Europeans press for digital tax turnover tax, at the July Buenos Aires G20 meeting, as an interim measure – Australian Treasurer not moved by ‘digital advertising sales tax’ approach

Tax Month - July 2018

BUENOS AIRES (Reuters) – European finance leaders called for progress on global rules to tax the digital economy at a meeting of G20 finance ministers and central bankers in Argentina on Sunday 22 July 2018, putting them at odds with US counterparts. The final communique reaffirmed a commitment to address the impacts of the shift to a…

Productivity Commission findings on SMSF costs and minimum $1m size are “flawed” – according to the SMSF Association

Tax Month - July 2018

The SMSF Association put out a media release, on 25 July 2018, tackling the Productivity Commission’s draft findings, about the cost effectiveness of self-managed super funds (SMSFs). It says the Commission uses evidence that is “fundamentally flawed” and does not consider broader motivations on why individuals set up SMSFs. “Factors such as data problems, investment…

Inbound supply chain (ICS) strategy to counter ‘transfer pricing risk’ – starting with 4 industries and developing a PCG

Tax Month - July 2018

On 15 December 2017, the ATO released the report, Tax and Corporate Australia. This report identified that there is a key compliance risk associated with the transfer pricing of inbound supply chain (ISC) arrangements. The report questions whether appropriate profit is being recognised in Australia where goods or services are being purchased from a related party and…

Top 1000 Tax Performance Program (streamlined assurance reviews): timing set to minimise duplication of effort – particularly when APAs are in place or being negotiated

Tax Month - July 2018

Large public and multinational groups with turnover above $250 million comprise what the ATO calls the ‘Top 1000’ and it has a ‘performance program’ to review the income tax affairs of those that that they do not engage with through pre-lodgment compliance reviews or annual compliance arrangements. On 23 July 2018, the ATO uploaded a…

Draft Property and Construction Website Guidance – ATO identifies the factors it looks at for capital v’s revenue account treatment and seeks feedback

Tax Month - July 2018

On Monday 9 July 2018, the ATO uploaded a Draft Paper providing outlines of real cases and decisions being made by the ATO in property developer cases. The Paper is intended to provide a transparent view into the decisions we are making on fact driven cases where a more technical product is not suited. The…

TD 2018/14 – Div 7A ‘benchmark’ interest rate for 2018-19 is 5.2% (down from 5.3% last year) – to avoid loans to shareholders/associates being deemed dividends

Tax Month - July 2018

On Wed 25.8.18, the ATO issued Taxation Determination TD 2018/14, confirming that the Div 7A benchmark interest rate is 5.20% for the 2018-19 income year (down from 5.30% for 2017-18). The ‘benchmark’ rate is used as a minimum amount, that a company must charge, on a loan to a shareholder or their associate, to put the…

PCG 2017/2 updated – Simplified transfer pricing record keeping options – including $50m in-bound and out-bound loan totals but 7% interest expense and 4% interest income limits

Tax Month - July 2018

On Wed 25.7.2018, the ATO released an updated version of Practical Compliance Guideline PCG 2017/2, its guidance on simplified transfer pricing record keeping options. The PCG notes that: Documenting your transfer pricing to meet all of the requirements of Subdivision 284-E of Schedule 1 to the Taxation Administration Act 1953 (TAA) may impose an administrative…

PCG 2018/D5 – Commissioner addresses confusion over ‘corporate tax rate’ changes in 2016 & 2017 years – no audit of ‘carrying on a business’ and allowing companies to issue statements correcting the franking rate

Tax Month - July 2018

On Wednesday 25.7.2018, the ATO issued Draft Practical Compliance Guideline PCG 2018/D5 (Enterprise Tax Plan: small business company tax rate change: compliance and administrative approaches for the 2015-16, 2016-17 and 2017-18 income years). This 2018 draft PCG replaces Draft PCG 2017/D7, which only covered the 2017 financial year and was not as extensive. This 2018 draft…

PCG 2018/D3 – Income Tax: central management and control test of residency: identifying where a company’s central management and control is located – Joint Bodies’ post-Bywater Submission

Tax Articles

Joint Submission of the Tax Institute, Law Council of Australia, Chartered Accountants Australia and New Zealand, Corporate Tax Association and Group of 100 on the ATO’s draft Practical Compliance Guideline    25 July 2018  Mr Bruce Lee  Australian Taxation Office  GPO Box 9977  BOX HILL VIC 3128  By email: bruce.lee@ato.gov.au  Dear Bruce,  Practical Compliance Guideline…

Greig v FCT – Deduction for share losses and legal fees denied – not acquired as part of a profit making undertaking or scheme (just ordinary investment)

Tax Month - July 2018

The Federal Court has held that a taxpayer was not entitled to a deduction under s 8-1 of the ITAA 1997 for share losses exceeding $11m (in 62 purchases) and legal fees of just over $500,000. The facts were these. Between 2008 and 2014 the taxpayer expended many millions of dollars on share purchases, typically based…