T a x T e c h n i c a l – M o n t h l y N e w s
– April 2017 Developments –
This is a collection of developments in Australian tax law and practice that occurred in April 2017
which aims to be relevant to tax practitioners.[i]
Compiled By
F John Morgan
A member of the Victorian Bar (www.FJMtax.com)
Table of Contents
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COMPILING NOW
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ACTS, BILLS AND ANNOUNCEMENTS
Acts, Bills & Draft Legislation
Treasury Laws Amendment (2017 Enterprise Incentives (No 1) Bill 2017 introduced – adding a ‘similar’ business test for carry forward of tax losses and to allow self-assessed ‘effective life’ depreciation of intangible assets
Diverted Profits Tax Bills receive Royal Assent and become Australian Act No. 27 – 40% tax on diverted profits; 30% franking; pay tax to object; 12 months to supply documents in defense; limited rights of appeal
Treasury Laws Amendment (2016 Measures No 1) Bill 2016 – amendments to Corporations Act 2001 to ensure that ‘employee share scheme’ documents for ‘start ups’ are not made public
Treasury Laws Amendment (2017 Measures No 1) Bill 2017 – allowing ‘Innovation tax concessions’ to flow through an interposed trust and facilitating ASIC disclosure of information to the ATO
Foreign resident capital gains withholding: legislative instrument reduces withholding to nil for tax exempt vendors
CRP 2017/D1 – Commissioner’s remedial power – amending the Foreign Resident CGT withholding regime so vendors get the benefit of withholding credits in the year the CGT is payable – for sales that straddle year end
Treasury Laws Amendment (2017 Measures No. 2) Bill 2017 – exposure draft Super reforms: TRIS rules; CGT relief; pension cap etc
Super reforms: capped defined benefit income streams to be expanded – draft regs released
Announcements
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BASE EROSION & PROFIT SHIFTING (BEPS)
Country-by-Country reporting: ATO releases further detail on the ‘local file / master file’ detail and design
UN updates transfer pricing manual, including: additional chapters on services, intangibles; taking account of the OECD/G20 BEPS project; revised guidance on comparability analysis; revised guidance on documentation
CASES AND APPEALS
High Court
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Full Federal Court
Thomas & Anor v FCT – franked dividends and the franking credits/off-sets distributed separately disproportionately between beneficiaries – not how tax law works but bound by QSC’s declaration on effect of distributions
Federal Court
Binqld Finances Pty Ltd (In Liq) v Tamarama Fresh Juices Australia Pty Limited; In the Matter of Binqld Finances Pty Ltd (In Liq) – FCT required to produce documents to Binetter interests – secrecy exception applied
DCT v Club Culture Pty Ltd – Company fails to obtain review of winding-up order over $124 million tax debt from the Commissioner denying R&D off-sets and imposing huge shortfall penalties and GIC
Zappia v FCT – Taxpayer’s default assessments on unexplained $2 million receipt upheld – the taxpayer ‘did not even come close’ to discharging her onus of establishing what the correct taxable income should be
Administrative Appeals Tribunal (AAT)
Re Banks and FCT – Truck driver loses claim for work-related travel expenses above the maximum reasonable amount that can be claimed without formal substantiation per TD 2010/19 and TD 2011/17
Other Courts & Tribunals
Peter Sleiman Investments Pty Ltd as trustee for the Sleiman Family Trust v DCT – Winding up order for large tax debts confirmed, but stay continued
Ralston v Jurisich – Solicitors failed to advise client to get tax advice regarding a $1.3m share buy-back, which was deemed a dividend, when a voluntary liquidation would have been tax free – liable $608k for the tax
Appeals
Sandini Pty Ltd v FCT – Commissioner appeals from decision holding that a CGT rollover, on break-down in marriage, doesn’t have to be to the former spouse (though there’s a separate rollover from a related entity to a spouse)
COMMISSIONER’S PUBLICATIONS & NEWS
Decision Impact statements
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Rulings
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Determinations
TD 2017/10 – ‘Incidental costs’ can be included in the ‘cost base’ of an asset even though they are incurred after the relevant CGT event – they can still ‘relate to’ the CGT event under s110-35(1)(b)
