Tax Month – February 2014

M o r g a n’ s   T a x   M o n t h

– February 2014 Developments –

This is a collection of developments in Australian tax law and practice that occurred in February 2014 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

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ACTS, BILLS AND ANNOUNCEMENTS

Acts & Bills

*Tax and Superannuation Laws Amendment (2014 Measures No 1) Bill 2014 introduced – medical expense offset phase out; super penalties; more DGRs [1]

Farm Management Deposits scheme amendments: draft legislation released [2]

Senate hearing on R&D Bill – transcript of hearing and submissions released [3]

Tax-free bonus payments for long-term unemployed staying in work: Bill introduced [4]

 

Announcements

*Australia/Korea Free Trade Agreement: text released ahead of signature [5]

*Third party reporting regime and compliance: Treasury discussion paper [6]

*OECD releases new single global standard for automatic exchange of tax information – some new domestic law will be necessary [7]

G20 progress on global tax plan: automatic information exchange will start by the end of 2015; Anti-BEPS measures will progress [8]

*Australia and US sign FATCA agreement in substance [9]

*Cost of financial advice should be tax deductible: Institute of Public Accountants [10]

 

 

CASES AND APPEALS

High Court

*Milne v The Queen – Wickenby case: taxpayer wins appeal against conviction for money laundering (but dishonest gain offence remains) [11]

*SCCASP Holdings as trustee for the H&R Super Fund v FCT – High Court refused taxpayers leave to appeal decision that capital gain was ‘special income’ [12]

*FCT v Fabig – High Court refused taxpayer leave to appeal decision of Full Federal Court that CGT ‘scrip for scrip’ relief was not available to her [13]

 

Full Federal Court

 

Federal Court

*FCT v Barossa Vines Ltd – ‘Promoter Penalties’ imposed for MIS “materially different” from product ruling [14]

*Task Technology Pty Ltd v FCT – Software licensing fees were royalties [15]

*Nelson v FCT – Court confirms no business of primary production being carried on – activities preparatory [16]

*Blank v FCT – Amount received for termination of right to participate in profit plan assessable as income [17]

*Australian Building Systems Pty Ltd v FCT – Liquidators not subject to retention and payment obligations from property proceeds [18]

Haritos v FCT – Appeal from $20m default assessment – lack of procedural fairness grounds “incompetent” (really seeking further merits review) [19]

 

Federal Circuit Court

 

Administrative Appeals Tribunal (AAT)

 

Other Courts & Tribunals.

Gray v FCT – No fine or conviction recorded for non-lodgment of returns [20]

 

Appeals

*Palermo v Palermo [No 2] – the losing brother appeals decision that businesses were not carried on in partnership [21]

 

 

COMMISSIONER’S PUBLICATIONS

Decision Impact statements

*Parliamentary Trustee of the Parliamentary Contributory Superannuation Fund v FCT – superannuation contributions surcharge tax is constitutionally valid for State MPs [22]

 

Rulings

 

Determinations

*TD 2014/1 – Dividend access share arrangement a likely Pt IVA scheme [23]

 

Class Rulings & Product Rulings

CR 2014/15 – Mobile phone receipt for donations to Vision Australia Ltd [244]

CR 2014/16-21 – Incentive plan; early retirement schemes; FITO; payment agreement; training grant [25]

CR 2014/22-23 – ANZ Capital notes; WA Government support scheme [26]

PR 2014/2-3 – Portion of Annuity of ‘deductible amount’ assessable; Sandalwood Project – Commissioner will allow ‘non-commercial losses’ [27]

 

ATO Interpretive Decisions (ATOIDs)

CGT: discharge of debt and changed method of accounting: ATO ID [28]

 

Practice Statements

PS LA 2014/1 – Penalties for failure to comply with Ancillary Fund Guidelines [29]

 

Tax Alerts

Other Commissioner news or statements

ATO encourages tax agents lodging by paper to lodge electronically [30]

 

 

GST DEVELOPMENTS

Legislation & Announcements (GST)

*Refunding excess GST – changes from previous lapsed Bill: draft legislation released (new Division 142) [31]

 

Cases (GST)

Re Cartesian Capital Pty Ltd and FCT – penalty for claiming input tax credits without tax invoices – mostly affirmed [32]

*Re Swanbat Pty Ltd and FCT – Commissioner discontinues his appeal the decision setting aside his assessment under s105-55 of the TAA1 [33]

