Tax Month – June 2018

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

– June 2018 Developments –

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

     Acts etc.

• Personal income tax cuts – Bill to implement the 2018 Budget announcement to abolish the 37% rate and extend the 32.5% rate out to $200k – passes Lower House & Senate Committee recommends it be passed
• Treasury Laws Amendment (Tax Integrity and Other Measures No 2) Bill 2018 – Hybrid Mismatch Rules; Film Producer Offset; Tax Exemption for World Twenty20 Cricket; Korean War Memorial DGR – passed Lower House
• Treasury Laws Amendment (2018 Measures No. 4) Bill 2018 – strengthen SG Super contribution compliance, MySuper Core Provisions, Common Reporting Standard, off-shore information notices, disclose SCT information, update DGRs
• Reduction of ‘private companies’ total income threshold, for public reporting of high level tax data – Private Senator’s Bill passes Senate and moves to Lower House
• ‘Seasonal Workers’ – Commissioner exempts ‘substantial’ employers from having to report under the Div 389 ‘One Touch’ reporting system (see ‘One Touch’ overview, too)

     Announcements

• Significant Global Entity definition broadened – to include groups headed by partnerships, trusts and private equity investors ($1b turnover threshold unchanged)
• Stapled Structures – Integrity Measures Proposal Paper – extend existing MIT ‘arm’s length rent rule’ and introduce ‘statutory caps’ on cross-staple rent etc.

Cases

     High Court

• —

     Full Federal Court

• —

     Federal Court

• —

     Other Courts & Tribunals

• —

     Administrative Appeals Tribunal (AAT)

• —

     Appeals

• —

Rulings

     Decision Impact statements

• —

     Rulings

• TR 2018/5 & PCG 2018/D3 – Company residence: ‘central management and control’ test after the Bywater Investments decision
• ‘Government services’ articles in Australia’s DTAs – Addendum to TR 2005/8 to update various changes
• TR 2018/4 – Effective life of depreciating assets from 1 July 2018 – Commissioner’s determination under s40-100

     Determinations

• TD 2018/D2 – s40-80(1) instant write-off for the cost of mining rights etc. first ‘used’ for exploration – by doing something permitted by the relevant ‘right’
• TD 2018/10 – Value of goods taken from stock for private use

     Law Companion Rulings

• —

     Class Rulings & Product Rulings

• PR 2018/6 – Investment in Chan & Naylor Property Investor Trust – interest deductible and Part IVA doesn’t apply

     ATO Interpretative Decisions

• —

     Practice Statements

• —

     Practical Compliance Guides

• PCG 2018/D4 – Anti-Hybrid Bill – ATO would not apply Part IVA to a scheme to unwind certain arrangements before the 1 January 2019 start date of the new Bill (avoiding a future ‘tax benefit’)
• Non-core Procurement Hubs – draft ‘Second Schedule’ to PCG 2017/1 – transfer pricing ‘green zone’ 25% markup or 100% attribution

     Tax Alerts

• —

     Other ATO news or statements

• GIC rate (8.96%) and SIC (4.96%) rates for the first quarter of 2018-19 – modest increases over the last year
• Professional firms income allocation (income splitting) – no real pre-30 June 2018 replacement guidance from the ATO
• ATO Reportable Tax Position Schedule – ATO updates its website to encourage a wide interpretation of RTP questions

GST 

     Legislation & Announcements (GST)

• —

     Cases (GST)

• —

     Rulings, Etc. (GST)

• LCR 2018/4 – purchasers’ obligation to pay GST amounts on taxable supplies of certain ‘new’ residential premises and potential residential land – including ‘clarification’ of wrongly withheld refunds
• GST withholding on purchase of certain ‘new’ residential premises and ‘potential residential land’ – Commissioner releases relevant online forms and instructions
• GSTR 2006/6 – meaning of ‘no improvements on the land’ – draft changes to the ‘Explanation’ section (relevant for GST-free Government grants and the ‘margin scheme’

Superannuation 

     Legislation, Announcements etc. (Super)

• Superannuation Integrity Measures Bill – SG Amnesty, SG Opt-out for certain high earning employees, NALI extended to non-arm’s length expenses, LRBA changes – passes Lower House 21 June 2018
• 12 month Superannuation Guarantee Amnesty – to cover shortfalls over nearly 26 years from 1 July 1992 to 31 March 2018, disclosed between 24 March 2018 to 23 May 2019
• Super protection Bill – ‘exit fee’ prohibition; sub$6k small accounts: 3% fee cap, ‘opt-in’ insurance (under 25’s & ‘inactive’), transfer ‘inactive’ accounts to Commissioner; transfer ‘inactive’ to ‘active’ accounts
• Superannuation – ‘Member Information Accounts’ under s390-5 – Commissioner’s determination of ‘Approved Form’ registered – applies from 1 July 2018

     Cases (Super)

• —

     Rulings etc. (Super)

• —

State Taxes

     Legislation & Announcements (State)

• SA: Transfer Duty – no duty on transfers of non-residential and non-primary production land executed on or after 1 July 2018 (replaced by 0.825% ad valorem registration fee)
• State Taxation Acts Amendment Bill 2018 (Vic) – changes to the Duties Act to reverse the ‘Danvest’ partnership interest decision, widen the foreign purchaser definition and other changes – Act No 22 of 2018
• Qld Budget – 50% payroll tax rebate extended to 30 June 2019, reduction in first home owner’s grant, land tax increase over $10m, increase in Foreign Acquirer Duty by 3% to 7%

     Cases (State)

• NSW Duty – Winston-Smith v Chief Comr of State Revenue– NSW ‘landholder’ duty applied because it was ‘just or reasonable’ and the s163H discretion to exempt the transfer of shares did not apply

     Rulings & Other (State)

• —

Other Developments

    Australian Charities & Not-for-profits Commission (ACNC)

• —

     Base Erosion & Profit Shifting (BEPS)

• Taxing digital business in Australia – Treasury discussion paper to be issued
• ATO to wrap up Panama Papers investigations with $65m assessments & 3 criminal investigations; Paradise Papers still a WIP for multi-authority investigations

     Board of Taxation

• —

    Inspector General of Taxation, National Audit Office & JCPAA (Supervision of ATO)

• Tax Inspector-General reports on huge increase in complaints since the Four Corners allegations of ATO collections abuses – in appearance before the Senate Estimates Committee

    Tax Practitioners Board (TPB), etc.

• —

     Miscellaneous

• 2018 Year End Tax Planning ‘toolkit’ put out by Pitcher Partners

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[i]           Sources – abbreviations: ‘KPMG’: KPMG Daily Tax News; ‘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; ‘Vine’: The Tax Institute’s ‘Tax Vine’.