M o r g a n’ s   T a x   M o n t h

– December 2013 Developments –

This is a collection of developments in Australian tax law and practice that occurred in December 2013 and which aims at being of relevance to tax lawyers.*

F John Morgan
A member of the Victorian Bar (www.FJMtax.com)

Table of Contents





Acts & Bills

*Commencement of the Charities Act to be delayed from 1 Jan to 1 Sept 2014 – and with it the abolition of the ACNC [1]

Tax Bill removing R&D concessions for companies with a turnover over $20b referred to Senate committee [2]

*Commonwealth Places (Mirror Taxes) Legislation – Modification made by 2013 Notice being registered [3]

*Phase-out of net medical expenses tax offset: draft legislation released [4]

Tax Bonus Repeal Bill introduced [5]



*Unlegislated measures: Govt decides that 16 will go ahead, but 48 will not proceed [6]

*Greenwood Freehills’ Andrew Mills appointed a new Second Commissioner of Taxation to replace Mr Bruce Quigley who resigned on 4.12.13 [7]

Review of Anti-Money Laundering laws announced [8]

*Australia concludes Free Trade Agreement with South Korea [9]

*Thin cap arm’s length debt test: Tax Board releases discussion paper [10]

DGR status for Prince’s Charities Australia [11]

MYEFO: $47bn deficit in 2013-14; tax receipts down by $37bn over forward estimates [12]




High Court

Full Federal Court

Federal Court

*Ultra Thoroughbred Racing Pty Ltd v FCT – Garnishee notice issued in respect of horse racing prize moneys set aside [13]

*Seller & Anor v FCT – Orders in Tax Appeals extend time for delivery of evidence until after the criminal trial or further order, etc. [14]

*Australian Pipeline Limited as Responsible Entity for the Australian Pipeline Trust v FCT – Consolidation: joining entity an associate before joining time – no depreciation deduction for pipeline [15]


Federal Circuit Court

Administrative Appeals Tribunal (AAT)

*Re Desalination Technology Pty Ltd and FCT – R&D: Relevant expenditure incurred so R&D tax offset allowable [16]

*Re Browne and FCT – Irish citizen, here for 365 days, wanted to be a resident for lower tax rates, and during AAT proceedings Commissioner agreed [17]

*Re Guissouma and FCT – Taxpayer was a resident for part of year (like previous year) [18]

*Re Retirement Village Operator and FCT – Retirement village business entitled to deductions for “outgoing resident” payments [19]


Other Courts & Tribunals

*IMO of an application by CJ CGV Co Limited – Korean royalty payment to Hungarian subsidiary ineffective to avoid 15% withholding tax on Korean payer, who got a Korean judgment against Village parent that was registered in Victoria [20]

*Cameron v Jeffress – Tax expert’s report on ‘income v capital’ issues cannot be accepted as evidence in matter concerning construction of a ‘Will’ [21]

*DCT v Moignard – Appeal against summary judgment fails [22]

*Power v DCT – DPN valid despite failure to state under which provision the director’s liability arose as required under s269-25(2)(b) of the TAA1 [23]

*Stirling v Legal Services Commissioner – Barrister wins appeal against his suspension from practice [24]



VN Railway Pty Ltd & Anor v FCT – Taxpayer withdraws appeal [25]

*IOOF Holdings Limited v FCT – Taxpayer appeals from Federal Court decision that it was not entitled to transitional ‘rights to future income’ consolidation treatment [26]

*PTTEP Australasia (Ashmore Cartier) Pty Ltd v FCT – taxpayer appeals Federal Court decision that the Petroleum Rent Resource’s Tax consideration is the contract amount [27]




Decision Impact statements

ATO Decision Impact Statements: Sea Shepherd; VN Railway [28]



*TR 2013/D8 – A deemed permanent establishment does not mean that the taxpayer is automatically carrying on a business through the P/E [29]



TD 2013/D9 – R&D: deductibility of design expenditure [30]

TD 2013/D10 – Franking credits arise in franking account of the head company when a non-member entity makes a distribution to a subsidiary trust member [31]


Class Rulings & Product Rulings

PR 2013/22 – Deductions allowed under Mortgage reduction program [32]

CR 2013/95-96 – Disposal of shares; early retirement scheme [33]

CR 2013/97-98 – Early retirement schemes [34]

CR 2013/99-103 – Return of capital; early retirement schemes; new head company [35]

PR 2013/24 – Guaranteed annuity (Challenger Liquid Lifetime) [36]



ATO Interpretive Decisions (ATOIDs)

Company tax losses and the no detriment rule [37]


Practice Statements

PS LA 2013/4 (GA) – Fuel tax credits and auxiliary equipment [38]


Tax Alerts

Other Commissioner news or statements

*GIC rate is 9.59% pa and SIC rate 5.59% for Jan-Mar 2014 quarter [39]

ATO releases updated list of matters under consultation [40]

ATO needs transformational change and cultural shifts: review [41]

Building and construction industry ‘taxable payments system’ and the annual reporting obligation – ATO following up businesses and their agents [42]

*New ATO data-matching program gazette to collect credit and debit card sales information [43]

ATO updates its compliance focus for 2013-14 [44]




Legislation & Announcements (GST)

Cases (GST)

*Re Australian Style Investments Pty Ltd as Trustee for the Australian Style Investments Unit Trust and FCT – supply of irrevocable proxies not a financial supply [45]

Re VGGL and FCT – GST input tax credits denied re property development business through insufficient information and unrelated litigation [46]

