Tax Month – January 2018

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

– January 2018 Developments –

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

• Delinquent Tax Debt disclosure to credit reporting bureaus – consultation on draft legislation and ATO’s administrative approach

Announcements

• FOI disclosure of Treasury ‘dividend washing’ opinion/briefing – gives insight into the s177EA uncertainty (whether it would disallow the franking credit on the 2nd dividend)
• Revised TPP deal nearly done without US – remaining 11 agree on a raft of tariffs to be eliminated or reduced and better service export conditions

BASE EROSION & PROFIT SHIFTING (BEPS)

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CASES AND APPEALS

High Court

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Full Federal Court

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Federal Court

• Sandbach v CofT – barrister’s Federal Court appeal struck out ‘for want of prosecution’ – more or less from the inception of the appeal

Administrative Appeals Tribunal (AAT)

• Tyl v CofT – Truck driver’s ‘travel allowance expense’ claims reduced – problems with (difficult) s900-50 ‘reasonable’ substantiation exemption – relevant law explained and also ‘reconstitution’ of the Tribunal (worth a read)
• BXCD v CofT – taxpayer assessed on payments her companies made, purportedly, to gold suppliers that didn’t exist – taxpayer failed to discharge her onus that she received none of this money
• WLQC v CofT – AAT held it did not have jurisdiction to review ‘nil assessments’ of various Group companies (both before and after the 2005 amendments) as part of their claim to be ‘consolidated’ for tax purposes
• De Figueiredo v CofT – Receipt of $3.6m Glencore shares was assessable as a non-contingent financial benefit on dismantling a deferred remuneration scheme for an IPO
• Sharpcan Pty Ltd v CofT – Expenditure on Victorian ‘gaming machine entitlements’ held deductible but, if capital, it was not ‘black-hole’ deductible over 5 years because it ‘enhanced’ the value of goodwill (before Pagone J as DP)

Other Courts & Tribunals

• DCT v Lawson – Director Penalties Notice (DPN) liability for SGC upheld – director failed to make out lack of service, or illness defences

Appeals

• Decleah Investments v CofT – appeals GST ‘margin scheme’ decision for pre-GST land – AAT held it was not an ‘approved valuation’

COMMISSIONER’S PUBLICATIONS & NEWS

Decision Impact statements

• DIS – Cable & Wireless Australia & Pacific Holding BV (in liquidatie) v CofT – ATO accepts FFC decision that the $6.2b Optus buy-back amount was a ‘dividend’ correctly giving rise to the $452m withholding tax

Rulings

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Determinations

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Law Companion Guides

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Class Rulings & Product Rulings

• Class Rulings: CR 2018/4-6 – Govt Bonds exchanged for Chess Depository Instruments, scrip for scrip roll-over relief confirmed for merger, scrip for scrip relief also available for Tatts’ merger with Tabcorp in Dec 2017
• CR 2018/7 – Return of capital by way of in specie distribution as part of restructuring of Eneabba Gas Ltd- no ‘demerger relief’ available & resulting consequences

ATO Interpretative Decisions

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Practice Statements

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Practical Compliance Guides

• PCG 2018/1 – Thin cap: calculating an Australian bank’s adjusted average equity capital

Tax Alerts

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Other ATO news or statements

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GST DEVELOPMENTS

Legislation & Announcements (GST)

• GST – reduced input tax credits (RITCs) – Govt rejects extending system for credit union services to mutual building societies and mutual banks
• GST digital currency conversion – draft determination under s9-85(2) issued to commence on 1 July 2017 with the ‘digital currency’ amendments
• GST withholding by purchasers on the sale of ‘new residential premises’ – deferral in start date beyond 1 July 2018 required given delay in introducing (much less passing) the draft bill

Cases (GST)

• Decleah Investments v CofT – appeals GST ‘margin scheme’ decision for pre-GST land – AAT held it was not an ‘approved valuation’
• ACN 154 520 199 Pty Ltd v CofT – AAT orders ATO to produce internal advices regarding the GST-free status of supplies of gold bullion that was ‘re-refined’
• A & A Property Developers v MCCA Asset Management Ltd – inserting merely ‘GST’ in the box (instead of ‘plus GST’) was sufficient to get the purchaser of the land to pay the vendor extra for its GST liability – Victorian Court of Appeal

Rulings, Etc. (GST)

• GST administration annual performance report 2016–17 by ATO – $59.8m collected/4.3% increase; low value goods; digital economy & currency; sharing economy (Uber); fewer objections; more debt

SUPERANNUATION DEVELOPMENTS

Legislation, Announcements etc. (Super)

• Superannuation Taxation Integrity Measures – Outstanding LRBA balance added to Member’s total benefit & NALI extended to non-arm’s length payments
• Protecting superannuation entitlements: draft legislation released – to increase ATO’s power to detect and collect unpaid SGC amounts etc.

Cases (Super)

• Aussiegolfa Pty Ltd (Trustee) v CofT – SMSF investment in property sub-trust, where student unit leased to member’s daughter, breached the sole purpose test and in-house asset test (in s62 & s82 of the SIS Act)

Rulings & Other things (Super)

• SMSF Association – statement on the significance of the $1.6m 2017 super annexation changes – new reporting requirements and effect on estate planning
• Call to remove the ‘active member test’ from the definition of ‘Australian Superannuation Fund’ – so travelling members can continue to contribute to their SMSF – SMSF Association
• ATO annual SMSF statistics – 99.6% of all funds; 30% of $2.3t super assets; member balances grow; 4% of assets are LRBA funded
• ATO extends due date for 2016–17 SMSF returns to 30 June 2018 to cater for all the changes resulting from the $1.6m ‘transfer balance cap’ measures
• A much simpler super system – Bob’s ‘15% – 15% – 0% system’ – take a look inside

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

• ACNC – ‘Terms of Reference’ for review released – required, by law, after 5 years in operation
• ACNC recommends changes to its governing legislation, including: register to show reasons for revocation; minimum of 3 responsible persons; post registration protection for charities assets

BOARD OF TAXATION

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EXTERNAL SUPERVISORS – IGT, JCPAA & ANAO etc.

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TAX PRACTITIONERS BOARD & LEGISLATION

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STATE TAXES

Legislation & Announcements (State)

• Vic Land Tax Surcharge – Treasurer’s guidelines gazetted for exemption of ‘absentee persons’ controlling interests in ‘absentee corporations’ and beneficial interest in ‘absentee trusts’

Cases (State)

• Vic: Comr of State Revenue (Vic) v Danvest Pty Ltd & Anor – purchase of interest in land-owning partnership not liable for duty – partnership interest was personalty (not, relevantly, an ‘interest in land’)

Rulings & Other (State)

• NSW land tax: exemptions for Boarding Houses and Low Cost Housing – rulings on Treasurer’s guidelines

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’.