Tax Month – March 2014

M o r g a n’ s   T a x   M o n t h

– March 2014 Developments –

This is a collection of developments in Australian tax law and practice that occurred in March 2014 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

*Tax and Superannuation Laws Amendment (2014 Measures No 1) Bill 2014 – becomes law [1]

*Social Services and Other Legislation Amendment Bill 2013 amended: charities amendments deleted so 1 January 2014 start date remains [2]

*Australian Charities and Not-for-Profits Commission (ACNC) Repeal Bill introduced but referred to Senate Committee [3]

*Re-stating and centralising special conditions for tax concession entities: draft leg released [4]

Increased rates of excise and customs duty on tobacco products [5]

Increased excise on tobacco – Bills passed [6]

Developing country relief funds declared [7]

Mining tax and associated measures repeal Bill defeated in the Senate [8]

*Protection for relying on announced but un-enacted tax amendments: draft legislation released [9]

Higher education loan program: repayment income and rates [11]

Student Financial Supplement Scheme (SFSS): repayment income and rates [12]

*Tax Laws Amendment (2014 Measures No 1) Bill 2014 introduced: GST excess refunds; farm management deposits [13]

 

Announcements

*Anti-dividend washing legislation – draft released [14]

*Offshore voluntary disclosure initiative – ATO announcement [15]

*‘Statutory remedial power’ being investigated by Treasury, ATO and Private Sector working group – Parliamentary Secretary to the Treasurer [16]

*Tax hurdles for small businesses to be reviewed by the Board of Taxation by 31 August 2014 (in time to feed into the ‘white paper’ on tax reform) [17]

AUSTRAC signs finance intelligence exchange agreement with Vatican City [18]

*Minerals Exploration Development Incentive – Discussion Paper released [19]

*Treasurer will “explore” lowering GST-free import threshold [20]

 

 

CASES AND APPEALS

High Court

 

Full Federal Court

*Chemical Trustee Limited v DCT – Wickenby: taxpayer loses because estoppel, res judicata and abuse of process claims rejected [21]

*Rigoli v FCT – Onus of showing assessments excessive not discharged by accepting FCT’s calculation but for depreciation – remitted back to AAT [22]

*ATS Pacific Pty Ltd v FCT – GST: Supplies to non-resident travel agents fully taxable – no GST-free element for ‘arranging’ services to foreign travel agent [23]

 

Federal Court

Borcherdt v FCT – Disallowance of fuel tax credit claims largely upheld [24]

*FCT v Dowling – Court finds AAT “fell into error” in disregarding excess super contributions under the ‘special circumstances’ provisions in s292-465 [25]

*SPI PowerNet Pty Ltd v FCT – Taxpayer wins claim for deductions for copyright re purchase of Victorian electricity business [26]

 

Federal Circuit Court

 

Administrative Appeals Tribunal (AAT)

Credit for tax withheld and deductions for work-related expenses disallowed [27]

*Re QHVV and FCT – Amended assessment to be amended to correct amount but 75% penalty affirmed for 2008 year with no return [28]

*Re Thomas and DCT – Serious hardship application fails [29]

*Re Executor for the late Joan E Osborne and FCT – No share trading business operated through power of attorney – principal’s intentions relevant [30]

Re Tier Toys Limited and FCT – Denial of R&D offset confirmed [31]

*Re Macoun and FCT – Early retirement pension from World Bank was exempt from tax as was his salary – under the Privileges and Immunities Act [32]

 

Other Courts & Tribunals

*R v Dunn – Wickenby matter: 7 years’ jail for role in $2.6m tax fraud conspiracy – false interest scheme [33]

‘BJ’ and Australian Taxation Office – Access to documents regarding ‘rights to future income rules’ denied under FoI Act – they were deliberative [34]

*DCT v Roget (No 2) – Summary judgment against company director refused because he may have a defense to the ‘DPN’ liability [35]

*R v Milne (No 2) – Wickenby matter: jail sentence varied and taxpayer released on recognizance order [36]

*FCT v Moodie – Commissioner liable for liquidator’s costs in relation to unfair preference claim [37]

*Power v DCT (No 2) – Director fails to re-open previous adverse DPN finding (where DPN called director’s attention to Div 269 as required) [38]

*DCT v Healy – Appeal against 2007 DPN default judgment denied – argument that Administrator appointed within the 14 days rejected [39]

 

Appeals

*Task Technology Pty Ltd v FCT – Taxpayer appeals decision that payments were a ‘royalty’ under Article 12(7) of the Canada-Australia DTA [40]

