Category Archives: Tax Month – July 2018

Draft Property and Construction Website Guidance – ATO identifies the factors it looks at for capital v’s revenue account treatment and seeks feedback

On Monday 9 July 2018, the ATO uploaded a Draft Paper providing outlines of real cases and decisions being made by the ATO in property developer cases. The Paper is intended to provide a transparent view into the decisions we are making on fact driven cases where a more technical product is not suited. The…

TD 2018/14 – Div 7A ‘benchmark’ interest rate for 2018-19 is 5.2% (down from 5.3% last year) – to avoid loans to shareholders/associates being deemed dividends

On Wed 25.8.18, the ATO issued Taxation Determination TD 2018/14, confirming that the Div 7A benchmark interest rate is 5.20% for the 2018-19 income year (down from 5.30% for 2017-18). The ‘benchmark’ rate is used as a minimum amount, that a company must charge, on a loan to a shareholder or their associate, to put the…

PCG 2017/2 updated – Simplified transfer pricing record keeping options – including $50m in-bound and out-bound loan totals but 7% interest expense and 4% interest income limits

On Wed 25.7.2018, the ATO released an updated version of Practical Compliance Guideline PCG 2017/2, its guidance on simplified transfer pricing record keeping options. The PCG notes that: Documenting your transfer pricing to meet all of the requirements of Subdivision 284-E of Schedule 1 to the Taxation Administration Act 1953 (TAA) may impose an administrative…

PCG 2018/D5 – Commissioner addresses confusion over ‘corporate tax rate’ changes in 2016 & 2017 years – no audit of ‘carrying on a business’ and allowing companies to issue statements correcting the franking rate

On Wednesday 25.7.2018, the ATO issued Draft Practical Compliance Guideline PCG 2018/D5 (Enterprise Tax Plan: small business company tax rate change: compliance and administrative approaches for the 2015-16, 2016-17 and 2017-18 income years). This 2018 draft PCG replaces Draft PCG 2017/D7, which only covered the 2017 financial year and was not as extensive. This 2018 draft…

Greig v FCT – Deduction for share losses and legal fees denied – not acquired as part of a profit making undertaking or scheme (just ordinary investment)

The Federal Court has held that a taxpayer was not entitled to a deduction under s 8-1 of the ITAA 1997 for share losses exceeding $11m (in 62 purchases) and legal fees of just over $500,000. The facts were these. Between 2008 and 2014 the taxpayer expended many millions of dollars on share purchases, typically based…

Reportable payment system to be extended to road freight, IT and security providers – to Implement the balance of the ‘Black Economy’ Taskforce’s Final Report recommendations – draft legislation released

On Monday Mon 23.7.2018, Treasury released exposure draft legislation, to further expand the taxable payment reporting system (Reporting System), which is in Div 396 of the TAA 1953. This measure was previously announced in the 2018-19 Budget as part of other measures aimed at tackling the black economy. The ‘Black Economy Taskforce’s Interim Report,it recommended that…

Black Economy Budget Measure – Removing tax deductibility of wages and the cost of making non-cash benefits in phoenixing situations (no PAYGw payments made to the ATO)

On Monday 23.7.18, Treasury released an exposure draft legislation to remove tax deductibility of certain payments – including payment of wages and payments to contractors – if the entity making the payment fails to comply with its obligations to withhold and report information to the ATO. This proposal is part of a number of measures…

Becoming a philanthropist has its benefits – consider ‘Private Ancillary Funds’

So you want to be a philanthropist? The very word often conjures up a vision of multi-million dollar bank accounts, high net worth individuals and mega corporations. However, this doesn’t have to be the case. Many smaller organisations want to make a difference and engage with the community and there are sound financial benefits in…

Reforming ABN system – Treasury releases Consultation Paper exploring the role of ABNs in light of Black Economy Taskforce’s suggestions to limit period of ABN registration and charge a fee for renewal

On Friday 20 July 2018, Treasury released a consultation paper for comment on the 2018-19 Budget measure to strengthen and modernise the Australian Business Number (ABN) system. This measure implements a recommendation of the final report of the Black Economy Taskforce, that the ABN system be strengthened to provide improved confidence in the identity and…

GST Turnover – Offshore travel agents, etc. will have to include the value of Australian hotel bookings, like Australian suppliers – affecting their Australian GST liability – draft legislation introduced

On Friday 20 July 2018, Treasury released draft legislation to ensure offshore sellers of hotel accommodation in Australia calculate their GST turnover in the same way as local sellers from 1 July 2019. By doing so, the Government proposes to amend the GST Act by requiring offshore suppliers of rights or options to use commercial accommodation in…