M o r g a n’ s    T a x    M o n t h

– November 2012 Developments –

This is a collection of developments in Australian tax law and practice that occurred in November 2012 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

*NFP/Charities Bills await Royal Assent [1]

Malaysia-Australia Free Trade Agreement Bills introduced – to amend the Customs Act 1901 to amend the rules of origin for goods from Malaysia [2]

Crimes Legislation Amendment Bill passes House of Representatives [3]

*Draft Part IVA draft legislative changes released – to apply from Fri 16.11.2012 [4]

*New transfer pricing rules – draft legislation released [5]

*Various Bills pass all stages and await Royal Assent [6]

Private Health Insurance Amendment (Lifetime Health Cover Loading and Other Measures) Bill 2012 was introduced in the House of Reps [7]

Unclaimed Money Amendments Bill passes into law with 7 Government Amendments [8]

*Tax Laws Amendment (2012 Measures No 6) Bill 2012 was introduced in the House of Reps – MITs; DGRs; medical expenses rebate; limited recourse debt; FBT and in-house benefits [10]

International Tax Agreements Amendment Bill introduced – to give force of law to DTA with India, Marshall Islands and Mauritius [11]

 

Announcements

Business Tax Working Group final report: no changes to report which failed to recommend any changes to our tax system [12]

*Tax concessions for the NFP sector: consultation paper released [13]

*Coalition promises to cut red tape and unnecessary taxes [14]

Federal Coalition would allow SMEs to remit super directly to the ATO – amongst other things [15]

*FATCA Compliance – Australia and US commence discussions on Intergovernmental Agreement [16]

*Financial planners providing tax advice will have to be registered under the Tax Agents Services Act – Regulation Impact Statement released [17]

Assistant Treasurer on tax reform, Pt IVA, transfer pricing, etc [18]

*MIT tax changes have boosted investment in Australia by 54% over 2 years – per survey designed to encourage more tax efficient outcomes [19]

Senate committee recommends tax changes re foreign investment [20]

 

 

CASES AND APPEALS

High Court

*Federal Court Chief Justice: Patrick Keane appointed to the High Court and replaced by Justice Allsop, currently President of the NSW Court of Appeal [21]

*Fortescue Metals Group – High Court agrees to hear its constitutional challenge to the Minerals Resource Rent Tax [22]

*Mills v FCT – Taxpayer wins High Court appeal that Pt IVA does not apply to PERLS V Securities franking credit scheme [23]

 

Full Federal Court

*FCT v Crown Insurance Services Ltd – Court agrees that the ‘source’ of income is not a question of law that can be appealed from the AAT [24]

*Queensland Maintenance Services Pty Ltd v FCT – In ADJR action, a reduced garnishee order was held reasonable – only 20% of the $10m owed to the taxpayer [25]

 

Federal Court

*Visy Packaging Holdings Pty Ltd v FCT – Visy entitled to deduction for losses on resale of non-packaging businesses acquired from Southcorp [26]

*Kahn v FCTJudiciary Act claim for credits in relation to PAYG withheld but not remitted dismissed as an abuse of process [27]

DCT v Chemical Trustee Limited (No 7) – Taxpayers’ notices to DCT to produce documents mostly set aside [28]

 

Federal Circuit Court

The Federal Magistrates Court will be re-named the Federal Circuit Court under the Federal Circuit Court of Australia Legislation Amendment Bill 2012 [29]

Federal Circuit Court (Consequential Amendments) Bill introduced [30]

 

Administrative Appeals Tribunal (AAT)

*Re Building Company Owner and FCT – Discretion to disregard Div 7A not exercised in 2005, but was exercised in 2006 and 2007 for not properly documenting loans [31]

Re Rigoli and FCT – Depreciation deductions on some capital items allowed [32]

Re The Employed Accountant and FCT – Taxpayer not assessable on bank deposits [33]

Re Daniels and FCT – Taxpayer liable for $129k of CGT on disposal of Panamanian shares and a 50% shortfall penalty [34]

Re Bezuidenhout and FCT – Taxpayer was a resident of Australia; assessable on foreign income [35]

Re Neimanis and FCT – Tax debt not released on hardship grounds despite tax payer having few assets in his name as his wife had assets [36]

Re Watsford and FCT – ESS: share options issued under a settlement were not new and the discount was assessable in the previous year [37]

Re Lack and FCT – Commissioner not out of time to issue assessments – sham conceded by taxpayers [38]

Hancox and FCT – $20k Allowance was a LAFHA, exempt as a fringe benefit, so $36k of deductions not allowable [39]

 

Other Courts & Tribunals

DCT v Power – Validity of DPNs for $1m upheld – resigning as a director didn’t assist, notice didn’t need to cite Div 269 and didn’t need separate notices [40]