*Nelson v FCT – taxpayer appeals to Full Federal Court from decision upholding AAT’s finding that activity was preparatory to carrying on business [41]

*Haritos & Anor – Taxpayer appeals to Full Federal Court from decision assessing it on $20m deposited into a bank over a 4 year period as income [42]

*Australian Building Systems Pty Ltd v FCT – Commissioner appeals to the Full Federal Court from a decision that s254 does apply to a liquidator for CGT [43]

Taras Nominees Pty Ltd as Trustee for the Burnley Street Trust v FCT – Taxpayer appeals decision that vesting land in JV trust was a CGT event [44]

 

 

COMMISSIONER’S PUBLICATIONS

Decision Impact statements

CGT small business relief – daughter was a “puppet director” for her father’s trust, which didn’t have to be grouped with her company: Gutteridge case [45]

*Garnishee notice for horse race winnings because ATO issued it in respect of the wrong taxpayer: ATO Decision Impact Statement (Oops) [46]

Barossa Vines – promoter penalties case – ATO view [47]

 

Rulings

*TR 2014/1 – Commercial software developers: derivation of (pre-paid) income from licence agreements and ‘hosted’ or ‘cloud’ arrangements [48]

*TR 2014/D1 – Tax consequences of employee remuneration trust arrangements – deductible contributions and assessable receipts [49]

TR 2014/D2 – Foreign Income Tax Offset (FITO) limit and hedging transactions – foreign source issues [50]

 

Determinations

TD 2014/2 – Value of goods taken from stock for private use: 2013-14 [51]

*TD 2014/3-6 – FBT rates, thresholds and other amounts for 2014-15 [52]

TD 2014/D8 – Thin cap rules and special purpose securitisation entities [53]

TD 2014/D9 – UK-Australia DTA and the Dividends article [54]

Erratum to TD 2014/1: Dividend access share arrangement – dividend stripping under s177E of Pt IVA? [55]

 

Class Rulings & Product Rulings

CR 2014/24-25 – CGT scrip-for-scrip roll-over; return of capital [56]

CR 2014/26-27 – FBT: gift cards; logbook [57]

PR 2014/4 – Soleir Solar Investment Project 2015 [58]

CR 2014/28-33 – Stapled security; Government payments; executive plan; return of capital; early retirement [59]

 

ATO Interpretive Decisions (ATOIDs)

ATO ID 2014/10 – Franking credits and employee share trusts [60]

 

Practice Statements

PS 2008/5 on private advice, guidance and objections updated by ATO [61]

 

 

Tax Alerts

Other ATO news or statements

*SIC and GIC rates for Apr-Jun 2014 quarter – base rate of 2.63% plus 3 and 7 basis points respectively – so the GIC is 9.63% pa [62]

ATO small business consultation panel – calls for business owners to join [63]

ATO warning – criminals targeting tax practitioners to steal details of their businesses and individual clients [64]

R&D tax incentive registration deadline is 30 April 2014 for standard year balancer’s year ended 30 June 2013 claims – reminder [65]

Parliamentary Committee reports on ATO Annual Report 2012-13 [66]

 

 

GST DEVELOPMENTS

Legislation & Announcements (GST)

Tax Laws Amendment (2014 Measures No 1) Bill 2014 introduced: GST excess refunds (new Div 142 in the GST Act) [67]

*Treasurer will “explore” lowering GST-free import threshold [68]

 

Cases (GST)

*Australia Pacific Pty Ltd & Ors v Building and Construction Industry Authority – GST is part of the ‘cost’ of the project and subject to building training levies [69]

*ATS Pacific Pty Ltd v FCT – GST: Supplies to non-resident travel agents fully taxable – no GST-free element for ‘arranging’ services to foreign travel agent [70]

*Re RV Investments (Aust) Pty Ltd and FCT – Challenge to GST assessments partly successful – whether ‘creditable acquisitions’ and ‘only’ 50% penalty [71]

 

Rulings & Other things (GST)

Tax Office website updates – GST and property [72]

 

 

SUPERANNUATION DEVELOPMENTS

Legislation, Announcements etc. (Super)

Defined benefit contributions for Div 293 tax purposes: draft regs released [73]

 

Cases (Super)

 

Rulings & Other things (Super)

ASIC fines SMSF administrator for “free SMSF” set up claims [74]

