M o r g a n’ s    T a x    M o n t h

– September 2012 Developments –

This is a collection of developments in Australian tax law and practice that occurred in September 2012and 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 Laws Amendment (2012 Measures No 4) Bill 2012 now law [1]

*Tax Laws Amendment (2012 Measures No 5) Bill 2012 was introduced – various minor amendments [2]

*Transfer Pricing Bill that is retrospective back to 2004 gets Royal Assent on 8 September 2012 [3]

*Investment Manager Regime Bill receives Assent – ‘FIN 48’ (Element 1) for 2010-11 and earlier years – ‘conduit income’ (Element 2) for 2010-11 and subsequent years [4]

Directors’ liability reform in line with COAG harmonization and relief principles – Commonwealth Bill introduced [5]

*NFP/Charities Bills pass House of Reps with amendments [6]

*Legislation introduced to rename the Federal Magistrates Court as the Federal Circuit Court of Australia [7]

Sunsetting Bill and Law Revision Bills get Royal Assent [8]

 

Announcements

Divided House of Reps Committee recommends NFP/charities Bills be passed without amendment or delay – but with some other recommendations [9]

Charities and NFP Bills: Senate Community Affairs Legislation Committee releases transcript of its public hearing on 4 September 2012 [10]

Senate committee report on NFP/Charities Bills tabled [11]

*‘Gag clauses’ banned in ‘Not For Profit’ sector contracts – Government announcement and amendments to legislation [12]

*Words of caution about the ‘reform’ of Part IVA from Logan J – if it were to eliminate the ‘do nothing’ postulate [13]

Net effect of company tax cut traded off against repeal of other tax concessions [14]

 

 

CASES AND APPEALS

High Court

Full Federal Court

*FCT v Park – ATO garnishee notice valid: Commissioner’s appeal allowed [15]

*Binetter v DCT – Taxpayer loses appeal on review of Commissioner’s decision to issue a s 264 notice issue [16]

*Australia and New Zealand Banking Group Limited v Konza – Full Federal Court confirms validity of s 264 notices seeking Vanuatu bank information [17]

 

Federal Court

*Palassis & Ors v FCT (No 2) – Income tax and GST assessments, and Div 7A issues: AAT ordered to rehear case [18]

*Thorpe v FCT – AAT ordered to rehear case after reproducing the Commissioner’s submissions without attribution (no independent thought?) [19]

*DCT v Bollands & Ors – Freezing orders varied to allow taxpayer access to funds for legal expenses [20]

*Bell v FCT – CGT – Court finds the ‘net asset value test’ failed because an money was held in an interest off-set account instead of being used to pay off the mortgage – even though another loan in trust did relate to assets [21]

*Fowler v FCT – date of acquiring share option rights: taxpayer loses before Federal Court [22]

 

Federal Magistrates Court

*Government to rename the Federal Magistrates Court as the ‘Federal Circuit Court of Australia’ [23]

 

Administrative Appeals Tribunal (AAT)

*Re Nelson and FCT – Taxpayer not carrying on primary production business – activities preparatory [24]

*Re Sully and FCT – Taxpayer was a resident of Australia: domicile test satisfied [25]

*Re Siddiqi and FCT – Amended assessments following cash economy audit mainly affirmed [26]

Re Suburban Property Owner and FCT – No deduction for interest on inter-entity loans – insufficient evidence [27]

*Re Pala and FCT – Accountant’s failure to remit PAYG on his own remuneration results in penalties for ‘intentional disregard of the law’ and uplift [28]

Re Wray-McCann and FCT – Commissioner’s refusal to withdraw District Court proceedings not reviewable in the AAT [29]

 

 

Other Courts & Tribunals

*DCT v Zammitt – No recovery of penalty under new DPN regime – requirement not met [30]

*DCT v Gashi & Anor – Court maintains 2010 freezing orders over wife’s assets despite her assessment being reduced from $1,600k to $42k plus penalties [31]

