CR 2018/7 – Return of capital by way of in specie distribution as part of restructuring of Eneabba Gas Ltd- no ‘demerger relief’ available & resulting consequences

Tax Month - January 2018

On Wed 31.1.2018, the ATO issued Class Ruling CR 2018/7 (Eneabba Gas Limited – return of capital by way of in specie distribution). It explains the tax consequences for shareholders of Eneabba Gas Ltd (ENB) who received an in specie distribution of UIL Energy Ltd (UIL) convertible redeemable preference shares in September 2016. The ATO says that:…

DIS – Cable & Wireless Australia & Pacific Holding BV (in liquidatie) v CofT – ATO accepts FFC decision that the $6.2b Optus buy-back amount was a ‘dividend’ correctly giving rise to the $452m withholding tax

Tax Month - January 2018, Uncategorized

The ATO has issued a Decision Impact Statement on the Full Federal Court decision in Cable & Wireless Australia & Pacific Holding BV (in liquidatie) v FCT [2017] FCAFC 71, which held that an off-market share buy back receipt was a ‘dividend’ to the overseas recipient and that and the withholding tax paid was correctly paid…

Sharpcan Pty Ltd v CofT – Expenditure on Victorian ‘gaming machine entitlements’ held deductible but, if capital, it was not ‘black-hole’ deductible over 5 years because it ‘enhanced’ the value of goodwill (before Pagone J as DP)

Tax Month - January 2018

The AAT held that the taxpayer was correct in claiming certain expenditure, on ‘gaming machine entitlements’. The deductions were held to have been allowable, for the whole of the expenditure, in the year it was ‘incurred’, under the provision allowing ‘general deductions’, in s8-1 of the Income Tax Assessment Act 1997 (ITAA97). These ‘gaming machine…

Protecting superannuation entitlements: draft legislation released – to increase ATO’s power to detect and collect unpaid SGC amounts etc.

Tax Month - January 2018

On 24 January, 2018, the Minister for Revenue released a draft Bill and announced other measures intended to give effect to its Superannuation Guarantee (SG) Integrity Package (which she announced on 29 August 2017). The draft Bill would: allow the ATO, in cases where employers fail to comply with their SG obligations, to issue directions to pay unpaid…

Revised TPP deal nearly done without US – remaining 11 agree on a raft of tariffs to be eliminated or reduced and better service export conditions

Tax Month - January 2018

Apparently a revised Trans-Pacific Partnership between Australia and 10 other countries will be signed soon. The 11 countries are: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam. This is what the Trade Minister: Steven Ciobo indicated in an interview with the ABC’s Fran Kelly (see transcript on Minister’s site). He said: “Well as they…

Class Rulings: CR 2018/4-6 – Govt Bonds exchanged for Chess Depository Instruments, scrip for scrip roll-over relief confirmed for merger, scrip for scrip relief also available for Tatts’ merger with Tabcorp in Dec 2017

Tax Month - January 2018

Three Class Rulings were released by the ATO on Wed 24.1.2018: CR 2018/4 – Australian Government Bond holders electing to exchange bonds for CHESS Depository Interests (CDIs). It states that CGT event H2 will occur when a bondholder chooses to exchange a bond for a CDI in that bond, but that there will be no…

PCG 2018/1 – Thin cap rules for outward investing Australian bank’s – calculating their ‘adjusted average equity capital’

Tax Month - January 2018

The Commissioner released Practical Compliance Guideline PCG 2018/1, on Wed 24.1.2018. It explains how the ATO will administer s820-300(3) of the ITAA 1997 (this is the thin capitalisation rule for outward investing banks/ADI’s and sits within Subdiv 820-D, which is the thin cap rules for outward investing entities). This section (reproduced below): Applies to outward investing banks…

De Figueiredo v CofT – Receipt of $3.6m Glencore shares was assessable as a non-contingent financial benefit on dismantling a deferred remuneration scheme for an IPO

Tax Month - January 2018

The AAT has found that a taxpayer’s assessable income, for the year ended 30 June 2011, includes the amount of $3,610,467 million, being the value of 16 shares, in a new holding company: Glencore International PLC. This was so, because the taxpayer exchanged his ‘Profit Participation Units’, in a subsidiary, as part of the float of the…