Category Archives: Tax Month – January 2015

TD 2015/1 – PSI: payments from service acquirers when no service is provided [19]

This Taxation Determination, released on Wed 28.1.2015, states that a payment received by a personal services entity (PSE) from a service acquirer during a period [when] the service provider is not providing services to the acquirer, until further called upon, is personal services income (PSI) within the meaning of s 84-5(1) of the ITAA 1997. It…

Re GHP 104 160 689 PTY LTD v FCT – ‘feedstock expenditure’ allowed under R&D provisions – not ‘overlapping expenditure’ [18]

Re GHP 104 160 689 PTY LTD v FCT [2014] AATA 515 – The AAT allowed most of a taxpayer’s claims for R&D expenditure at the 125% rate, but disallowed other claims in respect of overlapping expenditure. The case concerned R&D “feedstock expenditure” by a mining company. The ATO said it accepts the Tribunal’s decision…

*MBI Properties Pty Ltd v FCT – GST: whether purchaser of land subject to a lease continues to make supplies to the lessee? [17]

On 22 December 2014, the ATO released Decision Impact Statements MBI Properties Pty Ltd v FCT [2014] HCA 49. The High Court had unanimously allowed the Commissioner’s appeal, holding that the conditions for the operation of s 135-5 of the GST Act were met, and the Commissioner was correct to assess MBI to an increasing adjustment under that…

*John Holland Group Pty Ltd & Anor v FCT – Taxpayer appeals FBT ‘otherwise deductible’ decision on ‘fly in – fly out’ expenditure [16]

The taxpayers have appealed to the Full Federal Court against the decision in John Holland Group Pty Ltd & Anor v FCT [2014] FCA 1332. The Federal Court had dismissed the taxpayers’ appeal. The issue was whether John Holland was entitled to reduce, by the “otherwise deductible rule”, the FBT payable on the value of return…

*Re Raschta Coatings Pty Ltd as trustee for the Raschta Coatings Trust and FCT – assessments excessive though records lost in Brisbane floods [15]

A company has been successful before the AAT in discharging the burden of proof that GST and income tax assessments issued to it following an audit by the Commissioner were “excessive”. The company was the trustee of the Raschta Coatings Trust and its business was involved buying and selling protective coatings used on steel and…

*Re The Engineering Manager and FCT – Taxpayer visited his family when of leave from 7 years overseas – not resident for the whole year he returned [14]

The AAT has held that an engineer, who returned to Australia in April 2011 after working overseas since 2004, was not a resident of Australia for the whole of the 2011 year. The taxpayer was working as a lead instrumentation engineer and manager in Oman for a multinational company in the oil and gas industry from 4 January 2010…

*Confidential and Commissioner of Taxation – No foreign tax offset for Irish ‘Pay Related Social Insurance’ – not a “substantially similar tax” [13]

The AAT has held that an amount of Pay Related Social Insurance (PRSI) deducted from a taxpayer’s Irish salary was not a “substantially similar tax” to Australian income tax for the purposes of Australia-Ireland double tax agreement (Irish Agreement) and he was therefore not entitled to a foreign income tax offset for that Insurance. The…

*Confidential v Commissioner of Taxation – beneficiaries of unit-holding trusts assessable on UT capital gain – small business CGT concessions relevant [12]

In a case involving CGT and trust issues, the AAT has held that the sale of a business was a CGT event A1 that happened in the 2007 income year [for the vendor unit trust and that beneficiaries of unit holding trusts. However, the Tribunal then adjourned the case] for consideration issues surrounding the maximum…

*Kocharyan v FCT – deductions denied for share in partnership losses from investment in a MIS forestry scheme – ‘scheme benefit’ [11]

The Federal Court has rejected a taxpayer’s appeal against an earlier AAT decision concerning amended assessments. Originally, the AAT (in Confidential and FCT [2014] AATA 32) affirmed objection decisions made by the Commissioner to deny a taxpayer deductions of close to id=”mce_marker”m concerning partnership losses in relation to his investment in a forestry managed investment…

*Seven Network Limited v FCT – Payments for Olympic Games broadcasting rights were not ‘royalties’ and no withholding were required [10]

The Federal Court has allowed a taxpayer’s appeal and held that payments it made to the IOC for broadcasting rights to the Olympic Games were not ‘royalties’ under the Australia-Switzerland DTA, and that it was not required to withhold amounts from the payments. Seven Network Limited (Seven) made a series of payments between March 2006 and August 2008 to…