 

Appeals

*Pratt Holdings Proprietary Limited v FCT – taxpayer appeals decision to disallow loss generated from sale of mining exploration tenements [41]

*Re Nash v FCT – Commissioner appeals AAT decision that GIC is deductible in the period to which it is referable (not the period in which it is imposed) [42]

 

 

COMMISSIONER’S PUBLICATIONS

Decision Impact statements

FCT v Kassem and Secatore & Anor – Full Federal Court dismissed the Commissioner’s appeal against recovery of a preference [43]

 

Rulings

*TR 2012/7 – Capital allowances: open pit mine improvements for depreciation (capital allowance) purposes [44]

*TR 2012/8 – Assessability of amounts received for legal costs incurred in ETP disputes [45]

 

Determinations

Class Rulings & Product Rulings

CR 2012/102 – Off-market share buy-back will be deemed to pay a ‘dividend’ [46]

CR 2012/103-109 – Rollovers; demerger; ESS; capital reallocation; early retirement scheme; R&D [47]

 

ATO Interpretive Decisions (ATOIDs)

Practice Statements

Tax Alerts

Other Commissioner news

ATO to data match motor vehicle purchases over $10k in 2011-12 and 2012-13 years to other data for avoidance detection [48]

*Mr Chris Jordan to be new Tax Commissioner [49]

 

 

GST DEVELOPMENTS

Legislation & Announcements (GST)

*GST instalment system and SMEs in net refund position: draft legislation released [50]

GST: issue of RCTIs by training providers [51]

 

Cases (GST)

*Unit Trend Services Pty Ltd v FCT – Commissioner seeks leave to appeal to High Court against GST Anti-Avoidance decision based on choice offered by the margin scheme [52]

*Re SDI Group Pty Ltd and FCT – GST: sale of property was a going concern [53]

 

Rulings & Other things (GST)

PS LA 2008/1 (GA) Update – hire purchase acquisitions under pre-1 July 2012 law [54]

*Qantas GST High Court decision impact statement – amounts received from passengers who don’t fly still subject to GST [55]

*ATO runs ‘in-house’ ADR pilot on indirect taxes – by invitation, no legal interpretation issues and voluntary participation [56]

*First OECD Global Forum on VAT concludes that the tax treatment of exports and imports urgently needs attention [57]

*Government charges are exempted by being listed only to 30 June 2013 – after that the new Div 81 and associated Regs must be self-assessed [58]

* GSTD 2012/7-10 – GST treatment of specific telecommunication supplies [59]

Low value import threshold for exemption from GST – GST Distribution Review recommends reducing threshold from $1,000 to $500 asap [60]

 

 

SUPERANNUATION DEVELOPMENTS

Legislation (Super)

Default super funds in modern awards – Fair Work Amendment Act 2012 passes House of Reps [61]

MySuper (Core Provisions) Bill awaits Assent after Government amendments to ensure that all the ‘MySuper’ authorization provisions commence together [62]

Third tranche of MySuper Legislation (Transparency Measures Bill) – 17 Government Amendments and moves to Senate [63]

Final tranche of MySuper reforms – Bill introduced [64]

*Various Super Bills pass all stages and await or receive Royal Assent [65]

Stronger Super reforms – MySuper and insurance: draft regs released [66]

SMSF trustee penalties; scheme promoters; roll-overs: Bills introduced [67]

 

Cases (Super)

Re Hamad and FCT – Excess contributions tax assessment set aside – special circumstances existed because he scrutinized payslips [68]

Re Dickinson and FCT – Excess super contributions tax: no special circumstances [69]

Re Australian Medical Services Pty Ltd and FCT – SGC correctly calculated from beginning of the quarter to default assessment and no power to remit back to date of contributions [70]

Re Peach and FCT – Early access to SMSF money assessable – trustee could not be reasonably satisfied that member ‘retired’ from the work force [72]

*Re Davenport and FCT – Fund received contribution on 27 June but kept it in suspense until 1 July remittance advice – no special circumstances warranting reallocation to earlier period [73]

 

Rulings (Super)

*Re The Trustee for MH Ghali Superannuation Fund and FCT – ATO accepts the win on ‘special income’ but disputes that the meaning of ‘fixed entitlement’ comes from Schedule 2F [74]

TA 2012/7 – warning about SMSF arrangements to acquire property that could breach superannuation law involving limited recourse finance and related trusts [75]

Decision Impact Statement on Longcake v FCT – one of the few cases where the excess contributions tax assessment was set aside [76]

Re Sinclair v FCT – Decision Impact Statement on case which included benefits in breach of SIS in taxpayer’s assessable income [77]