*Re Swanbat Pty Ltd and FCT – GST: recouping refund paid outside the 4-year limit not in the ‘net amount’ so amended assessments set aside as outside s8AAZN [47]

GST: married couple not a partnership, not carrying on an ‘enterprise’ in building a residential property for short-term letting, planting olives and no ITC [49]

*Mattress Innovations Pty Ltd v Suncorp Metway Insurance Limited – policy construction is that Sums Insured be paid out unreduced by Input tax credits [50]


Rulings & Other things (GST)

*Withdraw GST 2013/D2 which would have ruled moveable home estates are not commercial residential premises, accepting they are like caravan parks [51]




Legislation, Announcements etc. (Super)

Div 293 tax: family law superannuation payment not an end benefit – Instrument made [52]

*SMSF’s limited recourse borrowing arrangements can still infringe related trust prohibition at times requiring relief via ATO draft legislative instrument [53]

*Draft legislation released to increase the thresholds for lost/inactive member accounts for transfer to ATO: $2k to $4k on 31.12.15 and to $6k on 31.12.16 [54]

*New Regulation registered to amend ‘cashing restrictions’ to facilitate payment to ATO under its Div 96 or Div 135 ‘release authorities’ [55]


Cases (Super)

*Re Xu and FCT – Early access to SMSF money not a loan or complying with conditions of release, so taxpayer’s assessable on it with 25% penalty [56]

*Albrecht & Ors v FCT – taxpayers appeal in ATO funded test case against decision that the Superannuation Contribution Surcharge applied to WA police [57]


Rulings & Other things (Super)

*TR 2013/D7 – Deductibility of expenses incurred by superannuation entities partly to earn assessable income and partly to earn exempt income [58]

Newly registered SMSF annual return due date reminded that their 2013 Annual Returns are due 28 Feb 2014 unless they held no assets [59]

*ATO statistics highlight SMSF’s are a growing sector [60]




Senate committee recommends carbon tax repeal Bills be passed: Labor and Greens dissent [61]




Senate committee recommends mining tax repeal Bill be passed; Labor dissents [62]




Charities regulator marks first birthday [63]

Commencement of the Charities Act to be delayed from 1 Jan to 1 Sept 2014 – and with it the abolition of the ACNC [64]

Charities Act expands definition of ‘charity’ from 1 Jan 2014 (but that will be delayed until 1 September 2014 by other amendments) [65]




Thin cap arm’s length debt test: Tax Board releases discussion paper [66]

Board of Taxation 2012-13 Annual Report released [67]







TASA change from 30.6.13 that tax and BAS agents may register on a “will be able to maintain” PI insurance that meets the Board’s requirements [68]




Legislation & Announcements (State)

SA: Succession Duties Repeal; Housing Construction Grants: Bills receive Assent [69]


Cases (State)

NSW land tax: Maraya Holdings Pty Ltd & Ors v Chief Comr of State Revenue – primary production exemption – taxpayers lose appeal [70]

Qld land tax: Greendale Developments Pty Ltd v Comr of State Revenue – valuation of land: taxpayer loses appeal [71]

Qld stamp duty: Market Square (Queensland) Pty Ltd v Comr of State Revenue – shortfall in payment of disputed tax and thus no jurisdiction to review assessment [72]

Vic payroll tax: Bank of Queensland Ltd v Comr of State Revenue (Review and Regulation) – bank and franchised branches – grouping decision set aside [73]

Vic land tax: Comr of State Revenue v Oakbee Pty Ltd & Ors – Commissioner wins appeal and vendor of land liable for land tax – purchaser took possession before 31.12.08 but hadn’t paid 15% deposit [74]



Rulings & Other (State)

SA stamp duty: primary production land – ‘ex-gratia’ regime announced for trusts involving more than one beneficiary to allow existing policy to continue [75]

SA stamp duty: proposed amendment to clarify “date of the sale” – Revenue Ruling [76]




Reserve Bank leaves interest rates unchanged at 2.5% [77]

PM flags G20 examination of international tax arrangements [78]

OECD publishes comments on tax treaty treatment of termination payments [79]

*ASIC: advice on complex products needs to improve – tax-driven advice did not highlight risks [80]

*UK to impose CGT on non-residents disposing of UK residential property from 1 April 2015 [81]

Factors affecting Australian tax receipts: Treasury Economic Roundup [82]

Customs and excise on tobacco – Tariff proposals tabled [83]

The development of Northern Australia: Parliamentary committee begins its inquiry [84]

Government announces $100m manufacturing package following Holden’s announced exit from manufacturing in Australia [85]

Government invites 2014-15 Pre-Budget Submissions by 31 January 2014 [86]

*Government announces major FoFA reforms [87]

Financial System Inquiry: Terms of Reference and members announced – submissions from January to March 2014 [88]




NB: I have gathered these articles from various sources for the purposes of study and teaching and I have acknowledged the sources. None of this publication should reproduced in breach of copyright belonging to the acknowledged source. The headings to the articles are often mine (and shouldn’t necessarily be attributed to the publisher).

Source Abbreviations: ‘EDTN’ = Electronic Daily Tax News, published by CCH; ‘LTN’ = Latest Tax News published by Thomsons; and ‘Taxvine’ is the weekly publication by the Tax Institute of Australia; Greenfields = Greenfields Financial Services; TaxBar = Melbourne Tax Bar Association Newsletter at www.vicbar.com.au / Members / Bar Associations / Tax

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