T a x T e c h n i c a l – M o n t h l y N e w s
– August 2017 Developments –
This is a collection of developments in Australian tax law and practice that occurred in August 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
Taxation Administration (Remedial Power – Foreign Resident Capital Gains Withholding) Determination 2017 – 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 Enterprise Incentives No 2) Bill 2017 – Senate Committee recommends passing Bill giving directors an Insolvency safe harbour for restructuring outside formal administration and outlawing ‘ipso facto’ clauses
Labor’s bill to halve the turnover threshold for public disclosure of private company tax information – it would reduce the $200m threshold to $100m (matching public companies)
Medicare Levy bills – to increase rate from 2.0% to 2.5% as announced in the May 2017 Federal Budget with consequential rate adjustments to other taxes (e.g. FBT)
Announcements
Black Economy Taskforce – Minister releases its Interim Report and Consultation Document containing 54 ideas for further feedback prior to final report due October 2017
Treasurer acknowledges New Zealand’s measures to combat cross-border avoidance of local tax and gives figures for tax boosts from its international measures
BASE EROSION & PROFIT SHIFTING (BEPS)
Joint toolkit designed to help developing countries tackle the complexities of taxing offshore indirect transfers of assets – IMF, OECD, UN & World Bank seeking feedback on draft ‘toolkit’
USA signs CbC report exchange Arrangement with Australia – joining 18 others including Belgium, Brazil, Denmark, Guernsey, Ireland, Isle of Man, Netherlands, New Zealand, South Korea, South Africa
Multi-Lateral Instrument (Treaty) – 8 Submissions made and released on the Treasury paper on Australia’s adoption of the OECD BEPS MLI
OECD releases public comments received on draft 2017 Update to OECD Model Tax Convention
BEPS Multilateral Tax Treaty Convention was tabled in Parliament together with a “National Interest Summary” (that provides an excellent summary of the effect and reasons for Australia’s position on this Convention)
Google, Microsoft, Apple, Facebook, the ATO and others report on the MAAL, their ATO audits and their restructuring – attracting public attention at the Senate Committee’s public hearing
Country by Country (CbC) reports – ATO makes a ‘determination’ for exchange of these reports and makes a similar ‘arrangement’ with the USA
CASES AND APPEALS
High Court
FCT v Jayasinghe – High Court finds foreign earnings as an expert ‘project manager’ with the UN were not exempt from income tax as he was not relevantly ‘a person who held an OFFICE in an international organisation’
Chevron withdraws it’s High Court appeal – transfer pricing case and new principles settled in the Commissioner’s favour – finality welcomed by Government
FCT v Normandy Finance and Investments Asia Pty Ltd & Ors – High Court refused taxpayer’s appeal – $4m in payments from a foreign related party were shams not loans
Full Federal Court
FCT v Primary Health Care Limited – taxpayer sought deductions for purchasing practices after Commissioner assessed doctors – FFC upheld late objections for that purpose
Federal Court
Academy Cleaning & Security Pty Ltd v DCT – Contract for the purchase of future property: ’emission units’ of ‘sequestered carbon’ – No deduction for unpaid 85% balance of purchase price after Australia’s emissions trading scheme did not proceed
Juneja & Anor v Tax Practitioners Board – Federal Court upheld termination of the Tax Agent’s registration – Agent’s arguments failed that the AAT had not discharged its function by adopting large amounts of the Board’s closing submissions sometimes without acknowledgement
Lane (Trustee), in the matter of Lee (Bankrupt) v DCT – No priority in bankruptcy proceedings for unpaid part of SGC
DCT v Whiteman – taxpayer denied a stay in proceedings for the collection of $8.5m just because of the risk of bankruptcy inadequately and belatedly deposed
Administrative Appeals Tribunal (AAT)
BFCB and FCT – Release from Tax Debt on grounds of ‘serious hardship’ rejected because expenses exceeded income and release from debt would not have relieved the hardship
Arnold and FCT – No deduction for purported gifts of AIDS drugs to African charities because of aspects of the scheme which Edmonds J, previously found, made it a ‘tax exploitation scheme’
Other Courts & Tribunals
DCT v Arora – Director penalty notices for $1.9m upheld – it did not matter that the liquidator might pay, that he’d tried to get finance (not ‘reasonable steps’) or illness and marriage breakdown from audit etc (not ‘unreasonable to expect [him] to take part in the management’)
Appeals
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COMMISSIONER’S PUBLICATIONS & NEWS
Decision Impact statements
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Rulings
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Determinations
