UK announces a 2% unilateral, and temporary, ‘Digital Services Tax’ (DST) on ‘within scope’ revenues linked to UK users – large: ‘social media platforms’, ‘online market places’ and ‘search engines’

Tax Month - November 2018

On UK Budget day: 29 Oct 2018, the UK Government announced that it will unilaterally introduce a 2% digital services tax on the revenues of large digital firms that are linked to users in the UK (whilst continuing to contribute to global consensus on a long term answer to this challenge to the UK tax…

ATO collects share sale data from an additional source – to help ‘prefil’ tax returns and ensure disclosures are correct and complete

Tax Month - November 2018

On 30 October 2018, the ATO posted the following statement on its latest data matching protocol, which will see the ATO continue to receive share data from the Australian Securities and Investment Commission (ASIC). The data includes details of the price, quantity and time of individual trades dating back to 2014, with more than 500 million…

DCT v Wilson – DPN liability for director of construction company – despite shareholder/director agreements to avoid PAYGw liability by not hiring employees, broken by the other directors, in their area of geographic responsibility and timely meetings to appoint an administrator or liquidator (where he was outvoted)

Tax Month - October 2018

The NSW District Court has rejected a director’s defences to a director’s penalty notice (DPN) for $111,798. The defendant was the director of a construction company, formed in April 2015. Its activities were mainly conducted in Western Australia. The company lodged BASs in respect of the periods 1 April 2015 to 30 June 2015 and 1 July 2015 to 30 September 2015. The BASs identified…

PCG 2018/7 – restructuring out of arrangements likely to offend the new ‘anti-hybrid rules’ – 6 examples where the ATO will NOT apply Part IVA and a list of ‘low risk’ features (for deploying audit resources)

Tax Month - October 2018

Practical Compliance Guideline PCG 2018/7, issued on Thursday 25.10.2018. It sets out the ATO’s compliance approach to restructures out of existing hybrid arrangements to avoid the potential application of the hybrid mismatch rules. The anti-hybrid rules, will generally take effect from 1 January 2019, and they address certain hybrid arrangements that exploit differences in the tax treatment…

Consultation on proposed amendments to Div 7A – 10 year complying loans; self-correct ‘inadvertent’ breaches; UPE’s brought within Div 7A

Tax Month - October 2018

On 22 October 2018m, the Assistant Treasurer, the Hon Stuart Robert MP, released a consultation paper seeking views on the proposed implementation of the amendments to Division 7A of the Income Tax Assessment Act 1936 (ITAA36). He said the proposed amendments drew on recommendations from the Board of Taxation and will provide clearer rules for taxpayers…

IGT’s report – no evidence of systemic internal fraud or corruption in the ATO – report prompted by ATO fallout following the high profile ‘Project Elbrus’ investigation – IGT made 13 recommendations to ATO & 1 to Government (all accepted, at least in part)

Tax Month - October 2018

The Inspector-General of Taxation (IGT), Mr Ali Noroozi, has announced the release of his report into the ATO’s fraud control management. The review arose because of the concerns surrounding Operation Elbrus (a major phoenixing operation conducted by the son of a senior tax officer), including allegations of tax fraud that may be associated to abuse of position…

Watson v CofT – Super Div 293 tax upheld against AIRC Vice President – legislation giving him the same status as a judge did not make him a judge for the purposes of the s293-190 exemption and did not offend s72(iii) of the Constitution

Tax Month - October 2018

The AAT has upheld superannuation Division 293 tax assessments against a former Vice President of the Australian Industrial Relations Commission (AIRC) after ruling that he was not a “judge” for the purposes of the exemption under s 293-190 of the ITAA 1997. The taxpayer, the Hon Graeme Watson, is a former Vice President of the Australian…

Inspector General’s last (2017/18) Annual Report – covering its recent Complaints/Ombudsman Role and Systemic Reviews recently completed or ‘in progress’

Tax Month - October 2018

The Inspector-General of Taxation released its 2017-18 Annual Report on 18 October 2018. The Inspector-General, Ali Noroozi, confirmed that this would be his last Annual Report, following his decision not to seek another term. The themes in the Annual Report included the following. The creation of the IGT in 2003 to investigate systemic problems in the ATO –…

SM Ho & Ors c CofT – GST on sale of properties – Lot 1 only 50% leased, only 50% GST-free; Lot 2 unleased and not input taxed; Lots 3&4: ‘margin’ can’t be calculated using development costs

Tax Month - October 2018

A taxpayer has been unsuccessful in contesting GST assessments, relating to the sale of 4 properties. They imposed $265,296 of GST plus substantial further amounts of shortfall penalties, before considering, also, interest based penalties. The facts were these: The taxpayer bought 2 existing terrace properties (Lots 1 & 2) in 2001 – one used commercially…