M o r g a n’ s   T a x   M o n t h

– January 2014 Developments –

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





Acts & Bills

PAYG withholding variations arrangements for occasional donations to a DGR under a workplace giving arrangement [1]

*Investment Manager Regime: 3rd and final draft of legislation released for investment in or through Australia by Qualifying Foreign Funds [2]



*Small business superannuation clearing house going from Medicare to the ATO as part of the Government’s plans to reduce ‘red tape’ [3]

*US Republican Party votes to repeal FATCA [4]

*Treasury consults on Employee Share Schemes for start-ups etc [5]

Offshore Banking Unit regime changes – 1 July 2015 start date announced [6]

*Government (still) looking for an alternative to the ACNC [7]




High Court


Full Federal Court


Federal Court

*DCT v Specialised Finance Group Pty Ltd – instructions for AAT review of disallowed ITCs and offer to pay half of tax not enough to stave off winding up [8]

*Watsford v FCT – assessed discount on shares acquired under employee share option scheme on date employment terminated, despite no options being exercised until next year (Div 13A) [9]

*Taras Nominees Pty Ltd as Trustee for the Burnley Street Trust v FCT – CGT liability arises on transfer of land to “joint development trust” [10]


Federal Circuit Court


Administrative Appeals Tribunal (AAT)

*Re XTJT and FCT – interest and other holding costs, in acquiring her husband’s brother’s share of land not deductible – private not business purposes [11]

*Re Gutteridge and FCT – Taxpayers get CGT relief as trust was a ‘small business entity’ – appointor father was de facto director [12]

*Re PNGR & Anor and FCT – significant investment properties bought with only modest income, amendments made outside 4-year period for fraud or evasion [13]

*Re The Study and Prevention of Psychological Diseases Foundation Incorporated and FCT – Psychological diseases foundation denied tax-exempt charity status [14]

*Re Gleeson and FCT – Truck driver allowed deductions for unsubstantiated work-related expenses [15]

*Re Mathoura Property Pty Ltd as Trustee for the Mathoura Property Trust and FCT – Taxpayer failed to take reasonable care in preparing BAS [16]

*Re VPFD and FCT – Deductions relating to a rental property business mostly disallowed [17]

*Re Yeates and FCT – Deductions for work-related expenses denied [18]

*Deductions denied for $1m losses in MIS investment – going back 4 years under scheme to obtain ‘tax benefit’ qualification [19]


Other Courts & Tribunals

*Palermo v Palermo [No 2] – Business corporate and trust arrangements cannot be re-interpreted as a partnership [20]

*Hancock v Rinehart – Commissioner denied access to court files in Rinehart case until matter completed, though could look at specified material [21]



Re Desalination Technology Pty Ltd and FCT – Commissioner appeals AAT decision to allow a $363k R&D tax offset [22]

Australian Pipeline Limited as Responsible Entity for the Australian Pipeline Trust v FCT – taxpayer appeals decision denying depreciation on pipeline under consolidation regime [23]




Decision Impact statements

Crown Insurance case – source of non-resident insurance company income was not Australian [24]

Macquarie Bank (OBU) case – ATO view of the Full Federal Court decision not to apply the anti ‘U-turns’ Practice Statement (and render that issue non-justiciable) [25]

FCT v Cancer and Bowel Research Association Inc atf the Cancer and Bowel Research Trust – AAT decision to remit charitable institution status matter [26]

ATO releases 3 Decision Impact Statements [27]





*TD 2014/D1 – Dividend washing and Pt IVA (SMSF) [28]

*TD 2014/D2-D6 – Consolidation and rights to future income and residual tax cost setting rules [29]

TD 2014/D7 – capital support given to loss making subsidiary not deductible under any provision in the ATO’s view [30]


Class Rulings & Product Rulings

PR 2014/1 – National rental affordability scheme joint venture offsets etc. [31]

CR 2014/4-5 – Special dividend; donations invoice via SMS [32]

CR 2014/6-9 – GST fees by councils; dental benefits; demerger; capital reallocation [33]

CR 2014/10-14Share consolidation; demerger; SMS donations; employee equity plan [34]


ATO Interpretive Decisions (ATOIDs)

ATO ID 2013/63 Update – MIT withholding tax obligations [35]


Practice Statements


Tax Alerts


Other Commissioner news or statements

FBT returns: ATO changes due date for tax agents lodging 2014 returns [36]

