Author Archives: John Morgan

*TR 2014/7 – Foreign Income Tax Offset (FITO): source of hedging transactions – source of hedging transactions for the purpose of the s770-75 FITO limit [30]

This Ruling, released on Wed 10.12.2014, deals with the application of s770-75 of the ITAA 1997 (foreign income tax offset (FITO) limit) to an Australian resident taxpayer deriving gains and losses from foreign currency hedging transactions undertaken to mitigate the foreign currency fluctuation risk attached to the market value of a portfolio of assets. Broadly,…

*Akers as a joint foreign representative of Saad Investments Company Limited (in Official Liquidation) v DCT – Cayman Island liquidators re Aust tax debt [29]

The ATO has released a Decision Impact Statement on the Full Federal Court’s decision in Akers as a joint foreign representative of Saad Investments Company Limited (in Official Liquidation) v DCT [2014] FCAFC 57. In that case, Cayman Island liquidators were unsuccessful in seeking to defeat a Deputy Commissioner of Taxation’s claim to recover a…

*Re Agius and FCT – taxpayer appeals decision that whilst he was non-resident, he had Australian source income [28]

A taxpayer has appealed to the Federal Court against the decision in AAT Case [2014] AATA 854, Re Agius and FCT. In that case, the AAT held the taxpayer was not a resident of Australia for the years in question, but he did derive Australian-sourced income.

[LTN 242, 15/12/14]

*SPI PowerNet Pty Ltd v FCT – the High Court did not give leave to appeal the disallowance of deductions for payments on acquisition of power grid [27]

The taxpayer has lodged an application for special leave to appeal to the High Court against the decision of the Full Federal Court in SPI PowerNet Pty Ltd v FCT [2014] FCAFC 36. The majority of the Full Court (Davies J dissenting) had dismissed the taxpayer’s appeal and held that payments it made to the State…

*DCT v Keane – Director penalty: DCT obtains summary judgment [26]

A Deputy Commissioner of Taxation has been successful before the Qld District Court in seeking summary judgment against an individual for a director penalty arising from unpaid PAYG liabilities of a company. The individual did not contest most of the material facts relied upon by the Deputy Commissioner. He accepted that the company failed to…

*Re Pettiford and FCT – CGT: alleged construction costs were not included in cost base of property because they were not actually incurred [25]

The AAT has dismissed a taxpayer’s application that he was entitled to include in the cost base of a Queensland property construction costs of id=”mce_marker”78,000 he incurred under a contract he entered with his own company. However, the AAT found the taxpayer’s claims lacked substance for several reasons including the following. The construction contract was…

*Re Upson and FCT – Default assessments for drug traffickers upheld – did not prove the assessments were excessive [24]

The AAT has upheld default assessments against husband and wife taxpayers. The AAT said that in 2010, the husband was found guilty of the offence of carrying on the business of unlawfully trafficking in a dangerous drug and was sentenced to imprisonment for 8 years. Part of the Crown case was that during those years…

*Hua Wang Bank Berhad & Ors v FCT – Companies were resident and liable to tax in Australia on sale of shares – reasons referred to law enforcement agencies to investigate money laundering & tax fraud (‘disgraceful’) [23]

In a lengthy decision handed down on Fri 19.12.2014, the Federal Court has found that 5 companies were resident of Australia and liable to pay tax here on the proceeds of the sale of shares in ASX listed entities. This case concerned appeals from decisions of the Commissioner disallowing 5 taxpayers’ objections to a number…

*John Holland Group Pty Ltd & Anor v FCT – Employee “fly-in fly-out” costs not deductible to employer [22]

The Federal Court has dismissed the taxpayers’ appeal and held that costs incurred in flying employees from Perth to Geraldton and back for a rail upgrade construction project were not deductible. The Commissioner contended that “fly-in fly-out” (FIFO) employees are undertaking another form of journey to and from work, it having long been established that…

*Allan J Heasman Pty Ltd v FCT – No deductions for contributions to employee welfare fund [21]

The Federal Court has dismissed a taxpayer’s appeal against an AAT decision that had confirmed the taxpayer, an automotive repair company, was not entitled to deductions for contributions paid to an off-shore “employee welfare fund” in the 1998 and 1999 years, nor resultant carried forward losses in the 1999 income year. The taxpayer and a…