Category Archives: Tax Month – July 2018

Budget ‘thin cap’ measure: ending valuations outside financial accounts – Treasury fills the ‘gap’ in the transitional rule – the ‘average’ asset value will be frozen at the last complying valuation pre-Budget Night

Treasury has released details of the policy principles that will be used regarding the start date and transitional period of the 2018-19 Federal Budget thin cap changes. In the 2018-19 Federal Budget, the Government announced that it will tighten Australia’s thin capitalisation rules by requiring entities to align the value of their assets for thin…

NSW land tax: Australia Avenue Developments Pty Ltd v Chief Commissioner of State Revenue (NSW) – ‘Construction Lease’, supporting a Development Agreement, still found to be a ‘lease’ and the lessee was liable to land tax as a deemed ‘owner’

NSW Civil and Administrative Tribunal (Tribunal) held that a company was liable, to pay NSW land tax, as an agreement, with the land owner was, in law, a lease. The facts were as follows. Australia Avenue Developments Pty Ltd (Developer) entered into a Project Development Agreement (Development Agreement) with the Sydney Olympic Park Authority (Authority)…

CR 2018/32 – Mantra Group Limited: Employee Share Scheme – Tax Exempt Share Plan Shares disposed of under Scheme of Arrangement – disposal of tax exempt share plan shares

On Wed 18.7.2018, the ATO issued Class Ruling CR 2018/32 (Mantra Group Limited – Employee Share Scheme – Tax Exempt Share Plan Shares disposed of under Scheme of Arrangement). This ruling considers the application of the employee share scheme rules in Div 83A of the ITAA97 to employees of Mantra Group Limited whose shares in the…

Draft legislation to broaden the definition of ‘significant global entity’ to include notional groups headed by unlisted entities, partnerships and trusts – also a separate definition of ‘CbC Reporting Entity’ (similar but not the same)

On Friday 20 July 2018, Treasury released draft legislation to extend the definition of a significant global entity (SGE) by including members of large multinational groups headed by proprietary companies, trusts, partnerships and investment entities. For the moment, this draft is styled the: Treasury Laws Amendment (Measures for a later sitting) Bill 2018. This measure was…

Standard form SMSF documents – the problems of going to a non-lawyer

There are numerous suppliers of self managed superannuation fund (SMSF) deeds and other documents, apart from law firms with SMSF expertise and no shortage of accountants, financial advisers and ultimately clients, prepared to use their documents and services. In a longer article, DBA Laywers looked at the issues with the non-lawyer part of this industry…

TD 2018/13 – Div 7A: ordinary commercial payments or loans, to interposed entities can still trigger the s109T anti-avoidance provision (but not necessarily trigger Div 7A)

On 18 July 2018, the ATO issued Taxation Determination TD 2018/13, which considers whether a Div 7A interposed entity rule (s109T of the ITAA36) can apply to an ordinary commercial payment, or loan from a private company to an interposed entity. The Commissioner concludes that it can apply, which is to say that a two step…

Whittle and ASIC – SMSF auditor disqualification upheld – breach of independence standards by auditing her brother’s fund for 9 years and her de-facto partner’s fund for 6 years

The AAT has affirmed a decision by ASIC to disqualify an approved SMSF auditor for failing to comply with the auditor independence requirements by auditing the SMSFs of close family members. The applicant, an accountant since 1975, had conducted numerous audits of SMSFs since 1999. Following an ATO compliance review, it was revealed that she had…

Takeover of Westfield by Unibail-Rodamco – no rollover so cost base has to be calculated and apportioned to 3 elements of stapled security

With 30 June clicking over, the managed funds and superannuation industry has been busily producing year end tax reporting on behalf of investors and members. A core element of this is reflecting on whether any major corporate actions took place in the preceding 12 months and the tax implications. This year was no different, but…

FCT v Chen – Asset freezing order granted over Australian and foreign assets of an Indian citizen, to secure $7.5m tax debts (94% of income omitted if Commissioner’s assessment is correct)

The Federal Court has granted the Commissioner a freezing order of the assets of a taxpayer concerning a $7.5 million tax debt. The Commissioner had sought freezing orders against the taxpayer under Division 7.4 of the Federal Court Rules 2011 (Cth).  After hearing counsel for the Commission, Colvin J made orders substantially in the terms sought.…

SuperStream to now apply to SMSFs – applying to rollovers – draft regulations released requiring Fund to advise ATO of banking details etc. 10 days prior

On Tuesday 17 July 2018, the Government released exposure draft regulations, proposing to extend SuperStream to include rollovers to and from self-managed superannuation funds (SMSFs). The Minister previously announced this measure, on 27 April 2018, at the same time as announcing that SMSFs will be allowed to have up to 6 members (instead of only 4). She announced…