Tax Month – July 2017

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

– July 2017 Developments –

This is a collection of developments in Australian tax law and practice that occurred in July 2017
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

Draft ‘housing affordability’ law – to implement a ‘First Home Super Saver Scheme (where up to $30k can be withdrawn from a superannuation fund to pay a deposit on a first residence) and also a ‘Main Residence Downsizing Scheme’ (where up to 2 people can make a non-concessional superannuation contribution, of up to $300k each)

CGT changes – excluding non-residents from the ‘main residence’ exemption; imposing CGT on non-residents for CGT events happening to their ‘membership interests’ by calculating ‘taxable Australian real property (TARP) under the ‘principal asset test’ in s855-30 on an ‘associate inclusive’ basis

Tax Administration Act – exposure draft of ‘re-landscaped’ regulations released for feedback – substance is not meant to change

Announcements

Adult Beneficiaries of ‘discretionary trusts’ will be taxed at a minimum rate of 30% under a Labor Government – avoiding the bulk of income splitting without grasping the nettle of taxing (all) trusts as companies

BASE EROSION & PROFIT SHIFTING (BEPS)

OECD releases its updated 2017 Transfer Pricing Guidelines for multinational enterprises and tax administrations – application of the “arm’s length principle” post BEPS changes

OECD releases draft contents of 2017 update to OECD Model Tax Convention – seeking comments on particular portions 

OECD releases The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI) Matching Database – software beta version

OECD & G20 release report on ‘Branch Mismatches’ – where different jurisdictions have different rules for recognising branches or allocating profits between them (similar issues to ‘Hybrid Mismatches’)

CASES AND APPEALS

High Court

Anglo American Investments Pty Ltd v DCT – High Court refuses special leave to appeal – attempting to defend collection on the basis allegations of ‘conscious maladministration’ (from using illegally obtained material to assess) ineffective because judicial review on this point not commenced

Full Federal Court

Federal Court

Nelson v FCT – trustee taxpayer failed to injunct s353-10 notices, to give sworn evidence, because she failed to establish a prima facie case that the interviews would imperil the integrity of an imminent Part IVC appeal against s100A assessments (relating to gifted trust income entitlements) – s14ZYA notice given to determine the trustee’s objection within 60 days

Administrative Appeals Tribunal (AAT)

Other Courts & Tribunals

Appeals

Taxpayers appeal in Normanby Finance (loan shams); Sunraysia Harvesting (PAYGw avoidance) and Peter Sleiman Investments (Default Assessments) and the Commissioner appealed in Hacon (Private Ruling Request declined)

COMMISSIONER’S PUBLICATIONS & NEWS

Decision Impact statements

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Rulings

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Determinations

Law Companion Guides

LCG 2017/D6 – ATO’s guidance on the new ‘similar’ business rule for carrying forward company tax and capital losses under the ‘innovation’ Bill passing through Parliament

Class Rulings & Product Rulings

CR 2017/44: scrip-for-scrip roll-over; CR 2017/45: returns of share capital; CR 2017 2017/46: demerger roll-over

ATO Interpretative Decisions

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Practice Statements

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Practical Compliance Guides

PCG 2017/13 – Div 7A: Unpaid Present Entitlement (UPE) sub-trust invested in 7 year interest only loan to main trust maturing in 2017 or 2018 fYears must be repaid or refinanced on a complying 7 year principal and interest loan

Tax Alerts

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Other ATO news or statements

ATO advice on how the ‘Common Reporting Standard’ (CRS) affects ‘Not-for-Profit’ organisations

ATO now accepting Country-by-Country lodgements electronically

ATO investigating unexpected tax refunds

ATO garnishees and freezing orders – ATO is seeking feedback and wishes to consult 

GST DEVELOPMENTS

Legislation & Announcements (GST)

VM 2017/D1 – Goods and Services Tax: Valuable Metals Market Value Determination 2017 – a draft determination of the s86-10(3) method by which taxpayers may determine the ‘market value’ of ‘Valuable Metals’ in goods supplied for the purposes of determining whether there is a s86-5 ‘reverse charge’ liability of the recipient of the goods

Cases (GST)

GH1 Pty Ltd, in Liquidation and Commissioner of Taxation – AAT denied ITC’s in the face of the Commr’s audit evidence that the credits related to earlier work and credits already claimed – ‘tax invoices’ and MYOB accounting entries do not evidence a supply in the period and Comm’r has no evidentiary onus – related party taxpayers should have given evidence

Rulings, Etc. (GST)

GSTD 2017/1 – GST: supply of credit card facility – use of card overseas is GST-free

SUPERANNUATION DEVELOPMENTS

Legislation, Announcements etc. (Super)

Treasury Legislation Amendment (Improving Accountability and Member Outcomes in Superannuation) Bill 2017 & related SCG Bill – an exposure draft of legislation to increase accountability of superannuation funds – especially poorly performing ‘MySuper’ funds and to stop salary sacrificed super counting towards the employer’s SGC mandatory minimum level of employer super contributions

Superannuation Complaints Tribunal (SCT) to be amalgamated with other bodies into the new ‘Financial Complaints Authority’ to commence 1 July 2018

Cases (Super)

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Rulings & Other things (Super)

Super fund mergers and wind-ups: APRA guidance finalised

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

ACNC revokes charity status of 3 organisations: African Australian Network Limited; Global Helping Hands Foundation – Australia; Immigrant Womens’ Health Information Service Inc. for reasons it can’t state because of its secrecy obligations

BOARD OF TAXATION

EXTERNAL SUPERVISORS – IGT, JCPAA & ANAO etc.

IGT releases new newsletter – ‘IGoT News!’ – covering complaints handling, their reviews, the ATO’s fraud control management; other IGT reviews; taxpayer engagement; unpaid superannuation; taxpayer rights and protection; engaging with the tax profession

IGT has extended the time for making submissions on its investigation into fraud control in the ATO (until 4 Aug 2017)

TAX PRACTITIONERS BOARD & LEGISLATION

TPB statement regarding its approach to recognised professional associations – eligibility via membership or directly if RPA fails accreditation

Appointments to the TPB – including Ms Sotiropoulos: a Tax Barrister at the Victorian Bar

STATE TAXES

Legislation & Announcements (State)

Cases (State)

Rulings & Other (State)

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OTHER DEVELOPMENTS

CPI: 0.2% increase for the June quarter 2017; 1.9% increase for year to 30 June 2017 – relevant for indexation factor for FBT purposes

[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.