T a x T e c h n i c a l – M o n t h l y N e w s
– July 2016 Developments –
This is a collection of developments in Australian tax law and practice that occurred in July 2016
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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You are free to use this material, provided you include a link back to the article on this site.
ACTS, BILLS AND ANNOUNCEMES
Acts, Bills & Draft Legislation
Announcements
BASE EROSION & PROFIT SHIFTING (BEPS)
Transfer Pricing and Country-by-Country Reporting – ATO uploads a ‘High Level Design’ guidance for the requirement to lodge the ‘Local File’ under existing law starting this year
EU Parliament votes in favour of tax report recommendations for tax haven blacklist, patent box rules, code of conduct for tax advisers, etc
OECD releases discussion draft on the design and operation of the group ratio rule under BEPS Action 4
OECD releases standardised IT-format for the exchange on tax rulings under BEPS Action 5
OECD releases standardised IT-format for providing feedback on received Common Reporting Standard information
CASES AND APPEALS
High Court
FCT v ElecNet (Aust) Pty Ltd (Trustee) – High Court allows taxpayer to appeal decision that it is not the trustee of a ‘unit trust’ for Division 6C purposes and therefore not taxed as a company
Full Federal Court
Millar v FCT – Back to Back loan from Aust’n Super Fund to Hua Wang Bank (Vanda Gould) to the taxpayers was treated as a ‘sham’ and taxed as premature payment of preserved benefits
Rawson Finances Pty Ltd v FCT – Commissioner denied permission to take evidence from the chair of an Israeli bank as there was no evidence she had personal knowledge and the subpoenaed documents were defacto discovery (not ‘in aid of’ this examination)
Federal Court
Shord v FCT – taxpayer held to be a ‘resident’ and taxable on foreign source income without qualifying for s23AG exemption or foreign tax offsets
FCT v Oswal (No 6) – Court finds mortgages void as being an alienation of property with intent to defraud creditors (including the Commissioner as it turned out)
Caratti v FCT – Taxpayer gets interlocutory order preventing the Commissioner taking recovery action, despite breach of security arrangements because of alleged failure of Commissioner to give notice before taking action
Ransley v FCT – Stay of wife’s tax appeal until husband’s related committal was heard – relating to charges of obtaining advantage for stating that the relevant mine was acquired as a ‘training mine’
Administrative Appeals Tribunal (AAT)
Re H J International Trade Group Pty Ltd and FCT – milk bar and student home stay taxpayers assessed on under-reported income tax and GST based on records and industry averages together with penalties
Re XLPZ and FCT – Tax debt not released because the ‘serious hardship’ was independent of the $58k tax debt (there were $300k of other liabilities beyond the value of his assets)
Re Hill and FCT – Deductions for car and travel expenses refused; not an itinerant worker
Re SHTX and Tax Practitioners Board – Board’s decision to terminate an agent’s registration for 3 years replaced with a caution, remedial education and practice restrictions until education is completed
Other Courts & Tribunals
DCT v Panayi – DPN for $370,000 upheld: Defendant found to be a director and then other defences failed (despite bad health)
DCT v Fitzgerald – director’s DPN liability for company’s failure to remit $2m of PAYG withheld from salary and wages – deemed service was valid and no defence could be made out
DCT v Anglo American Investments Pty Ltd & Ors – Commissioner succeeds in recovering debt under ‘conclusivity’ provisions – no “conscious maladministration” as required in Denlay
Bamsang Pty Ltd v FCT – Penalties for failing to lodge income tax and GST returns reduced (but not by that much) – some errors at first instance
Appeals
Shord v FCT – taxpayer who worked overseas appeals Fed Crt decision that he was resident, not entitled to s23AG exemption and not entitled to foreign tax credits
Re Rowntree and FCT – taxpayer appeals AAT decision assessing him on $3m of $4m loans under Div 7A and 50% shortfall penalties
COMMISSIONER’S PUBLICATIONS & NEWS
Decision Impact statements
FCT v Donoghue – use of privileged documents in raising assessments held to not be conscious maladministration causing jurisdictional error for the relevant ‘conclusively’ provision: s175
Rulings
Determinations
TD 2016/13 – Reasonable travel and meal allowance amounts for 2016-17