ATO reminder tax labels (for income of the trust and beneficiary’s share) has moved in 2013 trust tax returns [37]

SME tax compliance a focus for the ATO [38]

TFN application process simplified by partnership with Australia Post (with its 460 retail outlets) [39]

ATO to data-match payments from local governments [40]

ATO calls on large businesses for paid practical input (with suitable experience) [41]




Legislation & Announcements (GST)


Cases (GST)

*Re Harland as Trustee for the PCS Global Discretionary Trust and FCT – No entitlement to ITCs for trustee of discretionary trust; penalty affirmed [42]

*Re Swanbat Pty Ltd v FCT – Commissioner appeals AAT decision that an assessment to recoup a refund of GST more than 4 years ago was excessive [43]


Rulings & Other things (GST)

*GSTD 2014/1 – GST private rulings available as a means of getting the Commissioner’s s105-65 refund decision before the AAT – post Naidoo case [44]

CR 2014/6 – GST on charges imposed by NSW Councils for administration, animals, approvals/permits, health, impounding and pest control [45]

Re Snugfit Australia Pty Ltd v FCT – a sleep positioning system did ‘modify’ the mattress and was GST-free as a medical aid or appliance [46]




Legislation, Announcements etc. (Super)


Cases (Super)

*Wooster v Morris – SMSF trustee held personally liable for disputing valid ‘Binding Death Benefit Nomination’ [47]

*SCCASP Holdings atf the H&R Super Fund v FCT – Taxpayer seeks leave from the High Court to argue distribution of capital gain is not ‘special income’ [48]


Rulings & Other things (Super)

Div 293 assessments on super concessional contributions (for those with income of over $300k) will issue in February 2014 [49]

*SMSF trustees will be required to receive electronic payments by 1 July 2014 (per SuperStream) – ATO to publish a list of service providers in readiness [50]

TD 2014/D1 – Dividend washing and Pt IVA (SMSF) [51]

Superannuation non-statutory reform or consultation bodies to be disbanded: Assistant Treasurer [52]




Government releases Green Paper on its proposed Emissions Reduction Fund [53]





*Instrument registered prescribing which ‘State and Territory entities’ are ‘government entities’ and thus excluded from definition of “charity” in the Act [54]

*Charity registration application form updated as Charities Act takes effect [55]

*ACNC releases Interpretation Statement on Indigenous charities [56]

*Government (still) looking for an alternative to the ACNC [57]










Tax Practitioners Board approved courses – qualifications lists updated [58]

Tax Practitioners Board reminds Registered Tax and BAS agents to advise it of their PI insurance details and keep them up-to-date [59]

*Re Mahaffy and the Tax Practitioners Board – Decision not to renew tax agent’s registration stayed [60]

*TPB releases guidance on managing conflicts of interest [61]




Legislation & Announcements (State)


Cases (State)

*ACT stamp duty: Comr of ACT Revenue v Araghi & Anor – Commissioner loses appeal regarding ‘interdependent house and land contracts’ [62]           39

ACT landholder duty: Francey v Comr for ACT Revenue – constructive trust, so no liability on transfer of shares [63]    40

*NSW payroll tax: Smith’s Snackfood Company Ltd v Chief Comr of State Revenue – taxpayer wins appeal: contractors not engaged under a ‘relevant contract’ [64] 41

*WA land tax: Quito Pty Ltd and Comr of State Revenue – rural business exemption allowed [65]     41


Rulings & Other (State)

ACT stamp duty: progressive abolition of duty on general insurance policies – adjustments to help facilitate this [66]

NSW: check for “forgotten” dollars (unclaimed money) held by OSR [67]

*Tasmanian State election to be on 15 March 2014 [68]

Vic stamp duty: aggregation of dutiable transactions and domestic builders – Revenue Ruling updated [69]




FoFA amendments – draft regulations and legislation released [70]

Post-implementation reviews OK: Non-commercial losses; FBT and car fringe benefits; ESS [71]

Commission of Audit (to find savings in Government spending) – phase one reporting date of 31 January 2014 to be extended by 2 weeks [72]

CPI: up 0.8% for December quarter 2013 (2.7% over the year to 31 December 2013) [73]

Australia as Chair of G20 will address tax and the global economy [74]

*Australian Valuation Office to close [75]

Tax Expenditures Statement 2013 released [76]

Financial System Inquiry website launched [77]

OECD releases Draft on transfer pricing documentation and country-by-country reporting [78]





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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