Category Archives: Tax Month – August 2016

Vic motor vehicle registration duty: Mercedes-Benz Australia/Pacific Pty Ltd v Comr of State Revenue – no exemption for “courtesy” cars also said to be a ‘demonstrator vehicle’

On Thursday 11 August 2016, the Victorian Court of Appeal unanimously dismissed a taxpayer’s appeal against an earlier decision which had refused the taxpayer’s duty exemption claim on 2 vehicles under s231(2)(a) of the Duties Act 2000 (Vic). The above section (s231) provides an exemption from the imposition of duty on the registration of a motor vehicle,…

TD 2016/D2 – ATO proposes to rule that a foreign resident cannot make a s830-10(2)(b) election to be come a ‘foreign hybrid’

On 10 August 2016, the Commissioner issued this draft determination, asking the relatively technical question: Income tax: can a foreign resident elect to treat their interest in a limited partnership as an interest in a foreign hybrid limited partnership under paragraph 830-10(2)(b) of the Income Tax Assessment Act 1997? The draft answer given is: No. How do…

TD 2016/D1 – lump sum in place of periodic payments for work place injury ruled assessable as ‘ordinary income’ (despite compensation for loss of income earning capacity being ‘capital’)

On 10 August 2016, the Commissioner issued this draft Tax Determination, asking: Income tax: is a redemption payment received by a worker under the Return to Work Act 2014 (SA) assessable income of the worker? The Commissioner answers, ‘Yes, it is assessable as ‘ordinary income’ under s6-5(1) of the Income Tax Assessment Act 1997 (ITAA 1997) (see para 1…

ACNC announces compliance retrospective revocations of 2 organisations charity status with consequent loss of tax concessions – ‘Ethan Affordable Housing Ltd’ and ‘Kids Cancer Relief NSW Inc.’

On 9 August 2016, the Australian Charities and Not-for-profit Commission (ACNC) announced that it had revoked the ‘charity’ status of two organisations, back to 1 July 2013, and with that, they will lose all relevant Commonwealth tax concessions back to that date also. The organisations are: Ethan Affordable Housing Limited (ABN 22135818245), which had its charity status revoked by the…

Woods v Australian Taxation Office & Ors – the taxpayer alleged the ATO breached a contract and was owed money, net of her tax, and alleged that her tax had been paid by promissory notes, but her claim was struck out

A taxpayer has been unsuccessful before the Qld District Court in a matter concerning alleged promissory notes to discharge a tax debt and claimed breaches of alleged contracts by the ATO. The taxpayer commenced legal proceedings for money said to be owing to her pursuant to 2 contracts said to have arisen between herself and,…

Voluntary Tax Transparency Code (recommended by the BofT) – The ATO will receive information volunteered and provide access as the responsible entity for its administration

As the responsible agency for administering the Board of Taxation’s Voluntary Tax Transparency Code (TTC), the ATO uploaded information about the new Code (and its role in administering it). [ATO website] [LTN 153, 10/8/16] Background to TTC By way of background the ATO notes that the Tax Transparency Code (TTC) is a set of principles…

Offshore Marketing Hubs – draft Practical Compliance Guideline issued – 5 stage ‘traffic light’ system of risk assessment for reporting and compliance attention – starting with ‘green’ for no more than 100% markups

On 10 August 2016, the ATO released a draft practical compliance guideline (PCG) dealing with the use of offshore marketing hubs. The media release the draft PCG outlines how the ATO proposes to treat transfer pricing issues related to the location and relocation of certain business activities and operating risks into centralised operating models, commonly referred to…

TA 2016/9 – Commissioner alerts taxpayers that, in his view, ‘debt interests’ treated as ‘equity’ for accounting purposes, can be valued as $nil for ‘thin capitalisation’ purposes

On 10 August 2016, the ATO issued TA 2016/9 (the 3rd of 3 on that day). It alerts taxpayers that the Commissioner does not agree with a construction of the ‘thin capitalisation’ provisions in Div 820 of the ITAA97, where a taxpayer issues a ‘debt interest’ that is treated by ‘accounting standards’ (AASB 132) as…

TA 2016/8 – GST concerns about ‘MAAL’ defeating restructures that involve ‘swapping’ roles so that the Australian support company ‘distributes’ (as principal) for the foreign supplier

On Wednesday 10.8.16, the ATO released TA 2016/8 (the 2nd of 3). It addresses the ATO’s GST concerns about arrangements being made to avoid the operation of the Multinational Anti-Avoidance Law (MAAL), where the previous foreign supplier of intangible products or services (to Australia customers) now supplies to an Australian distributor (who distributes as principal) although…

TA 2016/7 – Consolidated company groups with an foreign ‘permanent establishment’ over-stating the s23AH income that is not assessable or over-claiming deductions incurred to acquire non-assessable income

On Wednesday 10 Aug 2016, the ATO issued TA 2016/7 (the first of 3 on that day). It relates to arrangements they have seen of Australian company groups that have elected to consolidate, for Australian income tax purposes, with one of those companies having an off-shore Permanent Establishment (PE). There is a tension here between…