T a x T e c h n i c a l – M o n t h l y N e w s
– August 2016 Developments –
This is a collection of developments in Australian tax law and practice that occurred in August 2016
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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ACTS, BILLS AND ANNOUNCEMENTS
Acts, Bills & Draft Legislation
Budget Savings (Omnibus) Bill – introduced: many savings including some tax related e.g. reducing R&D off-sets by 1.5 percentage points
Announcements
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BASE EROSION & PROFIT SHIFTING (BEPS)
OECD discussion draft on BEPS/’thin cap’ measures for interest in the banking and insurance sectors (carved out of ‘fixed ratio’ of its tax-EBITA general recommendation)
Understanding Country-by-Country reporting requirements – ATO announcement about its ‘Local File – High Level Design’ document
‘Apple’ received 13b Euro in tax benefits from Ireland, which the EU has declared illegal and required Ireland to recover
CASES AND APPEALS
High Court
Taxpayer appeal from FFC decision in Blank v FCT that $160m in profit participation agreement, on termination of his employment with Glencore was income – High Court transcript released
Taxpayer appeals from Bywater Investments Ltd & Ors v FCT (previously Hua Wang Bank Berhad v FCT) on residency and trading stock – High Court transcripts of hearing released
Full Federal Court
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Federal Court
FCT v Bosanac (No 2) – Grant of stay for $9.3m debt recovery – “extreme personal hardship” if bankrupted and (in practice) was precluded from pursing his complex appeal on the objection decision
Oswal v FCT (No 6) – Taxpayers succeed in application for mediation of tax dispute, with the same mediator in a commercial dispute, as one might affect the other (despite mediation having failed and judgement being reserved in the tax case)
Administrative Appeals Tribunal (AAT)
Re T T Lam and HT Ngo – Administrative penalty for failing to remit PAYG withheld was remitted from 100% to 75% then 50% but appeal from the 50% failed
Re Ogden and FCT – AAT imposes penalties reflecting Commissioner claim of recklessness and intentional disregard
Re Carr and FCT – the Commissioner issued default assessments for 2003 to 2006, totalling $2m, based on a loan from a bank and other unexplained deposits – the Taxpayer failed to prove that these assessments were excessive (only ‘meagre’ evidence)
Other Courts & Tribunals
Woods v Australian Taxation Office & Ors – the taxpayer alleged the ATO breached a contract and was owed money, net of her tax, and alleged that her tax had been paid by promissory notes, but her claim was struck out
FCT v Croft & Anor – Guarantee for debts of taxpayer company binding, under s3A general power of administration, despite deficient delegation (later ratified) and FCT allegedly breaching express term not to recover company’s debt, by garnishee, which interfered with company’s ability to meet its instalments, triggering the guarantors’ liability
Appeals
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COMMISSIONER’S PUBLICATIONS & NEWS
Decision Impact statements
Rigoli v Commissioner of Taxation – 2nd Full Federal Court held that the taxpayer could not discharge his onus of proof by relying on the Commissioner’s accounting report tendered as the basis for the quantum of the default assessment (after no records and no returns)
Rulings
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Determinations
TD 2016/D1 – lump sum in place of periodic payments for work place injury ruled assessable as ‘ordinary income’ (despite compensation for loss of income earning capacity being ‘capital’)
TD 2016/D2 – ATO proposes to rule that a foreign resident cannot make a s830-10(2)(b) election to be come a ‘foreign hybrid’
TD 2016/D3 – Employee Share Schemes – What sort of rights (indeterminate rights) ‘become a right to acquire a beneficial interest in shares’ and thus deemed to be ESS interest all along under s83A-340
Law Companion Guides
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Class Rulings & Product Rulings
CR 2016/56 – Ctrack Pty Ltd telematics system for car log book records and for odometer records complies with relevant FBT requirements
CR 2016/57 – Pacific Brands Limited – US takeover by way of Scheme of Arrangement and payment of Special Dividend
CR 2016/59 – rollover effect of Royal Dutch Shell’s ‘takeover’ of the BG Group on Australian employees who swapped their Employee Share Scheme interests in BG shares for ESS interests in Shell shares
ATO Interpretative Decisions