*Register of electronic messaging services, whom SMSFs can use to receive electronic messages and payment by 1 July 2014 – Tax Office website update [75]

 

 

CARBON TAX & EMISSIONS REDUCTION FUND

Climate Change Authority (Abolition) Bill defeated in the Senate [76]

Clean Energy Finance Corporation – Bill to abolish it introduced [77]

*Carbon tax repeal Bills defeated in the Senate [78]

 

MINERALS & PETROLEUM RENT RESOURCE RENT TAX

*Mining tax and associated measures repeal Bill defeated in the Senate [79]

Mining tax: nil rate determination and lodgment exemption – Legislative Instrument [80]

More time given to lodge 2014 mining tax return [81]

 

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

*Australian Charities and Not-for-Profits Commission Repeal Bill 2014 introduced [82]

Charities and measuring red tape: ACNC online survey [83]

*Social Services and Other Legislation Amendment Bill 2013 amended: charities amendments deleted so 1 January 2014 start date remains [84]

Re-stating and centralising special conditions for tax concession entities: draft legislation released [85]

 

BOARD OF TAXATION

*Div 7A review second discussion paper: Board of Taxation [86]

*Debt/equity tax rules discussion paper: Board of Taxation [87]

 

EXTERNAL SUPERVISORS – IGoT; OMBUDSMAN, JCPAA & ANAO

 

TAX PRACTITIONERS BOARD & LEGISLATION

Re Burnett and Tax Practitioners Board – Decision not to renew tax agent registration stayed [88]

Re Grosfeld and Tax Practitioners Board – Tax agent’s registration not renewed: not “fit and proper” person [89]

Re Ayles and Tax Practitioners Board – Tax agent registration refused; humanities degree (religious emphasis) not relevant to tax agent services [90]

TPB issues consultation documents on what is a ‘tax (financial) advice service’? and on the CPE and PI requirements for such services [91]

AFS licensees can become registered as a ‘tax (financial) adviser’ by notification to the TPB [92]

Confidentiality of client information: TPB draft information sheet [93]

 

STATE TAXES

Legislation & Announcements (State)

ACT: Duties (Commercial Leases) Amendment Bill introduced [94]

NSW payroll tax: rebate under Fresh Start Support: Bill introduced [95]

NSW: State Revenue Legislation Amendment Bill – update on amendments to Duties Act and land taxes [96]

 

Cases (State)

NSW land tax: De Re & Anor v Chief Comr of State Revenue – primary production exemption denied [97]

NSW stamp duty – LR Corrie Glen Pty Ltd v Chief Comr of State Revenue: Document stamped as a declaration of trust [98]

 

Rulings & Other (State)

ACT payroll tax: exemptions for employment agents – Revenue Circular updated [99]

NSW payroll tax: rebate to encourage hire of retrenched employees [100]

NSW land tax: Neal v Chief Comr of State Revenue – PPR exemption wrongly claimed – 75% penalty tax for “intentional disregard” affirmed [101]

Qld stamp duty: exemption for vestings of land; vehicle registration – Public Rulings [102]

 

OTHER DEVELOPMENTS

Transfer pricing and country-by-country reporting: OECD publishes comments received [103]

OECD paper on transfer pricing comparability data for developing countries – released for comment [104]

OECD BEPS Action Plan: Discussion Document released on Preventing Treaty Abuse [105]

OECD BEPS Action Plan: 2 new drafts released for comment [106]

Tax challenges of the digital economy: OECD draft discussion paper [107]

*Official interest rates left on hold at 2.5% [108]

Pensions to increase from 20 March [109]

*Unexplained Wealth Amendment Bill introduced [110]

Farm Household Support Bills introduced – income tested but assets test enough to allow for their farm [111]

Public infrastructure: Draft Productivity Commission report released [112]

Rio Tinto publishes details of its global tax payments [113]

FoFA streamlining Bill introduced [114]

FoFA amendments welcomed by FPA; SPAA positive on best interests duty amendments [115]

FOFA changes ‘paused’ by Senator Cormann [116]

Repeal of obsolete Legislation Bills introduced [117]

Paid Parental Leave Amendment Bill introduced [118]

Personal Property Securities Amendment Bill introduced – to minimise the need for registrations in respect of leases of a term of less than 12 months [119]

*Assistant Treasurer Sinodinos steps aside [120]

Shift FBT from employers to employees, says Institute of Public Accountants [121]

Financial System Inquiry – International Advisory Panel members announced [122]

Seniors Health Card indexation: Bill introduced [123]

 

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