Tax Month – February 2018

T a x  T e c h n i c a l  –  M o n t h l y  N e w s

– February 2018 Developments –

This is a collection of developments in Australian tax law and practice that occurred in February 2018
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

• Treasury Laws Amendment (Enterprise Tax Plan No 2) Bill 2017 passes Lower House – providing remaining 8 years of Government’s reduction in tax rates – down to 25% for all companies
• Treasury Laws Amendment (Enterprise Tax Plan Base Rate Entities) Bill 2017 – 80% passive income test (to retain 30% tax/franking rate) passes Lower House with one Government Amendment
• Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No 2) Bill 2018 – 3 CGT changes – excluding non-residents from ‘main residence’ exemption; avoiding double counting for Div 855 ‘principal asset’ test; additional 5% discount for ‘low cost housing’
• Treasury Laws Amendment (2018 Measures No 2) Bill 2018 – various amendments to the requirements for venture capital tax concessions – Early Stage VCLP and ‘Early Stage Innovation Companies’
• Draft Treasury Laws Amendment (Measures # ??) Bill 2018 – Small Business CGT concession ‘integrity’ measures, on sale of shares or units: ‘see through’ active assets test; new taxpayer requirement; new ‘object entity’ requirement (to carry on business)
• Draft legislation to give legal effect the ‘Multilateral Instrument’ in Australia – Amendment to International Agreements Act to include the MLI like any other bi-lateral agreement
• Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill 2018 – proposing 6 measures: the ‘deductible liabilities measure’; the ‘deferred tax liabilities measure’; the ‘securitised assets measure’; the ‘churning measure’; the ‘TOFA measure’ and the ‘value shifting measure’
• Treasury Laws Amendment (MAAL extension) Bill 2018: draft legislation to catch supplies made by Australian trusts and partnerships which are linked to a ‘foreign entity participants’

Announcements

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BASE EROSION & PROFIT SHIFTING (BEPS)

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CASES AND APPEALS

High Court

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Full Federal Court

• Denmark Community Windfarm Ltd v CofT – Grant to establish wind farms triggers an assessable recoupment as ‘indemnity’ and depreciation under the optional method for ‘small business entities’

Federal Court

• Cassaniti v CofT – employee entitled to credits for PAYG amounts “withheld” from her salary or wages, despite her employers not remitting the withheld amounts to the ATO
• Resource Capital Fund IV LP v CofT – US private equity funds, structured as Caymans limited partnerships, not taxed on profit from sale of shares in Australian Lithium mining and processing company

Administrative Appeals Tribunal (AAT)

• Walsh v CofT – DPO issued against taxpayer set aside after he petitioned for his own bankruptcy (leading to a discharge of the tax debt)
• Coventry v CofT – DFAT employee’s overseas earnings exempt from Australian tax, under s23AG, because diplomatic immunity was not ‘the only’ reason for no Pakistani tax

Other Courts & Tribunals

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Appeals

• CofT v Hacon Pty Ltd & Ors – Commissioner does not have to give private ruling on Part IVA for proposed restructure – Taxpayer seeks leave to appeal to the High Court

COMMISSIONER’S PUBLICATIONS & NEWS

Decision Impact statements

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Rulings

• TR 2018/2 – Record-keeping requirements: electronic records of transactions, elections and the like (revising 2005 ruling)

Determinations

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Law Companion Rulings

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Class Rulings & Product Rulings

• PR 2018/1-3 – HSBC: ‘presently entitled’ share; Macquarie: interest deductibility; Macquarie: Capital protected loans and Div 247 effect on interest deductibility

ATO Interpretative Decisions

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Practice Statements

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Practical Compliance Guides

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Tax Alerts

• Taxpayer Alert TA 2018/1 – to multiply shareholding parcels to multiply franking credits (without being economically exposed on both parcels)

Other ATO news or statements

• ATO’s Statement on Corporate Tax Compliance – it assures is under control because of strengthened legislation (BEPS initiatives) and enhanced compliance efforts and focus
• Edited versions of ‘private binding rulings’ now available on the ATO Legal database – to make them easier to find and search

GST DEVELOPMENTS

Legislation & Announcements (GST)

• Treasury Laws Amendment (2018 Measures No 1) Bill 2018 introduced: purchaser GST withholding on residential property commercing 1 July 2018 – including notices by all vendors (whether ‘new’ or not and for vacant residential land)

Cases (GST)

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Rulings, Etc. (GST)

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SUPERANNUATION DEVELOPMENTS

Legislation, Announcements etc. (Super)

• Treasury Laws Amendment (2018 Measures No 1) Bill 2018 – introduced – super fund merger relief to 30 June 2020; ATO to approve ‘early releases’; extend cost recovery by Super Levy; payments to members with a ‘terminal disease’

Cases (Super)

• AWU v BlueScope Steel (AIS) Pty Ltd – Additional super guarantee contributions required – ‘additional hours’ and work on ‘public holidays’ within ‘ordinary time earnings’

Rulings & Other things (Super)

• ASIC approved SMSF auditors – ATO identifies problem areas: (1) auditing your own accounts; (2) auditing relatives’ funds; (3) low cost audits; (4) CPD compliance
• SMSF auditor in NSW – disqualified by ASIC for breach of auditor independence requirements
• Superannuation rates and thresholds for 2018-19 – indexed by latest AWOTE figures from the ABS

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

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BOARD OF TAXATION

• Tax treatment of ‘bare trusts’: Board of Taxation report makes 8 recommendations for change, including to legislate for a ‘look through’ approach, given the tenuous technical status of the extra-ordinarily wide practice

EXTERNAL SUPERVISORS – IGT, JCPAA & ANAO etc.

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TAX PRACTITIONERS BOARD & LEGISLATION

• Peterson v Tax Practitioners Board – Tax agent’s registration terminated for incapacity to handle client needs (despite extra-professional burdens)

STATE TAXES

Legislation & Announcements (State)

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Cases (State)

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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’.