Law Companion Guides
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Class Rulings & Product Rulings
CR 2017/26-28 – Income tax: scrip-for-scrip roll-over; variation of class units rights; early retirement scheme
PR 2017/3 – Interest linked to CPI remains non-deductible if used to fund the purchase of a home loan (which is obvious) but changes in total rate of interest on refinancing is not assessable or deductible
ATO Interpretative Decisions
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Practice Statements
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Practical Compliance Guides
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Tax Alerts
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Other ATO news or statements
Retrospective franking measure announced in last years MYEFO – ATO reminds taxpayers that distributions funded by capital raisings, outside the normal dividend cycle, from 19.12.16 can’t be franked
ATO 2014/15 Taxation Statistics released – highest earning occupations & postcodes; highest donations; breakdowns by taxpayer type and tax type; compliance costs and industry benchmarks
GST DEVELOPMENTS
Legislation & Announcements (GST)
GST refunds – IGT to review ATO performance after the Multi-flex case prompted the change in the law (s8AAZLGA) to allow refunds to be held back for the time it takes to investigate
Supplies of ‘child-care’ are GST-free, despite not being approved under family assistance legislation – by legislative determination made by the Minister (under s38–150)
GST Legislative Instruments registered varying Attribution Rules; tax invoice requirements; recipient created tax invoices and cash basis determination
OECD releases its ‘The International VAT/GST Guidelines’ – setting a internationally agreed standards and recommended approaches to avoid growing risks of double taxation and unintended non-taxation
Cases (GST)
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Rulings, Etc. (GST)
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SUPERANNUATION DEVELOPMENTS
Legislation, Announcements etc. (Super)
Treasury Laws Amendment (2017 Measures No. 2) Bill 2017 – exposure draft Super reforms: TRIS rules; CGT relief; pension cap etc.
Super reforms: capped defined benefit income streams to be expanded – draft regs released
Transfers from default funds to ‘MySuper’ funds by 1 July 2017 – draft legislation to extend asset rollover relief and loss transfers to transfers within the same fund
Cases (Super)
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Rulings & Other things (Super)
SGD 2017/1 ATO rules that SGC is payable on ‘advances’ paid to former employees of a company in liquidation, under the Fair Entitlements Guarantee Act but it is only the employer (not the liquidator) who is liable
AUSTRALIAN CHARITIES & NOT-FOR-PROFITS (ACNC) SECTOR
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BOARD OF TAXATION
CEO update from latest Board of Taxation meeting – voluntary tax transparency disclosure has 38 reporting and a total of 76 signed up; 2017 work program includes the ‘black economy project and the ‘sharing economy’
EXTERNAL SUPERVISORS – IGT, JCPAA & ANAO etc.
GST refunds – IGT to review ATO performance after the Multi-flex case prompted the change in the law (s8AAZLGA) to allow refunds to be held back for the time it takes to investigate
TAX PRACTITIONERS BOARD & LEGISLATION
Tax Practioners Board – Advice on “who needs to register as a tax (financial) adviser?”
STATE TAXES
Legislation & Announcements (State)
Tas: Taxation and Related Legislation (Miscellaneous Amendments) Bill 2017 – awaits Assent – facilitates info to ATO; harmonized motor vehicle allowance for payroll tax; abolish duty on instruments that don’t affect land, etc.
Cases (State)
NSW: payroll tax, land tax, duty – Omnibus Bill awaits Assent – duty exemption for transfer to SMSF nominee (limited recourse financing); to new trustee and to SMSF member (primary production land)
Rulings & Other (State)
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OTHER DEVELOPMENTS
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[i] Sources – abbreviations: ‘ATOlpr’: ATO Legal Professions Relationships emails; ‘IT’: Inteliconnect Tracker (CCH); ‘LCA’: Law Council of Australia; ‘LTN’: Latest Tax News (Thomson Reuters); ‘Sievers’: Chris Sievers’ GST post (www. http://chrissievers.com); ‘TBA’: Tax Bar Association Newsletter; TX: Tax Week (Thomson Reuters); ‘Vine’: The Tax Institute’s Tax Vine.
