Tax Month - July 2012 - Tax Technical

M o r g a n’ s T a x M o n t h

– July 2012 Developments –

This is a collection of developments in Australian tax law and practice that occurred in July 2012 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

Shipping reform tax incentives – regulation made [1]

Draft charities legislation referred to Reps Economics Committee over Parliamentary Winter Recess [2]

Tax free treatment of water infrastructure improvement receipts – draft legislation released with effect back to 1 April 2010 [3]

Mature age worker offset phase out: draft legislation [4]

Announcements

Film producer tax offset – definition of “documentary” – further details [5]

*Scrip-for-scrip rollover amendments to improve integrity provisions – Treasury paper released to consult on provisions to date back to 8 May 2012 [6]

*Bad debts written off between related parties – Treasury releases discussion paper on 2012-13 Budget announcement to deny deduction and disregard gain [7]

Certain Instruments (Tier 2 capital instruments under Basel III) can be treated as debt – Treasury releases discussion paper on Budget announcement [8]

*Meaning of ‘limited recourse debt’: Treasury releases discussion paper seeking views for Budget announcement to limit deductions when taxpayer not at risk [9]

*Loss carry-back for companies – Treasury releases discussion paper [10]

*Government’s Forward Work Program for Tax Measures [11]

Italian earthquakes – declaration of a disaster for tax purposes [12]

*Treasury releases discussion paper on changing the definition of ‘fixed trusts’ [13]

*Trust reform start date deferred – Division 6, MIT’s & Streaming [14]

Inquiry into LAFHA changes – transcript released [15]

CASES AND APPEALS

High Court

Full Federal Court

*LVR (WA) Pty Ltd & Anor v AAT and FCT – AAT caught copying Commr’s submissions and Court ordered a different member to re-hear the case [16]

Federal Court

*August v FCT – Profits on sale of property and land assessable as ordinary income [17]

*Ferguson v FCT – Valid to lodge appeal to court on the substantive issue and an application to the AAT to review the shortfall penalty decision [18]

Binetter v DCT (No 3) – Section 264 notice stands [19]

*Collection Point Pty Ltd v FCT – Taxpayer’s FOI request for names of members with unclaimed moneys denied as ATO would have to write a new program to comply [20]

*FCT v Rawson Finances Pty Ltd – Court overturns AAT: taxpayer fails to discharge onus of proving that deposits of $4.75m were only loans [21]

*Messenger Press Proprietary Limited & Ors v FCT – News Corp entitled to deductions for over $2bn in foreign exchange losses [22]

Federal Magistrates Court

Administrative Appeals Tribunal (AAT)

*RACV Sales and Marketing Pty Ltd and Innovation Australia – Development of the ANCAP Crash Testing Methodology over 8 years held not R&D [23]

Re Sanctuary Lakes Pty Ltd and FCT – Deductions of $18m denied in relation to restructure of golf resort complex [24]

*Re Elliott and FCT – the “foreign transactions” exception to the 2-year amendment rule did not allow the assessment of foreign employment income [25]

*Re Fayle and FCT – PSI: taxpayer cannot re-litigate matter previously decided against him [26]

Re Armirthalingam and FCT – Taxpayer fails to show assessments excessive re gambling and motor vehicle claims [27]

*Re Yazbek and FCT – Commissioner’s amendment within time under s170(1), item (1)(d) because Taxpayer was a “beneficiary of a [discretionary] trust” despite getting no distribution [28]

Other Courts & Tribunals

Appeals

*Greenhatch case – only discounted capital gain is assessable to the beneficiary [29]

COMMISSIONER’S PUBLICATIONS

Decision Impact statements

Tandem master parachutist was an ‘employee’ for SGC purposes – entertainment or sport [30]

Lake Fox case – Health insurance not a s58M exempt FBT benefit – not in respect of work related medical screening or preventative health care [31]

Clark v FCT and International All Sports cases – so far as they relate to ‘Calderbank Offers’ – no change to PS LA 2009/9 (Conduct of Litigation) [32]

Rulings

TR 2012/D5 – Public unit trusts in a stapled group and connected entities [33]

Determinations

TD 2012/18 – NZ citizens are still ‘temporary residents’ after departing under their ‘special category visa’ as their citizenship still gives them ‘visa’ access [34]

TD 2012/19 – When non-share equity interest is issued through a PE [35]

Class Rulings & Product Rulings

CR 2012/49-52 – ESS; dental scheme; cadetship payments; capital return [36]

CR 2012/53-54 – Final ordinary dividend and special dividend; company merger [37]

PR 2012/25 – Professional sports person’s Temporary Total Disability Insurance proceeds included in his ordinary income [38]

CR 2012/55 – University stipend of veterinary studies is ordinary income, but exempt [39]

ATO Interpretive Decisions (ATOIDs)

Practice Statements

Draft PS LA 3582 – Commissioner’s discretion to retain refunds (of any tax) under s8AAZLGA of the TAA [40]

Tax Alerts

ATO warns about schemes to access private company profits through dividend arrangements [41]

Other Commissioner news

ATO’s view on Commissioner’s discretion to retain ‘high risk’ refunds [42]