TD 2016/14 – A general deduction is allowed for gifts to clients of a business (query whether it be aimed at getting future income)
TD 2016/15 – airport lounge membership fees for employees are deductible (and not entertainment or a recreational club)
Law Companion Guides
LCG 2016/2 – Small Business Restructure Rollover – ATO guide on the tax consequence of this rollover (by way of various examples)
LCG 2016/3 – Small Business Restructure Rollover – ATO guidance on meaning of ‘genuine restructure of an ongoing business’ (including various examples)
Class Rulings & Product Rulings
CR 2016/48 – NAB Capital Notes 2 – franking credits on convertible notes (streaming, s177EA etc.); not traditional securities; CGT on conversion; no s45A/B capital benefits; etc
CR 2016/49 – demerger of Graphex Mining Limited: Share transfer not a ‘dividend’; not s45A/B/C capital benefit; CGT effect including electing ‘rollover relief’ by resident shareholders
CR 2016/50 – AMP Capital Community Infrastructure Fund – tax effect of a Div 6C ‘trading trust’ making a capital distribution and compulsorily reinvested into the stapled ‘non-trading’ trust
CR 2016/51 – Scheme of Arrangement in which Unity Mining Limited returned capital to shareholders and Unity’s biggest shareholder bought the remaining Unity shares
CR 2016/35 – Westpac Tier 1 capital – tax effect of holding non-cumulative, convertible, transferable, redeemable, subordinated, perpetual, unsecured notes (Westpac Capital Notes 4)
CR 2016/53: tax consequences for shareholders in APN News & Media Limited of demerger of NZME Limited
CR 2016/54 Income tax: AMP Capital Infrastructure Equity Fund – Unit trust (for non-controlling interests in infrastructure assets) creates a new unit trust (for controlling interests) and ‘staples’ the units together
CR 2016/55 – Searoad (Queenscliff – Sorrento) Ferries Early Retirement Scheme is an ‘early retirement scheme’ under s83-170
ATO Interpretative Decisions
Practice Statements
Practical Compliance Guides
Tax Alerts
Other ATO news or statements
Car expenses rate for 2016-17 – $0.66/km (unchanged from last year)
Murray Goulburn milk supply support package – various tax implications
Phoenix Taskforce executed 6 search warrants in the Gold Coast in the course of investigating illegally leaving tax debts behind and starting again in a new vehicle
GST DEVELOPMENTS
Legislation & Announcements (GST)
Cases (GST)
Rulings, Announcements, Etc (GST)
SUPERANNUATION DEVELOPMENTS
Legislation, Announcements etc. (Super)
$500,000 lifetime cap on non-concessional super contributions – legislation currently being developed (per ATO website)
Cases (Super)
Re Azer and FCT – Excess concessional super contributions salary sacrificed super from various jobs – no special circumstances and no reallocation
Rulings & Other things (Super)
Limited AFS licence for SMSF advice – transitional period has ended; Corps Act requirements (client’s best interests and no ‘conflicted’ remuneration); contingency plan until licence issues; ‘relevant experience’ now required
AUSTRALIAN CHARITIES & NOT-FOR-PROFITS (ACNC) SECTOR
BOARD OF TAXATION
EXTERNAL SUPERVISORS – IGT, JCPAA & ANAO etc.
TAX PRACTITIONERS BOARD & LEGISLATION
Re SRBP and Tax Practitioners Board – Tax agent cautioned with sanctions instead of having registration terminated
Re Walsh and Tax Practitioners Board – BAS agent registration denied; courses not Board approved
STATE TAXES
Legislation & Announcements (State)
NT Duty – Budget Bill: Stamp Duty Amendment (First Home Owner Discount) Bill 2016 – receives Assent giving a 50% duty discount (capped at $10k) for first home buyers
SA 2016-17 Budget tax announcements & Bill – payroll rebate; off-the-plan stamp duty concession; PPR land tax exemption all extended; sports groups land tax emption expanded; 15% wagering tax introduced
Cases (State)
Qld Land Tax: Harrison v Comr of State Revenue – 3 houses taxed in aggregate rather than separately as not held on trust for each of their 3 children – houses leased to children and transfer on death under mutual wills
Vic stamp duty: Arrigo v Comr of State Revenue – transfer of subdivided apartments in old ‘stratum’ title, to unit holder, held exempt from duty under s36 for transfers to beneficiaries of a fixed trust
WA land tax: Caratti and Comr of State Revenue – private residential property exemption refused to an executor as the beneficiary did not have the necessary ‘right under the will’ to live there
Rulings & Other (State)
OTHER DEVELOPMENTS
[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.
