Tax Month – June 2017

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

– June 2017 Developments –

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

Treasury Laws Amendment (Accelerated Depreciation for Small Business Entities) Bill 2017 – 12 month extension of period for 100% depreciation deduction of $20,000 1st element or 2nd element asset cost amounts, in any one year – to 30 June 2018

Treasury Laws Amendment (2017 Measures No 2) Bill 2017 – passed all stages – amends 6 Acts to make technical changes relating to the $1.6m ‘transfer balance cap’ superannuation legislation and related measures

Treasury Laws Amendment (Foreign Resident Capital Gains Withholding Payments) Bill 2017 – withholding obligation increased from 10% to 12.5% and residential threshold reduced from $2m to $750k with effect from 1 July 2017

Announcements

Tax deductions inquiry report by Parliamentary Committee tabled – recommendations include keeping ‘work related expense’ deductions but quantifying and policing them better and no significant change for companies (particularly interest deductions)

Deductible Gift Recipient (DGR) tax arrangements – Treasury releases discussion paper to commence a review of this important segment

BASE EROSION & PROFIT SHIFTING (BEPS)

Multilateral Treaty Convention – signed by Australian Minister and 67 other jurisdictions, 30 of which will modify Australia’s DTT’s with them – Treasury summarises Australia’s position

Country by Country (CbC) Reporting – EU Parliamentary Committee resolves that Big Multinationals (750 Euro plus global turnover) must PUBLICLY report tax affairs in each country – including countries outside the EU

CASES AND APPEALS

High Court

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Full Federal Court

Federal Court

News Australia Holdings Pty Ltd v FCT – interest income not yet paid was still held to have been ‘derived’ during the year as this was the correct ‘reflex’ of income for that year

Hacon v C of T (Cwth) – the Court held that the Commissioner’s decision not to rule because he needed more information (which he did not go on and ask for) was an error of law and was quashed

DCT v A & S Services Australia Pty Ltd (No 2); DNV Accountants & Business Advisors (No 2); Bolton & Swan Pty Ltd (No 2); Ainslie Harding & Wood Solicitors Pty Ltd (No 2) – After provisional liquidators were appointed to non-compliant / ‘phoenix’ companies the Federal Court would them up on the ‘just and equitable ground’

Administrative Appeals Tribunal (AAT)

Other Courts & Tribunals

Man jailed for 5 years for $3.1m GST fraud in building a golf course and not GST on multi-step supplies

Appeals

COMMISSIONER’S PUBLICATIONS & NEWS

Decision Impact statements

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Rulings

TR 2017/D5 – Employee remuneration trusts (not Div 83A ’employee share schemes’) – tax effects for employers, trustees and employees

Determinations

TD 2017/16 – Commissioner publishes the next indexed ‘CGT improvement threshold’ for the purposes of post-CGT improvements to pre-CGT land being a separate asset under s108-70 & s108-75

TD 2017/D1 – proposal to rule that the wider definition of ‘distributions’ (that catches nearly every transaction at ‘undervalue’) can apply to non-beneficiaries too – s272-60 of Sch 2F, ITAA 1936

TD 2017/D2 – Commissioner proposes to rule that ‘dividend equivalent payments’ from a trustee of an ESS trust, to an employee beneficiary, out of s99A taxed dividends, can still be assessed as employment related ‘ordinary income’

Law Companion Guides

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Class Rulings & Product Rulings

ATO Interpretative Decisions

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Practice Statements

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Practical Compliance Guides

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Tax Alerts

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Other ATO news or statements

Privately owned and wealthy groups – the ATO lists the features that attract its audit and investigation interest

ATO’s review of private advice – offering early engagement like ‘big business’ and streamlined ruling application form

GST DEVELOPMENTS

Legislation & Announcements (GST)

Treasury Laws Amendment (GST Low Value Goods) Bill 2017 –  Bill to impose Australian GST on foreign vendors of sub-$1,000 goods passes Lower House but Labor flags amendments to delay its introduction 1 year whilst the Productivity Commission investigates other methods of levelling the GST playing field

Treasury Laws Amendment (GST Integrity) Bill 2017 – voluntary and mandatory ‘reverse supply’ provisions for supplies of gold, silver and platinum and related changes to the definition of ‘second hand goods’ for ‘integrity’ reasons

Cases (GST)

Morgan and FCT – taxpayer with a hardware business and collectables auction businesses assessed to GST and penalties and failed to have either set aside through lack of evidence (taxpayers’ onus)

Rulings, Etc. (GST)

GSTR 2017/1 – ruling for overseas suppliers about when they can be satisfied that a recipient is an ‘Australian Consumer’ for the purposes of the supply being taxable under the ‘Netflix’ provisions

LCG 2017/D4 – when an ‘electronic distribution platforms’ operator is liable for Australian GST under the ‘Netflix’ intangible supplies laws and the low value import laws

LCG 2017/D5 – when ‘re-deliverers’ (and which re-deliverers) are liable for Australian GST on the supply of low-value imported goods

SUPERANNUATION DEVELOPMENTS

Legislation, Announcements etc. (Super)

Treasury Laws Amendment (2017 Measures No 2) Bill 2017 – passed all stages – amends 6 Acts to make technical changes relating to the $1.6m ‘transfer balance cap’ superannuation legislation and related measures

Cases (Super)

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Rulings & Other things (Super)

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

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BOARD OF TAXATION

EXTERNAL SUPERVISORS – IGT, JCPAA & ANAO etc.

TAX PRACTITIONERS BOARD & LEGISLATION

STATE TAXES

Legislation & Announcements (State)

ACT – State Taxes – 2017 Budget announcements: land tax on residences unless ‘PPR’; conveyance rates on commercial properties separated to allow them to phased out; rates and gaming tax rebate

Cases (State)

NSW – Land Tax – D W Tolson Management Pty Ltd v Chief Comr of State Revenue – land used to rotate cattle used on other properties to eat mushroom waste was a use ‘too remote’ for exemption under a dominant purpose of mushroom propagation

Vic – Payroll Tax – Telecommunications Industry Ombudsman Ltd v Comr of State Revenue (Vic) – taxpayer’s wages  exempt – it was a ‘non-profit organisation’ with a dominant charitable purpose – despite being part of a statutory scheme

Rulings & Other (State)

Qld – Duty – Ruling: DA228.1.1 – When the ‘corporate trustee duty’ deduction is available under s228 of the Duties Act (for ordinary transfer duty also paid)

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.