Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill 2018 – proposing 6 measures: the ‘deductible liabilities measure’; the ‘deferred tax liabilities measure’; the ‘securitised assets measure’; the ‘churning measure’; the ‘TOFA measure’ and the ‘value shifting measure’

Tax Month - March 2018

On 15 February 2018, the Government introduced the Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill 2018 into the House of Representatives, it passed the Lower House, without amendment, on 28 February 2018 and passed all stages on 22 March 2018. There are around 12,000 tax consolidated groups in Australia, including the majority of the largest businesses.…

Coventry v CofT – DFAT employee’s overseas earnings exempt from Australian tax, under s23AG, because diplomatic immunity was not ‘the only’ reason for no Pakistani tax (and draft DIS)

Tax Month - February 2018

On 12 January 2018, the AAT has decided that a DFAT employee’s earnings while working in Pakistan were exempt under s 23AG of the ITAA 1936. This was because there was a Development Agreement, that gave the earnings exemption from Pakistani tax. I will explain why. Section 23AG(1) exempts, from Australian tax, any foreign earnings derived by…

EU proposing to ‘go it alone’, in taxing ‘digital’ services, whilst waiting for OECD/G20 multi-lateral initiatives to tax these services

Tax Month - March 2018

On 21.3.18, the European Commission proposed new rules to tax digital business activities – ‘going it alone’, ahead of any consensus from the OECD/G20. In response to this, the Australian Treasurer was reported as saying: ‘that Australia, like other G20 nations, might go it alone with measures to tax digital economy companies, like Uber, because…

DCT v Rennie Produce (Aust) Pty Ltd (in liq) – ATO s355-10 (old s264) notice to produce documents ‘trumps’ liquidator’s “Harman obligation” not to use documents produced, under other proceedings, for another purpose

Tax Month - March 2018

On 20 March 2018, the Full Federal Court has held that the “Harman obligation” did not excuse a liquidator from complying with an ATO notice “to produce documents”, under  under s 353-10, Sch 1 TAA (which superseded the old s264 of the ITAA36). Failure to comply with such a notice, if not constrained by law, is an offence.…

Product Ruling PR 2018/4 – Perpetual WealthFocus Fund; on electing into the ‘Attribution Managed Investment Trust (AMIT) regime – ‘single unit’ structure respected for CGT purposes

Tax Month - March 2018

On 21.3.2018, the ATO issued a product ruling and an addendum to a 2015 product ruling, for the Perpetual WealthFocus Investment Advantage Fund. This was prompted by the Fund electing into  the Attribution Managed Investment Trust (AMIT) regime from the 2017-18 income year under Part 3-25 of the ITAA97 (Divisions 275 & 276). The fund…

Promoter of ‘tax exploitation’ R&D tax schemes ordered to pay $4.25m in civil penalties and give undertakings

Tax Month - March 2018

On 21 March 2018, the ATO website advised that the Federal Court had ordered a Queensland company to pay a $4.25 million penalty to the Commissioner of Taxation for its promotion of tax exploitation schemes. These are the civil penalties provisions for prevention of ‘tax exploitation schemes’ in Div 290 of the TAA1 (and in particular…

Immediate 20% write-off for assets over $20,000 proposed by Labor, with remaining 80% depreciated from the first year – not Div 43 capital works, R&D items or passenger cars

Tax Month - March 2018

On 13 March 2018, the Opposition Leader: Bill Shorten announced that, if elected, his Government would introduce legislation to permit an immediate 20% tax deduction, for any new eligible asset worth more than $20,000. This would be available to all businesses (and they call it the ‘Australian Investment Guarantee’). The scope and key design features…

Common Reporting Standard (CRS) avoidance – OECD adopts tax disclosure rules for advisors as an ‘anti-avoidance’ approach

Tax Month - March 2018

As part of its BEPS (Base Erosion and Profit Shifting) initiative, the OECD/G20 adopted an action item to exchange information about foreign bank accounts (and the like), in a ‘common’ format, or standard (‘Common Resporting Standard’ or ‘CRS’). As the CRS reporting, and automatic exchange, of information, about offshore financial accounts, becomes a reality, in…

LLUN v CofT – AAT finds that a string of tax haven transactions created tax liabilities – Funding for Deregistered Vanuatu company; NZ capital gain; Rollover of NZ Welfare Fund into Samoan Super Fund, including a ‘guest appearance’ by Hua Wang Bank Berhad

Tax Month - March 2018

The AAT has found against a Mr Taxpayer and Mrs Taxpayer on a range of issues traversing many of the world’s tax havens, including: Samoa and the now notorious Hua Wang Bank Berhad. Before trying to relate this story, the following ‘preliminary observations’ of Deputy President Frost, might set the scene. 94. One remarkable aspect of…

MWYS and CofT – Profits within a ‘dual listed’ structure, were only CFC attributable, on purchases from the Australian side of the structure because the dual-listed companies were not CFC ‘associates’

Tax Month - March 2018

The AAT has decided that only part (not all) of the profits, of a Swiss company, should have been attributed to the Taxpayer, under the CFC provisions (as “tainted sales income”), despite Swiss Co being 100% (indirectly) owned by the Taxpayer and a UK company, under a dual-listed company (DLC) arrangement. The AAT attempted to keep…