*ATO’s strategic direction 2012-13 [43]

*ATO releases its 2012-13 Compliance Program [44]

Extended ATO compliance focus areas [45]

Second Commissioner to head HMRC compliance in the UK [46]

*New ATO income tax guide for non-profit organisations [47]

*Government rejects JCPAA recommendation for transparency in tax policy and legislative problems [48]

*PAYG withholding payment summary – closely held lodgment concession [49]

GST DEVELOPMENTS

Legislation (GST)

*GST regs amended to make all of HP taxable; extend RITC’s for Life Insurance; modify RITC’s for trustees and clarify guarantees and indemnities [50]

Cases (GST)

*re A.P. Group Limited and FCT – GST: Certain motor vehicle “incentive” payments not consideration for a supply [51]

*GST: second-hand aircraft acquired before 1 July 2000 were not acquired for the correct purpose and ITC’s were not available – objection decision upheld [52]

*Yacoub v FCT – taxpayer liable for all of the GST because it was held it was in a common law partnership and jointly liable with the insolvent third party [53]

Re Baini and FCT – GST and income tax assessments confirmed for taxi business [54]

Re Campbell and FCT – GST input credits denied – taxpayer unable to prove she was carrying on a software enterprise – records and code stolen [55]

Re Trnka and FCT – GST: no entitlement to input tax credits as no valid invoices [56]

Rulings & Other things (GST)

GSTR 2012/3 – when care services and accommodation provided to residents in privately funded retirement villages is GST-free [57]

*GSTR 2012/D3 – Draft ruling on the various requirements for ‘tax invoices’ [58]

GST Announcements (Other)

ATO guides and factsheets for GST and indirect taxes [59]

SUPERANNUATION DEVELOPMENTS

Legislation (Super)

Penalties for promoters of illegal early release super – Govt to introduce penalties legislation [60]

*SMSF approved auditors to be registered with and monitored by ASIC – as from 1 July 2013 – draft legislation released [61]

Transfer of certain unclaimed super monies to the Commonwealth: draft regs released [63]

Cases (Super)

*Kelly v FCT (No 2) – Family trust denied superannuation deduction for directors of the corporate trustee as they were not ‘employees’ – having no right to be paid under the constitution etc [64]

*Re Bornstein and FCT – Excess contributions tax set aside; special circumstances found [65]

*Re Colless and FCT – Late super contribution made via clearing account; no jurisdiction to reallocate contribution to earlier year [66]

*Parliamentary Trustee of the Parliamentary Contributory Superannuation Fund v FCT – Superannuation contributions surcharge assessments upheld [67]

*Re Walsh and FCT; Re Wilson and FCT; Re Bridge and FCT – AAT confirms no immunity from super surcharge for senior SA public servants [68]

Rulings (Super)

TR 2012/6 – Superannuation fund deductions for disability insurance premiums [69]

Announcements etc (Super)

New data standards for super contributions: employers, SMSFs, APRA funds [70]

Expanded superannuation reporting: exposure draft legislation released [71]

CARBON TAX

Coalition outlines its plan to abolish the carbon tax [72]

MINERALS & PETROLEUM RENT RESOURCE RENT TAX

ATO guides and factsheets: MRRT & PRRT [73]

BOARD OF TAXATION

*Part-Time Members Reappointed to the Board of Taxation – including Keith James [74]

EXTERNAL SUPERVISORS – IGoT; OMBUDSMAN & ANAO

*IGOT report – ATO use of early and alternative dispute resolution practices – ATO agrees with 14 of the 21 recommendations for it [75]

TAX PRACTITIONERS BOARD & LEGISLATION

Agents should update PI cover details: Tax Board [76]

STATE TAXES

Legislation (State)

Cases (State)

EK Anderson Investments Pty Ltd ATF CACS Property Trust v Chief Comr of State Revenue – NSW land tax: taxpayer under obligation to inform Commissioner of special trust [77]

Roman Catholic Church Trust Corporation of the Archdiocese of Hobart v Comr of State Revenue – Tas stamp duty: transfer of school plant and equipment not a “gift” [78]

Comr of State Revenue v Australand Investments Pty Ltd – Vic land rich provisions apply differently to 2 similar transactions – depending on whether transitional provisions applied [79]

Ashleigh Developments Pty Ltd v Chief Comr of State Revenue (RD) – NSW land tax: property developer did not get primary production exemption [80]

Chamber of Commerce v Industry of WA (Inc) v Comr of State Revenue – WA payroll tax: promotion of commerce a charitable purpose, so exemption allowed [81]

Pharmos Nominees Pty Ltd v Comr of State Taxation – SA stamp duty: instrument was a conveyance, but value to be reconsidered [82]

Rulings (State)

Other (State)

ACT publishes various rates on Revenue Office Website [83]

Vic: landholder duty provisions – OSR guidance released [84]

OTHER DEVELOPMENTS

Official interest rates – no change at 3.5% [85]

*Paper released on the wealth held on tax havens and how this influences our understanding of inequality [86]

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

Tax Month – July 2012

Author: John Morgan