 

Announcements etc (Super)

*SMSF auditors: ASIC update on registration regime [78]

Superannuation Complaints Tribunal Annual Report 2011-12 released [79]

*Directors’ liabilities for unpaid SGC: ATO reminds directors that they will become personally liable for their companies’ unpaid SGC from 28 Nov [80]

*APRA final prudential standards for superannuation released – 6 common to other APRA regulated industries and 5 specific to superannuation [81]

 

 

CARBON TAX

*Bills linking carbon price to the EU passed all stages and await Royal Assent [82]

 

 

MINERALS & PETROLEUM RENT RESOURCE RENT TAX

Greens Bill to peg mining tax rebate on State royalties: Senate Ecomomics Committee report delayed until 21 March 2013 [83]

 

BOARD OF TAXATION

Ms Teresa Dyson appointed the new chair of the Board of Taxation [84]

 

 

EXTERNAL SUPERVISORS – IGoT; OMBUDSMAN, JCPAA & ANAO

IGT to review delayed income tax refunds, super excess contributions tax and data matching [85]

IGT to review ATO’s administration of penalties [86]

ATO tax administration improved, but complaints handling could be better: JCPAA [87]

 

 

TAX PRACTITIONERS BOARD & LEGISLATION

Conflicts of Interest, Offshoring/Outsourcing, Agents’ own compliance & Book-keepers registration – dealt with in Chairman’s address [88]

Re Modini and Tax Practitioners Board – AAT affirms the Board’s decision to reject application for registration as a tax agent (in Tas after 5 rejections in Qld) [89]

Tax Board moves to IT cloud solution and in the process leaves the ATO’s IT system [90]

Tax Practitioners Board v Munro – Court confirms injunctions and penalties imposed for not being a registered tax agent [91]

 

 

STATE TAXES

Legislation (State)

NSW: State Revenue Legislation Further Amendment Bill 2012 receives Assent [92]

NSW land tax: increase in tax threshold for 2013 set at $406,000 (up from $396,000) [93]

SA: Statutes Amendment and Repeal (Budget 2012) (No 2) Bill 2012 was introduced into the SA Legislative Assembly – concession for ‘off-the-plan’ apartments [94]

SA: Payroll Tax (Miscellaneous) Amendment Bill awaits Assent [95]

Tas: Taxation Legislation (Miscellaneous Amendments) Bill 2012 becomes law [96]

Vic: State Taxation and Other Acts Amendment Bill 2012 – passes Legislative assembly – proposing to amend Vic Land Tax [97]

 

Cases (State)

ISPT Pty Ltd v Comr for ACT Revenue (Administrative Review) – ACT stamp duty: lease dutiable under transitional provisions [98]

*Chief Comr of State Revenue v Tasty Chicks Pty Ltd – NSW Payroll Tax – High Court refuses leave to Taxpayer to appeal assessment of a group [99]

Irwin v Comr of State Revenue – Qld stamp duty concession on home transfer lodged out of time [100]

Lim v Comr of State Revenue (Taxation) – Vic – property in children’s names transferred to parents to support land tax exemption but transfer dutiable [101]

Aston (Aust) Properties Pty Ltd & Ors v Comr of State Revenue – Vic land tax: trusts or related corporations – leave to appeal granted [102]

Floridia Enterprises Pty Ltd v Comr of State Revenue (Taxation) – Vic stamp duty: signed “reverse transfers” dutiable per private ruling request and VCAT [103]

Comr of State Revenue v Burdinat & Anor – WA land tax: PPR exemption allowed despite short-term lease for 3 months [104]

PG Dukes Pty Ltd ATF Patricia Dukes Foundation v Chief Comr of State Revenue – NSW land tax: foundation a “charitable institution” and entitled to exemption [105]

 

Rulings (State)

Qld Payroll Tax: Public Ruling on the 90 day Contractors Exemption [106]

SA stamp duty: calculation of life estates – Revenue Ruling released [107]

 

Other (State)

Vic: stamp duty concessions threshold for “young farmers” to be doubled [108]

 

 

OTHER DEVELOPMENTS

Re Gillespie and ASIC – After ASIC permanently banned a financial adviser, he appealed and obtained a stay from it publishing its reasons which the AAT declined to extend [109]

Ease of paying taxes – global survey of tax regimes – Australia ranks 48th [110]

Draft Regulations for a new limited Australian Financial Services Licence (AFSL) to replace the ‘Accountants’ Exemption’ [111]

Privacy Amendment (Enhancing Privacy Protection) Bill 2012 was passed by the Senate with 40 Government amendments [112]

Unexplained wealth amendments to the Proceeds of Crime Act 2002 introduced [113]

 

 

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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