for information on the Register and Governance Standards [81]

*ACNC financial reporting framework draft regs to be finalised soon [82]

Better targeting of NFP tax concessions: ATO will accept returns until 2014 but NFP’s will need to review back to 2011/12 with no Shortfall Penalty or SIC [83]

 

 

BOARD OF TAXATION

 

EXTERNAL SUPERVISORS – IGoT; OMBUDSMAN, JCPAA & ANAO

 

TAX PRACTITIONERS BOARD & LEGISLATION

Application of tax agent regime to financial planners: defer start date or not? [84]

Tax (financial product) advisers: Tax Practitioners Board proposed guideline on suitable ‘Australian taxation law courses’ [85]

 

 

STATE TAXES

Legislation (State)

 

Cases (State)

ACT stamp duty Comr for ACT Revenue v Araghi and Dorsett – Commissioner loses appeal re:new housing estate [86]

NSW payroll tax – Pastel Pines International v Chief Comr of State Revenue – grouping decision affirmed [87]

NSW land tax: Brataniec & Ors v Chief Comr of State Revenue – no waiver or estoppel for land tax liability [88]

SA Duty – National Mutual Life Association & Ors v Comr of State Taxation – Taxpayers seek leave to appeal to the High Court – assessment of ‘rider’ policies at higher ‘general insurance rate’ [89]

WA landholder provisions: Abbotts Exploration Pty Ltd v Comr of State Revenue – company’s proprietary interests in exploration licences were “land” [90]

 

Rulings & Announcements etc. (State)

Qld payroll tax: contractors, workers on-hired to government – Public Rulings released [91]

New Victorian Treasurer announced: Mr Michael O’Brien (who signed the roll of the Victorian Bar on 29 April 2004 before entering State politics) [92]

 

OTHER DEVELOPMENTS

ASIC releases guidance on ‘conflicted remuneration’ ban under FoFA [93]

ABS stats show tax revenue up 13.9% in Dec 2012 quarter [94]

Official interest rates – no change at 3.0% [95]

New OECD report on Aggressive Tax Planning Based on After-Tax Hedging [96]

Big Data Strategy Issues Paper issued by Government for consultation [97]

*Tax issues deter use of share options plans – per Deloitte and Norton Rose survey [98]

eBay data-matching “successful” in targeting social security fraud (so watch out taxpayers…) [99]

Use of the terms “financial planner” and “financial adviser”: Bill introduced [100]

UK Budget 2013 – company tax rate reduced to 20% and Individuals’ jump in tax free threshold one year earlier in 2014/15 [101]

Former Tax Commissioner appointed to Clean Energy Regulator [102]

 

 

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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