*Legal Services Commissioner v Turner – Leave granted to contest reprimand imposed by VCAT 10 years failure to lodge tax returns [32]

 

Appeals

*Sea Shepherd appeals to Federal Court on its DGR status [33]

*Hua Wang Bank Berhad & Ors v FCT (No 2) – taxpayer appeals Federal Court decision dismissing application to review Commissioner’s decision to request information from HMRC [34]

 

 

COMMISSIONER’S PUBLICATIONS

Decision Impact statements

Decision Impact Statements: private rulings; boat and rental property deductions [35]

*FCT v Noza Holdings Pty Ltd & Anor – deduction for dividend on debt interest incurred to derive NANE income from a foreign source and no Part IVA dominant purpose [36]

*Trustee failed to obtain orders under s63 of the NSW Trustee Act as it was really to head off the Commissioner’s assessment [37]

 

Rulings

Determinations

TD 2012/20 – Value of goods taken from stock for private use: 2011-12 [38]

*TD 2012/D6 – obligation of agents and trustees to retain sufficient money to pay tax under s254 includes tax not yet assessed [39]

*TD 2012/D7 – Receiver disposing of asset has an obligation to retain sufficient money to pay CGT under s254 [40]

Class Rulings & Product Rulings

 

CR 2012/66-79 – Special dividend; FBT exempt preventative health checks, and Early Retirement Schemes [41]

*CR 2012/80 – Selective capital reduction will not be treated as a ‘buy-back’ for the purposes of Div 16K [42]

 

 

ATO Interpretive Decisions (ATOIDs)

Practice Statements

Tax Alerts

Other Commissioner news

*October-December 2012 quarter GIC will be 10.62% and SIC rate will be 6.62%  [43]

*ATO prosecutes 2,000 for tax and super offences in 2011-12 [44]

ATO Second Commissioner appointment announced – Mr Geoff Leeper from outside the ATO [45]

 

 

GST DEVELOPMENTS

Legislation & Announcements (GST)

GST Regs amended to ensure credit unions that rebrand as banks retain their access to RITCs [46]

GST recommendations for low value parcels: Government Taskforce [47]

*Refunding excess GST: ASFA submission on draft legislation in proposed Division 36 [48]

 

Cases (GST)

Re A.P. Group Limited and FCT – Net GST amounts of motor vehicle dealerships reduced [49]

*Re Wynnum Holdings No 1 Pty Ltd & Ors and FCT – input tax credits disallowed because JV nominee not carrying on an enterprise (dubious) and property not ‘commercial residential premises’ [50]

 

Rulings & Other things (GST)

Decision Impact Statements on pre-GST contracts and GST-free status of supplies under those contracts [51]

*Decision Impact Statements on Tribunal case for input tax credits on second hand aircraft [52]

*Decision Impact Statement in ECC Southbank case – GST and commercial residential premises for student accommodation [53]

*Addendum to MT 2010/1 – for the International All Sports & Anor v FCT decision – s105-65 can’t restrict GST refunds when the supply hasn’t been mis-classified [54]

 

 

SUPERANNUATION DEVELOPMENTS

Legislation (Super)

*Second tranche of the ‘Stonger Super’ (MySuper and governance) reforms receive Royal Assent on 8 September 2012 [54]

*Electronic portability request scheme for super benefits: draft regs [55]

*Trans-Tasman superannuation portability: draft legislation released, but limits in Australia on Super transferred from NZ [56]

*New Bills will give tax relief for merging super funds; will require SMSF auditors to register with ASIC to audit; will require greater reporting each year; and increase the quality of data [57]

*Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Bill 2012 – entry fees banned; intra-fund advice cost limited; life insurance on a opt-out basis; and can’t charge fees paid to adviser [58]

 

Cases (Super)

*Re Sinclair and FCT – Early access to superannuation benefit included in taxpayer’s assessable income but 25% penalty remitted [59]

