M o r g a n’ s T a x M o n t h
– January 2013 Developments –
This is a collection of developments in Australian tax law and practice that occurred in January 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
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ACTS, BILLS AND ANNOUNCEMENTS
Acts & Bills
Miscellaneous amendments to the tax laws – draft legislation released [1]
Investment Manager Regime: Government announces amendments that allow tracing through ‘feeder funds’ to establish minimum number of members [2]
TOFA stages 3 & 4 – drafts of further refinements to be retrospectively enacted to (most commonly) years commencing on or after 1 July 2010 [3]
Public hearing into Tax Bill (No 6) 2012 re: native title exemption; disallowing capital allowance deductions through limited recourse debt not paid; and abolishing FBT in-house concessions through salary sacrificing [4]
Announcements
Final FATCA rules released by US Treasury [5]
*Coalition releases plan and policy priorities – cut tax; superannuation certainty [6]
*NFP tax concession changes delayed until 1 July 2014 – for post 10 May 2011 arrangements (1 July 2015 for pre 10.5.11 arrangements) [7]
*Charities transferred from ATO to ACNC, which is asking charities to confirm their details [8]
CASES AND APPEALS
High Court
Full Federal Court
*Sent v FCT – Bonus entitlements paid into executive share trust assessable: taxpayer loses appeal [9]
*Healey v FCT – Taxpayer’s appeal dismissed: CGT liability confirmed as onus not satisfied that ‘market value substitution rule’ applied to cost base [10]
*Weeks v FCT – Full Federal Court holds that public service ‘redundancy’ was not tax law ‘genuine redundancy payment’ – senior ATO officer [11]
ACE Insurance Limited v Trifunovski & Ors – Insurance agents found to be employees, not contractors: company’s appeal dismissed [13]
Federal Court
*DCT v Hua Wang Bank Berhad (No 4) – Summary judgment for GIC component maintained – subject to a stay [14]
*FCT v Oswal – Commissioner obtains order for substituted service in respect of $186m debt [15]
*FCT v Regent Pacific Group Limited & Ors – Freezing order granted over $12.7m capital gain made by foreign company and substituted service ordered [16]
Federal Circuit Court
Administrative Appeals Tribunal (AAT)
Re Parrish and FCT – GST unpaid, taxable income understated and 75% penalties imposed for intentional disregard of the law [17]
Re LVR (WA) Pty Ltd & Anor and FCT – the case where the AAT previously copied the Commissioner’s submissions – new AAT member dismisses Commissioner’s subsequent application for the case to be dismissed [18]
Assessment of bank deposits upheld for failure to discharge onus and penalties affirmed [19]
Re Outbound Logistics Pty Ltd and FCT – Penalty for incorrectly claimed R&D expenditure reduced [20]
*Winery losses quarantined under Division 35 of the 1997 Act – non-commercial loss discretion not exercised [21]
Re Kelly’s Office Furniture Pty Ltd & Anor and FCT – Amounts included in taxable income of companies; deductions denied [22]
Re Harbutt and FCT – Rental income reassessed; no splitting of income between husband and wife when only the husband was on title [23]
*Re Dickinson and FCT & Re Fabig and FCT – Scrip-for-scrip rollover on share exchanges ‘available’ on substantially the same terms [25]
Other Courts & Tribunals
*R (on the application of Prudential plc and Anor) v Special Commissioner of Income Tax and Anor – Legal professional privilege in the UK does not extend to accountants’ advice [26]
*R v Jo – Conviction for dishonestly evading tax upheld – correct to reject “no case to answer”; stripped of sham not deductible remuneration; rejected argument that director can’t aid and abet his company [27]
DCT v Dunn – Issue of writ outside Australia for outstanding tax debts affirmed [28]
DCT v Zerafa – Summary judgment granted against unrepresented taxpayer for tax debts benefiting from the ‘conclusivity’ provisions [29]
*R v Milne – further jail sentence for further omitted income in tax returns [30]
*DCT v De Simone – Summary judgment for tax debt partially refused – despite conclusivity provisions – because it was arguable an AAT decision was not properly applied [31]
Appeals
*Re Hancox and FCT – taxpayer appeals decision that he had a living away from home allowance not a travel allowance and couldn’t deduct expenses [32]
*Re Gem Plant Hire Pty Ltd ATF The Condello Family Trust and FCT – Commissioner appeals decision to allow fuel tax credits [33]
*Taxpayer seeks leave to appeal Binetter v DCT to the High Court – re: validity of a s264 notice [34]
COMMISSIONER’S PUBLICATIONS
Decision Impact statements
*Mills v FCT – DIS on High Court’s decision that s177EA (Part IVA) doesn’t apply to deny franking credits on PEARLS issued for Tier 1 Capital [35]
FCT v Visy Industries USA Pty Ltd – conclusion that the indemnity fee was deductible was ‘open on the facts…’ [36]
Re Waldeck and FCT – All penalties remitted for claiming PAYG withholding credits – “based on the facts in this particular case…” [37]
Rulings
TR 2013/1 – Australia’s tax treaties: meaning of “employer” for short-term visits [38]
Determinations
TD 2013/1 – Interest is deductible on a full recourse loan used to pay the interest on another capital protected borrowing [39]
*TD 2013/2 – Wind farming income is not primary production income for averaging purposes [40]
Class Rulings & Product Rulings
CR 2013/1-3 – GST and council rates; Afghanistan aid income; In Specie distributions [41]
CR 2013/4 – Return of capital on an Infrastructure Trust not a dividend [42]
