Capital works (Div 43) deductions – proposed new ruling on ‘alteration, extension or improvement’ and its interaction with other deduction provisions

  The purpose of the new ruling is to assist taxpayers in understanding the meaning of the phrase ‘alteration, extension or improvement’ in the context of Division 43 of the Income Tax Assessment Act 1997 (ITAA 1997) to enable a taxpayer to determine whether there is an extension, alteration or improvement for the purposes of the capital works…

General purpose financial statements – significant global entities must lodge with ATO if not lodged with ASIC: ATO will consult on procedures

On 3 December 2015 the Senate amended the Tax Laws Amendment (Combating Multinational Tax Avoidance) Bill 2015 to require corporate tax entities that are significant global entities to give the Commissioner a general purpose financial statement if they do not lodge one with the Australian Securities and Investments Commission (ASIC). The financial statement must be for the…

Large multinationals must pay “fair share of tax”, says Commissioner: no more ‘operate here and bill overseas’; 6 added to highest risk quadrant; MNE unable to give reports to auditors? (don’t game the system)

At a Senate Economics Legislation Committee hearing on 10 February 2016, the Commissioner delivered his opening remarks highlighting the ATO’s efforts to tackle tax avoidance by large corporates. Mr Jordan said the majority of large corporates, especially Australian owned companies, pay the right amount of tax; however, he said there was a minority of large corporates who try to avoid…

Tax Practitioners Board v Lamede Group Pty Ltd – company fined $77,000 and director fined $4,000 for advertising and providing tax agent services whilst not registered

The Federal Court has imposed over $80,000 in penalties on an individual and her company after they admitted to breaches of the Tax Agent Services Act 2009 by providing and advertising tax agent services whilst unregistered. Between July and December 2010, the individual provided tax agent services on 7 occasions, receiving around $1,000 for her work. From January 2011 to August 2013, the company provided…

Re Miley and FCT Devi and FCT – CGT: MNAV test – shares sold arm’s length but market value less because it was not a controlling interest

The AAT has ruled that, for the purposes of working out whether a taxpayer satisfied the $6m maximum net asset value (MNAV) test, the “market value” of shares that he sold was not the actual selling price of the shares, even though the shares were sold in an arm’s length dealing. Instead, the AAT accepted…

‘Life-style’ assets insurance – ATO data matching from insurance companies and others

The Commissioner has Gazetted a notice that he will acquire details of insurance policies for certain classes of assets, including marine vessels, enthusiast motor vehicles, thoroughbred horses, fine art and aircraft where the value exceeds nominated thresholds for the 2013-14 and 2014-15 financial years. The ATO said it will obtain policy holder identification details (names, addresses, phone…

LCG 2016/D1 – GST: how to apply the new test for carrying on an ‘enterprise’ in Australia – to be introduced by the 2016 Measures No. 1 Bill

The ATO, on Mon 15.2.2016, issued Draft Law Companion Guideline LCG 2016/D1 (GST and carrying on an enterprise in the indirect tax zone (Australia)). It describes how the Commissioner plans to apply the proposed new GST test for carrying on an enterprise in the indirect tax zone (ie Australia). This test is contained in the Tax and Superannuation…

Cable & Wireless Australia & Pacific Holding BV (in liquidatie) v FCT – Dividend WHT was not refunded as paid by mistake – the part of $6.2b Optus share buy-back debited to a ‘buy-back reserve’ was a Div 16K ‘dividend’ because that reserve was not a ‘share capital account’

The Federal Court has denied a taxpayer a refund of $452,452,013 which had been withheld as dividend withholding tax from the consideration paid to the taxpayer for its shares in Optus. The dispute concerned an amount of $3.9 billion debited to an account described as a “buyback reserve account” in the ledger of Cable &…

Exploration Development Incentive’s first year in operation: 84 Applications; $70m in greenfields expenditure & $21m in credits – Assistant Treasurer’s press release

The Assistant Treasurer: The Hon Kelly O’Dwyer, together with the Minister for Resources (and the former Asst Treasurer): The Hon. Josh Frydenberg, issued a joint press release that said the following. The recently released results for the first year of the Government’s $100 million Exploration Development Incentive (EDI) highlight its broad use in new exploration.…

PAYG withholding varied to ‘nil’ for various payments to religious practitioners – legislative instrument gazetted

A Legislative Instrument was gazetted on 12 February 2016 that varies to nil the amount of withholding required by a payer under the PAYG withholding system for allowance payments, payments made for locum services, and payments made by non-religious entities to religious practitioners, in a certain class of cases. It also removes the requirement to issue payment summaries and…