*SCCASP Holdings as trustee for the H&R Super Fund v FCT – Trust distribution of capital gain held to be “special income” derived by SMSF [60]

 

Rulings (Super)

*DIS – Senior public servants not senior enough to escape Superannuation Surcharge on constitutional grounds established in Clarke [61]

 

Announcements etc (Super)

Superannuation Roundtable agrees on better promote the small business clearing house [62]

APRA announces consultation on increased reporting requirements for the superannuation funds it regulates [63]

*30% super contributions tax for taxpayers above $300,000 – extra 15% to be levied on the individual – per ATO [64]

ATO right regulatory body to oversee SMSF sector, says SPAA [65]

 

 

CARBON TAX

Greens to try to lock in rebate for State royalties at levels applying on 1 July 2011 [66]

*Carbon Tax – Bills introduced to link carbon price with EU and to remove the price floor [67]

TA 2012/6 – ATO warns on offshore emission unit schemes, which may not exist, and a 100% deduction is claimed despite paying only a small portion to a tax haven [68]

 

 

MINERALS & PETROLEUM RENT RESOURCE RENT TAX

Government says it can’t comply with a Senate order for MRRT information presented by the Shadow Assistant Treasurer [69]

 

 

BOARD OF TAXATION

*Board’s reports into the Tax Design Review Panel’s recommendations and TIES – and Asst. Treasurer’s speech admitting there is more they could do [70]

*Board of Taxation seeks written submissions for its post-implementation review of the consolidation regime and issues a discussion paper [71]

 

 

EXTERNAL SUPERVISORS – IGoT; OMBUDSMAN & ANAO

*ATO to publish all findings of external scrutineers [72]

Tax Commissioner to be scrutinized at annual JCPAA public hearing [73]

 

 

TAX PRACTITIONERS BOARD & LEGISLATION

Qualification requirements for “non-accountants”: TPB Information Sheet [74]

*Code of Professional Conduct: Tax Board Draft Information Sheets on ‘reasonable care’ requirements [75]

*Court orders $40,000 penalty for unregistered tax agent: TPB [76]

*Re Tung and Tax Practitioners Board – AAT held that the Board’s decision to de-register the Tax Agent was not excessive and was affirmed [77]

Tax agents beware of being used by others to lodge false returns: Tax Practice Board Chairman: Dale Boucher [78]

 

 

STATE TAXES

Legislation (State)

NSW: Revenue Legislation Further Amendment Bill introduced [79]

*Qld Budget – Fiscal Repair Amendment Bill 2012 [80]

SA stamp duty: off-the-plan apartment duty concession; Budget Bill laid aside [81]

*Vic: Fire Services Property Levy Bill update [82]

WA: Budget pay-roll tax rebate; other revenue law amendments: Bill awaits Assent [83]

 

Cases (State)

*Chubb Electronic Security Australia Pty Ltd v Comr of State Taxation – SA stamp duty: Withdrawal of ex gratia relief cannot be reviewed on an appeal [84]

*OZ Minerals Ltd & Anor v Comr of State Revenue – WA stamp duty: Indonesian mining interests not “land”; company not a land-holder [85]

 

Rulings (State)

*NSW: interest penalties – rate decrease from 3.66% to 3.62% [86]

 

Other (State)

*Qld Budget 2012-13: land transfer duty rate increases; coal royalties increase; gambling tax increases and First Home Construction Grant [87]

 

 

OTHER DEVELOPMENTS

*Official interest rates – on hold at 3.5% [88]

Goverment’s Asian Century ‘White Paper’ to cover tax policy directions [89]

Institute of Public Accountants opposes proposed Standard on Financial Planning Services for accountants [90]

*Small business tax compliance cost more than doubles since 1995 – per Institute of Chartered Accountant’s research [91]

*Final 2011-12 Budget Outcome a $43.7bn cash deficit [92]

 

 

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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