CR 2013/5-6 – Employee share schemes: conversion; incentive plan [43]
CR 2013/7-10 – Early retirement; demerger; FITO and ESS; FBT parking [44]
ATO Interpretive Decisions (ATOIDs)
Practice Statements
*PS LA 2013/1 – Commissioner’s guidance on how to prepare an statement of facts and reasons under s13 of the ADJR Act [45]
Tax Alerts
Other Commissioner news
ATO data-matching program: credit and debit card sales by businesses [46]
GST DEVELOPMENTS
Legislation & Announcements (GST)
Cases (GST)
*High Court gives Commissioner leave to appeal in Unit Trend Services Pty Ltd v FCT – where the FFC split on whether GAAP applied to pre 16 March 2005 choices under the Margin Scheme [47]
Re Dandenong Motors Unit Trust and FCT – No GST refunds for net negative amounts for car dealership [48]
Re Yacoub and FCT – GST: taxpayer’s appeal dismissed re earlier deregistration date for applicable entity [49]
Re Tom and FCT – GST refunds sought for misclassified directors’ fees, but claim denied because it was more than 4 year prior to notifying the ATO [50]
Re Bayconnection Property Developments Pty Ltd and Ors and FCT – Input tax credits denied: not carrying on an enterprise – maximum penalties upheld too [51]
Rulings & Other things (GST)
Reminder for clients to register for GST may be sent to tax agents if their 2010 or 2011 returns show $75k turnover or more [52]
SUPERANNUATION DEVELOPMENTS
Legislation (Super)
*Acquisitions and disposals of assets by SMSFs and related parties to be conducted through a market or if none, with valuation – draft legislation [53]
Superannuation Data and Payment Standard for contributions and rollovers (under ‘SuperStream’) registered by ATO [54]
*Draft repeal of the SIS Regs protecting members with small balances from excessive fees (as inconsistent with MySuper principles of equal fees) [55]
*Super fund investment earnings to pay pensions on death of member to remain tax-exempt – draft regulation released [56]
Committee holds hearing into the 4th (last) tranche of the ‘MySuper’ amendments [57]
Cases (Super)
Re Penrowse Pty Ltd and FCT – taxpayer paid employee truck owners 80% for trucks and 20% for wages, but AAT upheld SGC on 100% [58]
Re Verschuer and FCT – Late super contribution via clearing account hit with 93% tax [59]
Rulings & Announcements etc. (Super)
Tax at 78% (or even 93%) on excess super contributions: Coalition says it will fix a problem that has existed for 2.5 years [60]
First MySuper Fund applications lodged with APRA [61]
Reminder that some SMSF annual returns are due 28 February 2013 [62]
APRA moves on lending policies of Banks to SMSFs – more risky [63]
SMSF pensions will be treated as continuing despite not meeting minimum SIS standards under Tax Office concession announced [64]
SMSF auditor register commences 31 January: ASIC reminder [65]
Latest Tax Expenditures Statement shows super concessions cost the most [66]
CARBON TAX
MINERALS & PETROLEUM RENT RESOURCE RENT TAX
BOARD OF TAXATION
EXTERNAL SUPERVISORS – IGoT; OMBUDSMAN, JCPAA & ANAO
TAX PRACTITIONERS BOARD & LEGISLATION
$174,500 in penalties against 4 unregistered tax agents in 2012: TPB media release [67]
Commercial law course requirement removed for certain tax agents: TPB [68]
New Tax Practitioners Board Chair and Board start on Tue 22.1.2013 [69]
STATE TAXES
Legislation (State)
Cases (State)
ACT payroll tax – A Plus Plumbing And Building Services Pty Ltd v Comr for ACT Revenue – penalty tax increased to 50%, but remitted back down to 25% [70]
NSW land tax – Kolln v Chief Comr of State Revenue – principal place of residence exemption refused [71]
NSW stamp duty: Landfall Pty Ltd v Chief Comr of State Revenue – promissory note not “money”; apparent purchaser exemption denied [72]
NSW payroll tax – Lombard Farms Pty Ltd v Chief Comr of State Revenue – de-grouping request refused [73]
NSW payroll tax – Nowlan Enterprises Pty Ltd v Chief Comr of State Revenue – Grouping decision affirmed [74]
NSW land tax – Maraya Holdings Pty Ltd Ors v Chief Comr of State Revenue: primary production exemption denied [75]
Qld stamp duty – Sherratt v Comr of State Revenue – exemption to correct “clerical error” denied [76]
*Vic Duty – High Court refuses SRO leave to appeal in Comr of State Revenue v Challenger Listed Investments Ltd – concerning conversion of a land rich land holder to a public unit trust [77]
Vic stamp duty Olivedale Park Pty Ltd v Comr of State Revenue – tourist park cabins were plant and equipment, not stock in trade [78]
Rulings & Announcements etc. (State)
SA land tax: concession for moving into residential care – Revenue Ruling released [79]
Vic land tax: principal place of residence exemption – Draft Ruling [80]
WA: remission of penalty tax for late payment – Commissioner’s Practice updated [81]
OTHER DEVELOPMENTS
PM announces election date – 14 Sept 2013, with writs to dissolve Parliament on 12 August 2013 [82]
Standard for 3 Accounting Bodies to provide financial planning services – start date delayed from 1 July 2013 to 1 July 2014 [83]
“Ethical investors” step up focus on tax avoidance [84]
Malaysia-Australia Free Trade Agreement enters into force on 1 January 2013 [85]
AASB Accounting Standard registered to withdraw interpretation as to when legislation is substantively enacted [86]
CPI: December quarter 2012 indexation factor for FBT purposes – December quarter increased 0.2 over September quarter to CPI of 102.0 [87]
THE END
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*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