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Law Companion Guides
Diverted Profits Tax – ATO flags development of a LCG to clarify new concepts; a PSLA on processes leading up to a DPT assessment; safeguards built into the procedure to issue a DPT assessment
Class Rulings & Product Rulings
Class Rulings 2017/47-51 – Retirement Schemes of Illawarra Coal and EnergyAustralia Yallourn and various rollovers in the merger of Touchcorp and Afterplay
PR 2017/9 – OnePath Life – OneCare Policy – Life Cover, Total and Permanent Disability Cover and/or Trauma Cover monthly benefits are not assessable and there is no CGT on payment either
CR 2017/53 – Batlow Fruit Company Pty Ltd: a cooperative demutualised to take an injection of capital from a non-member – old membership interests can be rolled over and the new shares were not a dividend (deemed or otherwise)
CR 2017/54 – Heemskirk: an Australian listed company that produces minerals in Canada acquired by Canadian Company: Northern Silica Corporation – scrip-for-scrip roll-over available
CR 2017/55-59 – Early retirement schemes, employee share schemes, scrip-for-scrip roll-over
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
Transfer of life insurance business of National Mutual to AMP – ATO guidance on tax implications
Remission of tax (administrative) penalties – ATO has updated its updated it’s explanatory material
GST DEVELOPMENTS
Legislation & Announcements (GST)
GST – Collection Models for GST on Low Value Imported Goods – Discussion Paper issued by the Productivity Commission for its reference on this subject, required as a condition of the deferred operation of the new law for vendor (etc.) collection of the GST
GST: SAM 2017/D1 – Replacement Simplified Accounting Method for eligible food retailers that sets a proportion of GST-free and taxable food acquisitions and sales – draft Legislative Instrument released for comment
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 4) Bill 2017 passes all stages – ITAA97 asset rollovers for mandatory transfers to a ‘MySuper’ fund
SPR 2017/D – draft instrument setting out ‘Superannuation Providers Reporting’ (SPR) requirements relating to members’ $1.6m ‘Transfer Balance Cap’
PAYG Withholding Variation for super beneficiaries who don’t quote their TFN (Final: F2017L01280) – rate on non-taxable component (NANE income) is varied to nil% – Commissioner registered instrument replacing 10 year old sunset predecessor
Cases (Super)
Lane (Trustee), in the matter of Lee (Bankrupt) v DCT – No priority in bankruptcy proceedings for unpaid part of SGC
Rulings & Other things (Super)
ASIC disqualifies SMSF auditor for breaches of independence standards for auditing the SMSF of a ‘close family member’ and also for breach of audit evidence standards
PCG 2017/D16 – Super fund asset parcel selection arrangements based on ‘propagation’ arrangements – when it is satisfactory and when it is not
Super fund (and SMSF) ‘transfer balance cap’ reporting of relevant events to the ATO – Position Paper on options for transition period from 1 July 2018 to 30 June 2020
AUSTRALIAN CHARITIES & NOT-FOR-PROFITS (ACNC) SECTOR
AUSTRAC & ACNC’s joint report: ‘Australia’s non-profit organisation sector: money laundering and terrorism financing risk assessment’ – 257,000 NPO’s investigated and ‘medium’ risk identified
BOARD OF TAXATION
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EXTERNAL SUPERVISORS – IGT, JCPAA & ANAO etc.
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TAX PRACTITIONERS BOARD & LEGISLATION
Twenty-seven per cent of ‘tax (financial) adviser’ notifiers did not renew in July – TPB announces in Media Release
TPB invites submissions on draft outsourcing and offshoring guidance for tax practitioners – for compliance with their obligations under the ‘Code of Professional Conduct’
STATE TAXES
Legislation & Announcements (State)
SA: Budget Measures Bill 2017 passes House of Assembly – 0.015% bank levy remains; some payroll tax rate reductions and Fed harmonisation; foreign ownership surcharge; ‘off the plan’ duty concessions extended but include a 5 year clawback and exclude foreign persons
SA ‘Bank Tax’ – Australian Bankers Association threaten SA Government with a High Court challenge to its Constitutional validity
Cases (State)
NSW payroll tax: Chief Comr of State Revenue v Smeaton Grange Holdings Pty Ltd – controlling persons disclaimer of benefits as a beneficiary of 2 discretionary trusts, expressed to have effect from the creation of the trusts, were not effective retrospectively against this third party, to defeat the grouped assessments
NSW payroll tax: Knight Watch Security Services Pty Ltd v Chief Comr of State Revenue – multiple parties liable in ‘chain of on-supply’ of labour – Commissioner’s assessment of taxpayer upheld (closest to the ‘ultimate client’) – it did not have to be the party paying the actual security guard
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.
