Yearly Archives: 2018

Draft Anti-avoidance rules for circular trust distributions – Sch 2F ‘family trusts’ type entities to be removed from trusts ‘excluded’ from Div 6D ‘closely held trust’ Regime (sort of)

On Friday12 October 2018, the Government  released draft legislation to give effect to its 2018-19 Budget measure to extend a specific anti-avoidance rule for closely held trusts engaging in circular trust distributions to  ‘family trusts’ (but note, these are discretionary trusts that have made the ‘family trust’ election under (under s272-80 of Sch 2F to…

Vic duty: MD Commercial Pty Ltd & AJ Commercial Pty Ltd v Comr of State Revenue – transfers of land not exempt under s 35(1)(a) as a transfer for the transferor without a change in beneficial ownership – taxpayers lose appeal

The Victorian Supreme Court has granted taxpayers leave to appeal but then dismissed that appeal in a matter concerning exemption from duty of transfers of land under s 35(1)(a) of the Duties Act 2000 (Vic). Under the will of their deceased mother, two sons were entitled to the residue of their mothers estate, which included land…

Satyam Computer Services Ltd v CofT – DTA a sword not shield – Indian company taxable on DTA ‘royalties’ outside Australia’s withholding tax scope – because the DTA deemed those receipts to have an Australian ‘source’, so as to be assessable as ‘ordinary income’

On a ‘case stated’, the Full Federal Court held that an Indian company, was taxable, on payments it received, from Australian customers, under the Australia – India Double Tax Agreement, because that DTA changed the Australian domestic tax law, to give these payments an Australian ‘source’. This case is very important, as it was fought…

PS LA 2018/1 – Guidance to ATO staff on when to refer SMSF auditors to ASIC for potential disciplinary action

On 18 October 2018, the ATO released Practice Statement PS LA 2018/1 – Self-managed superannuation funds – referral of approved SMSF auditors to ASIC on Thursday, 18 October 2018. Since 31 January 2013,  ASIC has been responsible for taking actions against approved SMSF auditors, who have not met their ongoing obligations, and ATO staff have the power, under…

Labor policy to double maximum ‘civil penalties’ for ‘promoting’ ‘tax exploitation schemes’ to $10m – against the backdrop of the Appleby leak of client documents in Bermuda, including the now contentious Glencore restructuring and allegations the ‘Big 4’ accountants could have been ‘promotors’

On 11 October 2018, the Labor party announced that it would double ‘promotor penalties’ from a maximum of $1m for individuals and $5.25m for corporations to $2m and $5.5m respectively. This might be fair enough, but it is important to have a sense for how low the bar is set for these penalties (it is…

Douglass v CofT – Engineer’s ‘personal services income’ couldn’t be shared with his wife as the partnership did not pass the ‘results test’ and did not carry on a ‘personal services business’ – 50% reckless penalty upheld too

The AAT has affirmed that income received for engineering services was subject to the personal services income (PSI) rules, as the partnership business did not pass the results test. The facts were as follows: The taxpayer was the sole service provider of a control systems engineering business, carried on by the taxpayer and his wife…

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…