Monthly Archives: October 2018

PCG 2017/1 – Procurement, marketing, sales and/or distribution hubs – new Schedule 2 for ‘non-core’ procurements (25% safe level of ‘mark-ups’) – ATO audit allocation of resources advice for practical ‘swim between the flags’ compliance guidance

PCG 2017/1 was issued in January 2017, to give practical compliance guidance on transfer pricing issues related to centralised operating models involving procurement, marketing, sales and distribution functions. On 11 October 2018, the Commissioner issued an addendum to this PCG, adding Schedule 2 for ‘non-core’ procurements. In broad summary, the ‘green’ (safe) level of ‘mark-up’, is…

BEPS Action Plan 14 – ‘Mutual Agreement Procedure’ (MAP) to resolve disputes within ave. 24 months – 2017 statistics show breakdown for 85 countries

10/10/2018 – Improving the effectiveness and timeliness of dispute resolution mechanisms is the aim of Action 14 of the BEPS Action Plan (read the final report on Action 14 of the BEPS Action Plan) and is also part of the wider G20/OECD tax certainty agenda. The Action 14 minimum standard requires jurisdictions to seek to…

Board of Taxation – CEO’s update on their September 2018 meeting – small business concessions, FBT compliance cost, tax residency for individuals, Taxation of agriculture, Tax and accounting standards, 2019 meeting dates and locations

Overview of current agenda The following is an overview of our current work program, which includes: Review of small business tax concessions; Review Voluntary Tax Transparency Code (the Code) and a broader consideration of tax transparency trends in Australia and globally; Consideration of certain aspects of not-for-profit tax concessions; Further work on tax residency for…

Sub-$50m turnover companies to get their 27.5% rate to reduced to 25.0% five years earlier: 2020/21 instead of $2026/27 – after Labor agrees to support the measure

On 11 October 2018, the Prime Minister; Mr Morrison, announced that his Government would introduce legislation during the next session of Parliament, fast-tracking our business tax relief for more than three million businesses that employ nearly seven million Australians. The way this would accelerate savings for both incorporated and unincorporated businesses (with sub-$50m turnover, is…

Aussiegolfa Pty Ltd (Trustee) v CofT – ATO will not appeal its loss on the superannuation ‘sole purpose’ test and will accept its win on the ‘sub-fund’ being the relevant entity for the ‘in-house assets’ 5% cap issue

The ATO will not seek special leave to appeal to the High Court from the decision of the Full Federal Court in Aussiegolfa Pty Ltd (Trustee) v CofT [2018] FCAFC 122. This Tax Technical Article relates to the Full Federal Court’s decision. The ATO’s decision not to appeal was revealed in an ASX announcement by…

Sales suppression software – ATO reminds people of the ban, the transitional relief and their audit experience of abuse using this sort of software

The law banning ‘sales suppression software tools’ (Suppression Software) became operative on 4 October 2018 and the ATO posted advice about this on its website, the following day. Then, on 10 October 2018, it posted a more ‘breezy’, shorter and more pointed article. (See related Tax Technical article.) It says that “these tools serve no…

Company director jailed for 4 years for $1m GST refund fraud – $11m in GST embedded expenses claimed but it appears all fictitious

On 10 October 2018, the ATO uploaded advice that a 58-year old Reservoir man has been sentenced, in the County Court of Victoria, to 4 years and 2 months’ jail for more than $1 million of tax fraud committed while he was the director of a company. He was also ordered to pay tax, interest…

PCG 2018/6 – GST: ‘swim between the flags’ guidance on an inbound tour operator (travel agent) acts as an ‘agent’ for the Australian Product Provider (eg. hotel operator) – so their profit is GST-free

On Wed 10.10.2018, the ATO issued Practical Compliance Guideline PCG 2018/6 on when compliance resources will not be applied to check whether an inbound tour operator is acting as an agent for GST purposes. This is ‘swim between the flags’ guidance and is finalising the draft PCG 2018/D7 (see related Tax Technical article). This is…

LCR 2018/7 – explains the s26-31 ban on deducting residential rental property travel expenses for other than for companies etc. and other than in carrying on a business

On Wed 10.10.2018, the ATO issued Law Companion Ruling LCR 2018/7 on non-business travel costs incurred in relation to residential rental properties. From 1 July 2017, individuals, SMSFs and “private” trusts and partnerships can no longer deduct such costs (s 26-31 ITAA 1997). The ruling provides guidance on the meaning of key terms in s 26-31, and on…

Tax treatment of compensation paid to individuals from financial institutions for faulty advice or improperly charged fees, etc. – Commissioner posts guidance on website (in light of the Hayne Royal Commission into the Financial Services Industry)

With the Hayne Royal Commission into the financial services industry in full swing, exposing significant misfeasance in the Banking, insurance, financial advice and superannuation sectors, there is much talk of the compensation being paid or accelerated. With this in mind, on 8 October 2018, the ATO posted an advice page, on its website, about how…