 

Rulings & Other things (GST)

*GSTD 2014/2 – GST: consideration paid for the call option is not included in the cost of land under the margin scheme provision in s75-10(2) [34]

*Interment fees in Victorian cemeteries ruled GST-free [35]

*MT 2010/1 Addendum to Ruling GST refund restrictions – for 2012 legislation introducing ‘self-assessment’ provisions [36]

 

 

SUPERANNUATION DEVELOPMENTS

Legislation, Announcements etc. (Super)

Tax and Superannuation Laws Amendment (2014 Measures No 1) Bill 2014 introduced – penalties for early release promoters; SMSF trustee directions and penalties [37]

Superannuation Div 293 tax and defined benefit contributions: Regs amended [38]

*Superannuation rates and thresholds increased for 2014-15 [39]

Actuaries’ submission that they ought to be exempt from regulation under the Tax Agent Services Act in relation to certain superannuation related services [40]

 

Cases (Super)

Liwszyc v FCT – Excess super contributions tax: late BPay not “special circumstances” [41]

 

Rulings & Other things (Super)

ASFA warns that legislation mandating the transfer of larger (inactive) balances to the Tax Office may leave members without life insurance [42]

ASFA submissions: SMSF borrowings; s 290-170 deduction notice; fund expenses [43]

SMSF auditor annual statements – first ones were issued on 1 February 2014 [44]

SMSF investment and growth trends from younger generations: SPAA study [45]

Penalty for failing SMSF residency test too severe, says leading practitioner [46]

Members travelling overseas can’t contribute to their SMSFs under current legislation: Assistant Treasurer asked whether he’ll review that at SPAA Q&A [47]

SMSF borrowing arrangements: SPAA proposes best practice guide [48]

SMSF trustees should rectify contraventions as soon as possible, says ATO [49]

SMSF emerging issues; auditors; support for SMSF sector: ATO speech at SPAA Conference [50]

ASIC says minimum account balances will not be prescribed for financial advice in relation to establishing a SMSF [51]

ASIC focus areas for 2014 include – SMSF one-stop shops and misleading advertising [52]

Tax Office SMSF News: contributions reporting; pensions; etc [53]

 

CARBON TAX & EMISSIONS REDUCTION FUND

 

MINERALS & PETROLEUM RENT RESOURCE RENT TAX

 

AUSTRALIAN CHARITIES & NOT-FOR-PROFITS (ACNC) SECTOR

ACNC will accept financial reports submitted to State and Territory governments [54]

 

 

BOARD OF TAXATION

 

 

EXTERNAL SUPERVISORS – IGoT; OMBUDSMAN, JCPAA & ANAO

IGT reports released on refund delays, ATO data matching, and compliance risk assessments [55]

Tax Inspector-General calls for submissions for new work program [56]

Australian National Audit Office report finds improvements needed in ATO complaints handling processes [57]

 

 

TAX PRACTITIONERS BOARD & LEGISLATION

FPA prepares financial planners for Tax Agent Services Act compliance [58]

Tax practitioner PI insurance will be their focus this year: Tax Practitioners Board Chair [59]

 

 

STATE TAXES

Legislation & Announcements (State)

Vic: State Taxation Legislation Amendment Bill introduced: congestion levy, gaming arrangements, changes to Fire Services Levy [60]

 

Cases (State)

NSW stamp duty: Bondi Beachside Pty Ltd & Ors v Chief Comr of State Revenue – taxpayers win appeal against additional mortgage duty assessment [61]

NSW land tax: Haddad v Chief Comr of State Revenue – principal place of residence exemption – taxpayer loses appeal [62]

NSW land tax: Frank Zakis Pty Ltd atf Frank Zakis Family Trust v Chief Comr for State Revenue – trustee was “owner” on taxing date [63]

 

Rulings & Other (State)

 

OTHER DEVELOPMENTS

The Reserve Bank Board decided to leave the cash rate unchanged at 2.5% [64]

Time to assess Age Pension eligibility – Financial Services Commission [65]

Financial Planning Association says proposed FoFA changes to safe harbor requirements for duty to act in best interests of investors can be trimmed without harm [66]

Financial Planning Association (FPA) welcomes FoFA changes but says they could be improved [67]

BCA calls for comprehensive tax reform [68]

 

 

 

THE END
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