TD 2016/18 – Redeemed South Australian workers compensation payments are assessable as a substitute for income

Tax Month - November 2016

The ATO on Wed 23.11.2016, released Taxation Determination TD 2016/18, which states that a redemption payment as outlined is ordinary income of the worker and is assessable under s 6-5 of the ITAA 1997 in the income year which it is received. It was previously issued as Draft Taxation Determination TD 2016/D1 and is largely the same.…

Financial Advisers – Bill introduced to set professional standards for the industry – Amending the Corporations Act 2001

Tax Month - November 2016

The Corporations Amendment (Professional Standards of Financial Advisers) Bill 2016 was introduced on Wed 23.11.2016 in the House of Reps. It proposes to amend the Corporations Act 2001 to: set new education and training standards (education standards) in proposed new Div 8A of Pt 7.6 of the Corporations Act that must be met by individuals who…

Re Gupta and FCT – it was not enough that arrears workers compensation paid were paid ‘for the injury’ – rather it was paid for loss of income (rather than loss of income earning capacity)

Tax Month - November 2016

The AAT has confirmed that a taxpayer who received  a lump sum payment of arrears of workers’ compensation was assessable on the amount as ordinary assessable income under s 6-5 of the ITAA 1997. The payment was made in respect of knee injury the taxpayer suffered at work and which later resulted in him having to…

BCI Finances Pty Limited (in liq) v Binetter (No 4) – Wickenby: Major victory for Commissioner: recovery of over $120m via liquidator of 4 Binetter family companies

Tax Month - November 2016

In a long-running Wickenby related matter involving offshore tax evasion, the liquidator of 4 companies (the applicants) – acting on behalf of the Commissioner as the only creditor of the companies – has been successful in the Federal Court in arguing that certain directors of the companies (the respondents) breached their fiduciary duty in engaging…

Re McKinnon Holdings (NSW) Pty Ltd and FCT – Claim for input tax credits denied – no payment made for supply and no assumption of finance liabilities by the purchaser/taxpayer (after agreement, nothing done)

Tax Month - November 2016

The AAT has confirmed that a taxpayer was not entitled to claim input tax credits of over $90,000 in relation to “acquisitions” from an associated entity. An associated entity of the taxpayer owned assets, most of which were subject to charges held by third party financiers. The taxpayer argued that under an agreement entered into with…

FCT v Jayasinghe – Commissioner grated leave to appeal decision that the taxpayer’s income from the UN was exempt from tax as the ‘holder of an office’ under the Privileges and Immunities Act

Tax Month - November 2016

The Commissioner has been granted special leave to appeal to the High Court against the Full Federal Court decision in FCT v Jayasinghe [2016] FCAFC 79. The Full Federal Court had by majority dismissed the Commissioner’s appeal from an AAT decision which had found that a taxpayer was exempt from his earnings as the “holder of…

MNWA Pty Ltd v DCT – Full Court dismisses appeal to have statutory demands set aside despite allegations of a global deal and written agreements providing security

Tax Month - November 2016

In a majority decision, the Full Federal Court dismissed the appeal of 2 corporate taxpayers to have statutory demands set aside. The taxpayers carried on property development activities. One of the directors of the companies claimed he reached a “global deal” with the ATO to bring to an end debt recovery action against the companies…

TA 2016/12 – Trusts: contrived s97(1)(a) ‘proportionate approach’ avoidance – distributable ‘trust law’ net income limited to exclude the economic substance in what would otherwise be the beneficiary’s taxable ‘net income’

Tax Month - November 2016

On Thur 17.11.2016, the ATO released Taxpayer Alert TA 2016/12, which deals with trust income reduction arrangements the ATO is reviewing. This Alert cautions against arrangements that minimise tax by creating artificial differences between the taxable net income and distributable income of closely held trusts. The ATO says the arrangements appear designed to exploit the…