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Practice Statements
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Practical Compliance Guides
Offshore Marketing Hubs – draft Practical Compliance Guideline issued – 5 stage ‘traffic light’ system of risk assessment for reporting and compliance attention – starting with ‘green’ for no more than 100% markups
Tax Alerts
TA 2016/7 – Consolidated company groups with an foreign ‘permanent establishment’ over-stating the s23AH income that is not assessable or over-claiming deductions incurred to acquire non-assessable income
TA 2016/8 – GST concerns about ‘MAAL’ defeating restructures that involve ‘swapping’ roles so that the Australian support company ‘distributes’ (as principal) for the foreign supplier
TA 2016/9 – Commissioner alerts taxpayers that, in his view, ‘debt interests’ treated as ‘equity’ for accounting purposes, can be valued as $nil for ‘thin capitalisation’ purposes
Other ATO news or statements
Voluntary Tax Transparency Code (recommended by the BofT) – The ATO will receive information volunteered and provide access as the responsible entity for its administration
Provision of general purpose financial statements by significant global entities ($1b plus global turnover) who don’t already lodge this with ASIC – s3CA of the TAA – ATO consultation process
GST DEVELOPMENTS
Legislation & Announcements (GST)
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Cases (GST)
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Rulings, Announcements, Etc (GST)
NSW stamp duty: Rulings – Commissioner insists that ‘market value’ must be GST inclusive; how the aggregation of dutiable transactions provision will be applied
SUPERANNUATION DEVELOPMENTS
Legislation, Announcements etc. (Super)
$500k lifetime limit on post tax super contributions – Treasurer indicates no lift in amount but some exemptions confirmed
Cases (Super)
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Rulings & Other things (Super)
Efficiency and competitiveness of Australia’s Superannuation System – Productivity Commission releases its proposed ‘framework’ for assessing this
Retirees choosing income streams over super lump sums – ABS details
SMSF compliance action and focus areas: ATO speech at Tax Institute’s National Superannuation Conference in Melbourne
AUSTRALIAN CHARITIES & NOT-FOR-PROFITS (ACNC) SECTOR
ACNC announces compliance retrospective revocations of 2 organisations charity status with consequent loss of tax concessions – ‘Ethan Affordable Housing Ltd’ and ‘Kids Cancer Relief NSW Inc.’
ACNC revokes the registration of 503 ‘double defaulters’ as charities – denying them access to Cwth tax concessions
BOARD OF TAXATION
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EXTERNAL SUPERVISORS – IGT, JCPAA & ANAO etc.
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TAX PRACTITIONERS BOARD & LEGISLATION
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STATE TAXES
Legislation & Announcements (State)
Tas Duties Act: amendments introduced to replace ‘land-rich’ (60% of value) with ‘Landholder’ provisions ($500k land & 50% change for ‘private landholders’ and 90% for ‘public’) and legislated exemption for ‘Corporate Reconstruction and Consolidations’
Tas Taxation: Miscellaneous Amendments Bill introduced – changes include: retrospective duty refund on matrimonial breakdown; land tax free thresholds for clubs; FHOG increase to $20k; 5 year amendment and refund periods and offset refunds and tax
Cases (State)
NSW stamp duty: Oak Brick Investment Pty Ltd & Anor v Chief Comr of State Revenue – ‘call option’ re-negotiated with grantor to entitle an new party the option to buy – not an assignment and not dutiable
Vic land tax: Robbins v Comr of State Revenue – principal place of residence exemption refused in the face of unsatisfactory evidence
Vic land tax: Ward v Comr of State Revenue – PPR exemption allowed for “world-traveller whose wife lives in Canada”
Vic motor vehicle registration duty: Mercedes-Benz Australia/Pacific Pty Ltd v Comr of State Revenue – no exemption for “courtesy” cars also said to be a ‘demonstrator vehicle’
Vic land tax: Frontlink Pty Ltd v Comr of State Revenue – primary production exemption mainly refused to a developer (lack of evidence a big issue)
Vic land rich provisions: Master Solutions Australia Pty Ltd v Comr of State Revenue – duty chargeable on acquisition of shares in land rich company
Rulings & Other (State)
NSW stamp duty: Rulings – Commissioner insists that ‘market value’ must be GST inclusive; how the aggregation of dutiable transactions provision will be applied
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.
