Diverted Profits Tax draft – $1b global, $25m local turnover taxpayers; 40% tax (30% franking) on profits diverted to sub-24% zone, if insufficient economic substance; pay 21 days; 12 month review; appeal limited to disclosed documents

On 29 November 2016, the Government released draft legislation for comment to implement its proposed Diverted Profits Tax (DPT), which was announced in the 2016-17 Federal Budget. It proposes to enable the Commissioner to impose a penalty tax rate of 40% on profits diverted in breach of the rules – that is: on profits that…

DCT v Peter Sleiman Investments Pty Ltd – Winding up order granted to DCT despite Part IVC appeal proceedings not being resolved – trustee declared it held its properties for unit trusts perhaps defrauding creditors (ATO)

The NSW Supreme Court has ordered that a company with a significant tax debt be wound up. PSI Pty Ltd was the trustee of a discretionary family trust (SFT). The primary beneficiary of the trust was PS (also the appointor). In July 2014, the DCT obtained a default judgment against the Trustee (PSI) for income tax assessed…

TD 2016/D5 – A ‘non-resident trust’ can ignore capital gains under Div 855 but beneficiaries can’t escape s99B assessment if those amounts are paid to them when they are ‘resident’

The Commissioner issued this draft determination on Wed 30 Sept 2017. The draft determination asks: where an amount included in a beneficiary’s assessable income under subsection 99B(1) of the Income Tax Assessment Act 1936 (ITAA 1936) had its origins in a capital gain from non-taxable Australian property of a foreign trust, can the beneficiary offset…

TD 2016/D4 – Commissioner proposes to rule that ‘foreign trusts’ do ‘disregard’ capital gains under s855-10, despite s95(1) directing trusts to calculate their tax law ‘net income’ as if they were a resident

The Commissioner issued this draft determination on Wed 30 Sept 2017. The draft determination asks: does the residency assumption in the definition of the tax law definition of ‘net income’ (in s95(1) of the Income Tax Assessment Act 1936) apply for the purpose of s855-10 of the Income Tax Assessment Act 1997), which disregards certain…

Multilateral Convention to close tax treaty loopholes – over 100 countries (including Australia) adopt the Convention, amending over 2,000 bilateral tax treaties

On 24 Nov 2016, the OECD announced that more than 100 jurisdictions have concluded negotiations on a multilateral instrument that will swiftly implement a series of tax treaty measures to update international tax rules and lessen the opportunity for tax avoidance by multinational enterprises. [Australia is amongst those countries.] The new instrument will transpose results…

FIRB issues Guidance Note No. 47 on imposing tax conditions on takeovers etc – comply with tax laws; provide information; pay tax debts; provide annual report on compliance with these conditions etc.

On 24 November 2016, the Foreign Investment Review Board (FIRB) released its Guidance Note No 47 on tax conditions for foreign investment approvals. It includes a template for reporting back to FIRB on compliance with tax conditions. [FIRB website] [LTN 230, 28/11/16] This Guidance Note outlines circumstances in which the Treasurer will consider tax‑related conditions and serves…

DCT v Tannous – DPN validly served on director by posting, even though letter returned to ATO and DPN valid despite not using exactly the wording stipulated in the Act

The defendant/director failed in his arguments that the Director’s Penalty Notices (DPN’s) issued were invalid or not relevantly served. The defendant was the sole director of a company, which failed to pay PAYG withholding amounts to the ATO and as a result, it was alleged that he was personally liable for the company’s debt of…

LCG 2016/D9 Draft Guideline released on new concepts in the Superannuation ‘transfer balance cap’ legislation and how they work

On Thursday 24.11.2016, the ATO released Draft Law Companion Guideline LCG 2016/D9 dealing with Superannuation reform: transfer balance cap. The Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016 (which received Royal Assent as Act No. 81on 29 Nov 2016) imposes a transfer balance cap of $1.6m on the amount of capital individuals can transfer…

LCG 2016/D8 – transitional CGT relief for super funds affected by the $1.6m transfer balance cap – Draft Guideline released

On Thursday 24.11.2016, the ATO released Draft Law Companion Guideline LCG 2016/D8 dealing with Superannuation reform: transfer balance cap and transition-to-retirement (TTR) reforms: transitional CGT relief for superannuation funds. The Draft Guideline provides guidance on the transitional CGT relief for superannuation funds where assets supporting superannuation income streams are reallocated or reapportioned to accumulation phase…