TR 2021/D4 – Royalties: character of receipts in respect of software – for granting right to do something that is the exclusive right of the copyright owner, etc.

Tax Month - June 2021

On Friday 25.6.21, the Commissioner issued TR 2021/D4, which considers whether, receipts from the licensing and distribution of software, qualify as royalties (under the s 6(1) ITAA 1936 definition). It focuses on 3 software distribution models – packaged software, the digital distribution of software and cloud computing arrangements. See below for further detail. [Tax Month – June…

Smith v CofT – Retired couple granted relief from paying most of those debts – despite pay paying out certain debts ahead of the ATO

Tax Month - June 2021

On 23 June the AAT decided that it should reverse the Commissioner’s decision not to grant ‘hardship relief’ and decided that a retired couple, with tax debts totalling almost $106,580 have been granted relief from paying most of those debts – despite pay paying out certain debts, from their collapsed business, ahead of the ATO. See…

Addy case – Hight Court has reserved its decision, in the taxpayer’s appeal on the validity of the ‘backpacker tax’

Tax Month - June 2021

On 24 June 2021 the High Court heard the taxpayer’s appeal in the Addy case and reserved its decision. This is the case about the validity of Australia’s ‘backpacker tax’ – under an ‘anti-discrimination’ clause in a Double Tax Agreement – in this one, our agreement with the UK. See below for further details. [Tax Month – June…

Should directors manage ESG (environment, social and governance) – ‘too right’, argues Gerry Bean in the Law Institute Journal

Tax Month - June 2021

Dr Gerry Bean has published an article in the Law Institute Journal assessing directors’ duty to management of environmental, social and governance (ESG) risk. He looks at the open ended duties of directors, at law, and the welter of spectacular reputational collapses, of recent, to argue that is is vital that they do manage ESG risk.…

Mussalli v Commissioner of Taxation – Prepaid rent for McDonalds stores not deductible – it was really for to acquire the right to operate the restaurants

Tax Month - June 2021

The Full Federal Court found that payments made by a franchisee in connection with the acquisition of McDonald’s restaurants and described as prepayment of rent were not deductible in Mussalli v Commissioner of Taxation. The Full Federal Court agreed with the decision of the primary judge that the payments were not deductible because they were on…

‘Business interruption insurance’ applies to Covid-19 interruptions – at least one common exclusion doesn’t apply (High Court refuses Insurer’s application for leave to appeal)

Tax Month - June 2021

The issue of whether policy holders can claim on ‘business interruption insurance’ on COVID related interruptions, was determined against insurers, in the NSW Court of Appeal, and on Friday, 25 June 2021, the High Court rejected the insurers leave to appeal. On 28 June, 2021, the law firm: Maurice Blackburn (well known for acting for…

Governance standards for charities strengthened: Regulations registered

Tax Month - June 2021

The Government today [Mon 28.6.2021] registered the Australian Charities and Not-for-profits Commission Amendment (2021 Measures No 2) Regulations 2021 to amend the Australian Charities and Not-for-profits Commission Regulation 2013 (ACNC Regs) by extending governance standard 3 of the Regs to prohibit certain kinds of summary offences]. Specifically, the instrument adds a new s 45.15(2)(aa) of the…

Appeals update – Commissioner appeals Virgin Australia Airlines case regarding ‘car parking fringe benefits’ and taxpayer appeals Mussalli case regarding deductibility of lump-sum payment to reduce rent

Tax Month - June 2021

VIRGIN AIRLINES: The Commissioner has filed a notice of appeal to the Full Federal Court against the decision of Griffiths J in Virgin Australia Airlines Pty Ltd v FCT [2021] FCA 523. The Federal Court had held that Virgin Airlines did not provide car parking fringe benefits to its flight and cabin crew at Sydney, Brisbane…

SMSF related-party LRBAs: ATO ‘safe harbour’ interest rate for 2021-22 is 5.10% for property and 7.10% for listed shares

Tax Month - June 2021

For SMSF related-party limited recourse borrowing arrangements (LRBAs) used to acquire real property, the ATO’s safe harbour interest rate is expected to be 5.10% for 2021-22 (unchanged from 2020-21). Practical Compliance Guideline PCG 2016/5 sets the safe harbour interest rate each year according to the Reserve Bank Indicator Lending Rates for banks providing standard variable housing…