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

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

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

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

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’

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…

Capital Gains Tax (CGT) withholding regime – ATO updates its webpage on ‘clearance certificates’ for trustees

The information on the ATO website, on Capital gains withholding clearance certificate application online form and instructions – for Australian residents, has been updated by the ATO. It notes that, if a corporate trustee does not have a TFN, an attachment can be included to provide the details of the relevant trust. The updated page, on…

Treasury Laws Amendment (MAAL extension) Bill 2018: draft legislation to catch supplies made by Australian trusts and partnerships which are linked to a ‘foreign entity participants’

On 12 February 2018, Treasury released an exposure draft of legislation to extend the application of the Multinational Anti-Avoidance Law (MAAL) to capture the use of certain trusts and partnerships that may otherwise circumvent the MAAL. This measure was announced in the 2017-18 Federal budget (in May 2017). The MAAL is located in Part IVA of the…

Taxpayer Alert TA 2018/1 – to multiply shareholding parcels to multiply franking credits (without being economically exposed on both parcels)

On 13 Feb 2018, the ATO issued its first Tax Alert for the 2018 year: TA 2018/1. It says that the ATO are reviewing arrangements that are intended to provide imputation benefits to Australian taxpayers who are not the true economic owners of the shares. Arrangements the Alert does apply to The ATO give an…

Tax treatment of ‘bare trusts’: Board of Taxation report makes 8 recommendations for change, including to legislate for a ‘look through’ approach, given the tenuous technical status of the extra-ordinarily wide practice

On Wed 14 Feb 2018, the Board of Taxation released its report Review of the Tax Treatment of Bare Trusts and Similar Arrangements to the public. The Board’s review was completed in June 2017. The Revenue Minister said the Board of Taxation has identified opportunities to simplify arrangements where the trustee has no or only minor powers of…

Edited versions of ‘private binding rulings’ now available on the ATO Legal database – to make them easier to find and search

On 12 Feb 2018, the ATO announced that edited versions, of Private Binding Rulings (EVs), are now available in the ATO Legal database (this produces a ‘search box’ and you can ‘refine search’ by ‘edited private advice’ to get all the EV’s on the subject matter for which you were searching). Moving them to the ATO…