T a x T e c h n i c a l – M o n t h l y N e w s
– February 2016 Developments –
This is a collection of developments in Australian tax law and practice that occurred in February 2016 and which aims at being of relevance to tax practitioners.[i]
Compiled By
F John Morgan
A member of the Victorian Bar (www.FJMtax.com)
Liability limited by a scheme approved under Professional Standards Legislation
Table of Contents
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ACTS, BILLS AND ANNOUNCEMES
Acts, Bills & Draft Legislation
Tax Laws Amendment (Small Business Restructure Rollover) Bill 2016 – any entity type to any entity type, any active asset and income tax neutral
Tax Laws Amendment (Implementation of the Common Reporting Standard) Bill 2015 – update on passage to law
Tax and Superannuation Laws Amendment (2016 Measures No 1) Bill 2016 introduced – GST on imported digital products and cross-border transactions
Tax Laws Amendment (Norfolk Island CGT Exemption) Bill 2016 – CGT exemption now for all assets acquired before becoming part of Australia (except pre-24.10.15 mainland assets already taxable)
PAYG withholding varied to ‘nil’ for various payments to religious practitioners – legislative instrument gazetted
Tax and Superannuation Laws Amendment (2015 Measures No. 6) Bill 2015 – passes Senate – CGT changes on earn outs and 10% non-final CGT withholding from non-resident vendors sale proceeds
Tax Laws Amendment (Small Business Restructure Roll-over) Bill 2016 – now law – sub-$2m turnover businesses can now roll from any structure to any structure with no tax consequences
Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Bill 2015 – passed – false dealing with accounting documents now an offence
Announcements
NFF lobbies against ‘backpackers’ tax – un-legislated 2015 Budget measure imposing minimum 32.5% tax through denying ‘resident’ status
Update on Multi-National Enterprise tax avoidance measures – ‘permanent establishment’ avoidance; thin capitalisation; OECD BEPS measures; and new ‘tax taskforce’
Latest OECD BEPS transfer pricing recommendations – Treasury released a consultation paper on adopting these recommendations in Australia
R&D tax incentive review as part of the ‘Innovation statement’ – issues paper released
‘Early stage investors’ tax incentives (announced in the ‘Innovation’ statement) – Treasury releases consultation paper
Labor Tax policy includes: halving CGT discount (to 25%) & limiting negative gearing on post 1 July 2017 acquisitions to new housing
Exploration Development Incentive’s first year in operation: 84 Applications; $70m in greenfields expenditure & $21m in credits – Assistant Treasurer’s press release
Foreign investors must now satisfy tax compliance obligations as a condition of FIRB approval: Treasurer
First foreign investment approval subject to tax compliance obligations – Moon Lake’s purchase of the Tasmanian Land Company including the Van Diemen’s Land Company
Water access entitlements – proposed national register of foreign ownership – Treasury consultation
CASES AND APPEALS
High Court
High Court Special Leave Applications – Bywater, ElectNet, and Donoghue
Full Federal Court
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Federal Court
Cable & Wireless Australia & Pacific Holding BV (in liquidatie) v FCT – Dividend WHT was not refunded as paid by mistake – the part of $6.2b Optus share buy-back debited to a ‘buy-back reserve’ was a Div 16K ‘dividend’ because that reserve was not a ‘share capital account’
Administrative Appeals Tribunal (AAT)
Re Ogden and FCT – Large home office and work-related deduction claims significantly reduced – largely used or consumed by family
Re Lau and FCT – Hardship relief denied to taxpayers with substantial assets, failure to report cash income and paying other creditors before the ATO
Re Devi and FCT – Taxpayer was not carrying on share trading business
Re Miley and FCT Devi and FCT – CGT: MNAV test – shares sold arm’s length but market value less because it was not a controlling interest
Re Jarvis v FCT – interest deductions denied: confused evidence regarding who paid the interest and who carried not he business
Other Courts & Tribunals
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Appeals
Normandy Finance Pty Ltd v FCT – Commissioner appeals against decision that receipts from overseas company were genuine loans not income
Thomas v FCT – Taxpayer appeals decision that franking credits and their respective dividends cannot be separated (for tax purposes at least)
Re Sandbach and FCT – taxpayer appeals decision that the taxpayer could not use “threatened” losses
COMMISSIONER’S PUBLICATIONS & NEWS
