Category Archives: Tax Month – June 2012

TR 2012/3 – TOFA: gains and losses related to exempt and NANE income [42]

This Ruling, released on Wed 12.6.2012, provides guidance on the nexus test for hypothetical losses relevant to the application of s 230-30(2) of the ITAA 1997. It explains how that subsection applies to a gain made from a financial arrangement. Where this provision applies, a gain is to some extent exempt income or non-assessable non-exempt…

*TR 2012/2 -Effective life of depreciating assets, from 1 July 2012 [41]

This Ruling, released from Wed 27.6.2012, applies from 1 July 2012, and explains the methodology used by the Commissioner in making determinations of the effective life of depreciating assets under s 40-100 of the ITAA 1997. The Ruling replaces Taxation Ruling TR 2011/2, which is withdrawn on and from 1 July 2012. To the extent…

Re Mehta and FCT – Taxpayer held to be a share trader: ATO view [40]

The ATO on Fri 1.6.2012, released a Decision Impact Statement on the AAT’s decision in AAT Case [2012] AATA 208, Re Mehta and FCT. In that case, the AAT held the taxpayer was a share trader for the year ended 30 June 2009 as it was satisfied that the taxpayer’s activities amounted to carrying on…

*Esso Australia Resources Pty Ltd v FCT – taxpayer applies for leave to appeal reversal of deduction claim under PRRT [39]

The taxpayer has lodged an application for special leave to appeal to the High Court against the Full Federal Court decision in Esso Australia Resources Pty Ltd v FCT [2012] FCAFC 5. The Full Federal Court had unanimously overturned a decision at first instance and held that Esso Australia Resources Pty Ltd was not entitled…

*Re IOOF Holdings Limited and FCT – Taxpayer applied for ruling on consolidation effect of ‘rights to future income’ in Dec 2010 and expected a ruling before the 31 March cut-off but failed to get back-dated ruling [39]

The AAT has dismissed the application of a taxpayer who sought a review of a deemed decision of the Commissioner to disallow an objection to a deemed decision to deny a private ruling. The taxpayer was also unsuccessful in seeking to have any finding made in its favour to take effect retrospectively to counter the…

Re Davsa Forty-Ninth Pty Ltd ATF Krongold Ford Bus Unit Trust and FCT – No summonses for taxpayer to examine ATO employees [38]

In a somewhat unusual case, the AAT has refused a taxpayer’s application for the issue of summonses to 3 ATO employees so the taxpayer could examine them in support of its claim to be carrying on a business and therefore be entitled to input tax credits. The substantive application involves disputed entitlements to input tax…

*Re JCZC and FCT – boat deductions disallowed but penalty reduced to 25% because it was not “reckless” and not “reasonably arguable” [37]

The AAT has reduced a tax shortfall penalty from 50% to 25% after finding that a taxpayer and its tax agent were not “reckless” in claiming $3.1m in deductions for a boat owned by a related trust. The taxpayer is the corporate trustee of a trust (controlled by Mr X) that is the ultimate beneficiary…

*Re Hopkins and Anor and FCT – Commissioner disallowed $1m deduction – 46 default beneficiaries should have been assessed [36]

The AAT has ruled that amended assessments issued to the father and son beneficiaries of a family trust were excessive. The amended assessments increased the distributions to the beneficiaries in the years in question by reference to the denial of deductions of some $1m for payments made to an employee entitlement fund by a fuel…

*Groves v FCT (No 4) – Stay of CGT appeal granted to ABC Learning Centres wife – pending Supreme Court ruling on alleged sale of shares [35]

In a judgment of the Federal Court dated 15 March 2012, the Court has granted a stay of Federal Court proceedings on a CGT issue pending conclusion of related proceedings in the Supreme Court of Qld. The stay was granted until the earlier of resolution of the Supreme Court proceeding or 1 March 2014 or…

*Gashi & Anor v FCT – Husband fails onus to show asset betterment assessments and 75% penalties were excessive but wife’s evidence she was just a house wife was accepted [34]

The Federal Court has made orders concerning income tax assessments and penalties issued to husband and wife taxpayers for the 2000 to 2006 income tax years inclusive. The matter concerned default assessments (including 75% penalty with the 20% uplift for most years) issued by the Commissioner to the taxpayers following an audit in March 2010.…