John Morgan is a tax specialist lawyer of more than three decades experience now practicing at the Victorian Bar - w: www.FJMtax.com e: f.john.morgan@vicbar.com.au

Thomas v CofT – High Court gives Commissioner leave to appeal adverse franking credit streaming decision – based on Qld Supreme Court declaration of beneficiaries’ rights

Tax Month - October 2017

The High Court has granted the Commissioner leave to appeal the decision of the Full Federal Court in Thomas & Anor v CofT [2017] FCAFC 57. The case involved franking credit streaming and the Full Federal Court had unanimously allowed the taxpayers’ appeals against the August 2015 decision of Greenwood J in Thomas v CofT [2015] FCA 968 and…

Moignard and C of T – Taxpayer beneficiary assessable to only 1/3rd of the trust’s property profit under default beneficiary’ clause argument

Tax Month - October 2017

The AAT has accepted the Commissioner’s changed position on the “present entitlement” of a taxpayer beneficiary and reduced tax assessments and penalty issued to him. The case concerned the 2007-08 financial year and, substantively, concerned whether the taxpayer was “presently entitled” to certain trust income during that year. The taxpayer was a winemaker who used…

Treasury Laws Amendment (Whistleblowers) Bill 2017 – Exposure Draft for consultation – uniform provisions under the Corporations Act and parallel taxation related provisions

Tax Month - October 2017

On 23 October 2017, the Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP, today released for public consultation exposure draft legislation – the Treasury Laws Amendment (Whistleblowers) Bill 2017 and explanatory material. The Minister says: these reforms will, for the first time, create a single whistleblower protection regime, in the Corporations Act,…

NSW payroll tax: JP Property Services Pty Limited v Chief Comr of State Revenue – no payroll tax on payments under cleaning subcontractor agreements as they were not ’employment agency contracts’ under the purposive interpretation accepted by earlier Court decisions

Tax Month - October 2017

In a lengthy decision, the NSW Supreme Court has allowed a taxpayer’s appeal and revoked payroll tax assessments concerning out of hours cleaning services provided to supermarkets and other businesses. The taxpayer (JP) provided contract cleaning and property maintenance services to commercial and industrial clients, including supermarkets operated by Franklins Pty Ltd. To provide those…

Keris Pty Ltd (Trustee) v DCT – Security deposit notice for estimated ‘future’ GST held to be valid even though the subdivision had not gone ahead, the sales had not occurred and the margin scheme might affect the amount of GST

Tax Month - October 2017

The Full Federal Court has dismissed a taxpayer company’s appeal (from [2015] FCA 1381) and held that the Commissioner’s notice to the company to give security for an unpaid GST liability was constitutional and valid. In September 2014, the Commissioner gave a notice under s255-105 of Sch 1 to the TAA to the taxpayer requiring it to give…

BEPS Action 5 implementation sees governments rapidly dismantling harmful tax incentives worldwide: OECD

Tax Month - October 2017

16/10/2017 – Governments have dismantled, or are in the process of amending, nearly 100 preferential tax regimes as part of the OECD/G20 BEPS standards to improve the international tax framework, according to a progress report released today. The report provides details on the outcome of peer reviews undertaken of 164 preferential tax regimes identified amongst the…

TD 2017/21 and TD 2017/22 – Foreign equity distributions to corporate partners and corporate beneficiaries for the purposes of establishing a 10% ‘participation interest’ under Subdiv 768-A

Tax Month - October 2017

On Wed 18.10.2017, the Commissioner issued 2 Taxation Determinations on the application of the foreign equity distribution rules in Subdiv 768-A of the ITAA 1997 where the recipient is a corporate partner in a partnership or a corporate beneficiary of a trust. Under Subdiv 768-A, a foreign equity distribution is treated as NANE income if the…

TR 2017/D8 – Tax treatment of long-term construction contracts – Accruals basis or estimated profits basis (AASB 15) – IT 2450 and related determinations replaced

Tax Month - October 2017

The Commissioner issued draft Ruling TR 2017/D8 on Wed 18.10.2017. It  explains the methods taxpayers can use to return income derived, and recognise expenses incurred, in long-term construction projects (ie those straddling 2 or more income years). The ATO describes TR 2017/D8 as a “refresh” of the former ruling on this matter, IT 2450. The Draft…

TR 2017/D7 – Lower 27.5% corporate tax rate: draft ruling on the ‘carrying on business’ requirement, which largely ignores the distinction between ‘passive investment’ and active business activities (2016-17 only – if sub-80% passive amendments pass)

Tax Month - October 2017

On Wed 18.10.2017, the Commissioner issued draft ruling: TR 2017/D7 on whether a company is ‘carrying on a business’ for the purpose of the staged reduction of company tax rates, which is to be found in s23AA of the Income Tax Rates Act 1986. That section specifies which companies are to be taxed at the…

Treasury Laws Amendment (Enterprise Tax Plan Base Rate Entities) Bill 2017 – small turnover companies can now maintain the higher 30% tax and franking credit rate if 80% or more of their income is ‘passive income’ as defined in s23AB of the Rates Act

Tax Month - October 2017

The Treasury Laws Amendment (Enterprise Tax Plan Base Rate Entities) Bill 2017 was introduced in the House of Reps on Wednesday 18 October 2017. This Bill is designed to substitute a ‘bright line’ test for companies that are to be taxed at the lower 27.5%, instead of the ‘carrying on business’ test that has applied since the…