Decision Impact statements
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Rulings
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Determinations
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Law Companion Guides
LCG 2016/D1 – GST: how to apply the new test for carrying on an ‘enterprise’ in Australia – to be introduced by the 2016 Measures No. 1 Bill
Class Rulings & Product Rulings
CR 2016/7 & 8 – tax treatment of fishing licence compensation and an early retirement scheme
CR 2016/9 – Qantas employee share schemes – return of capital
ATO Interpretative Decisions
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Practice Statements
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Tax Alerts
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Interpretation of statutes – guidance from Courts (TCN)
ATO’s “interpretation NOW!” series on Courts’ approach to interpretation – previously internal but made public in response to public interest
interpretation NOW! – Episode 9: ‘legislative scheme’; judgement words; delegated legislation
Other ATO news or statements
ATO’s ‘effective taxes borne’ tool completes trial and will help analyse tax performance of MNEs
Disputes with the ATO – Commissioner’s ‘service commitment’ – how they will review and attempt to resolve disputes
‘Life-style’ assets insurance – ATO data matching from insurance companies and others
Large multinationals must pay “fair share of tax”, says Commissioner: no more ‘operate here and bill overseas’; 6 added to highest risk quadrant; MNE unable to give reports to auditors? (don’t game the system)
Action against ‘corporate tax avoidance’ – ATO will focus on MN anti-avoidance; profit shifting; e-commerce; thin capital manipulation; related party financing & offshore hubs
Commissioner addresses tax practitioners’ concerns in Parliamentary Committee, including: accuracy of pre-filled data, better insolvency data for earlier collection, use of others’ ABN to avoid paying tax
General purpose financial statements – significant global entities must lodge with ATO if not lodged with ASIC: ATO will consult on procedures
Capital works (Div 43) deductions – proposed new ruling on ‘alteration, extension or improvement’ and its interaction with other deduction provisions
GST DEVELOPMENTS
Legislation & Announcements (GST)
Tax and Superannuation Laws Amendment (2016 Measures No 1) Bill 2016 introduced – GST on imported digital products and cross-border transactions
Cases (GST)
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Rulings, Announcements, Etc (GST)
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SUPERANNUATION DEVELOPMENTS
Legislation, Announcements etc. (Super)
Choice of superannuation fund for those under industrial agreements without choice provisions – Government expects legislation to be introduced soon
Cases (Super)
Re Brady and FCT – Excess super contributions could not be reallocated – breach of 10% rule prohibiting employees deducting their own contributions not “special circumstances”
Re Payne v FCT – ‘superannuation guarantee charge’: direct payments to employees not superannuation contributions for SGC purposes
Rulings & Other things (Super)
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AUSTRALIAN CHARITIES & NOT-FOR-PROFITS (ACNC) SECTOR
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BOARD OF TAXATION
Ms Karen Payne appointed inaugural CEO of the Taxation Board
EXTERNAL SUPERVISORS – IGT; OMBUDSMAN, JCPAA & ANAO
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TAX PRACTITIONERS BOARD & LEGISLATION
Tax Practitioners Board v Lamede Group Pty Ltd – company fined $77,000 and director fined $4,000 for advertising and providing tax agent services whilst not registered
DNV Accountants & Business Advisers v Tax Practitioners Board – cancellation of registration stayed the agent alleged it had instructions to amend information on the ATO portal
STATE TAXES
Legislation & Announcements (State)
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Cases (State)
NSW Land Tax – Codlea Pty Ltd v Chief Comr of State Revenue – bee-keeping did not pass the test for ‘primary production’ exemption
NSW stamp duty: Kamareddin v Comr of State Revenue – transfer exemption for break down of marriage available after divorce despite no Family Law Agreement and remarrying
Vic land tax: Colosseum Pty Ltd v Comr of State Revenue – 107 acres of land in greater Melbourne not ‘primarily’ used primary production because ‘landfill’ outweighed cropping and grazing business
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; ‘TTI Vine’: The Tax Institute’s Tax Vine.
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