T a x T e c h n i c a l – M o n t h l y N e w s
– May 2016 Developments –
This is a collection of developments in Australian tax law and practice that occurred in March 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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ACTS, BILLS AND ANNOUNCEMES
Acts, Bills & Draft Legislation
Tax Laws Amendment (Tougher Penalties for Country-by-Country Reporting) Bill 2016 [No 2] – Private members Bill to increase C-b-C reporting penalties up to 1500 units ($270k at present)
Tax Laws Amendment (Tax Incentives for Innovation) Bill 2016 – Act No. 54 – tax incentives for investing in ‘early stage innovation companies’: 20% offset; capital treatment; 10 year CGT exemption
Industry Research and Development Amendment (Innovation and Science Australia) Bill 2016 introduced to make consequential amendments (and lapsed on Parliament being dissolved)
Managed Investment Trust Bills – package of 4 Bills passed into law
Medicare Levy and Surcharge Bill receives Assent
Exemption to new ATO third party reporting obligations – FCT’s legislative instrument excludes reports of changes in shareholders/unitholders in listed entities not covered by ASIC integrity reporting and for certain small trusts under $5m in total assets
Tax Bills to lapse when election called and both houses of the Federal Parliament were dissolved
Foreign resident capital gains withholding – amendments to regulations to exempt market transactions on the Chi-X exchange and also to exempt conveyancers’s functions from being ‘tax agent services’
Higher Education Loan Program (HELP) repayment rates and thresholds for the 2016-17 financial year
NSW Amendments designed to feed information to the ATO for data matching and the ‘National Register of Foreign Ownership of Land Titles’
Greens oppose backpacker tax
Announcements – General
OECD proposals for mandatory disclosure of aggressive tax positions: Treasury issues paper to consult on how this should be implemented given the existing Australian laws
Encouraging venture capital investment in Financial Technology (‘FinTech’) – Govt seeks feedback, including on targeted tax incentives
Diverted profits tax consultation paper – design features set out
New FIRB ‘taxation conditions’ – comply with taxation laws; provide documents etc.; pay tax; annual report on compliance and extra tax risk conditions
Treasury modelling for 2016-17 Budget measures released – Effects of company rate tax cut; economy wide GDP uplift of 1% from budget measures; consultation on WET integrity measures and ‘portfolio’ budget statements (ATO, IGoT etc.)
‘Digital currency – Game Changer or Bit Player’: Government response to Senate Economics References Committee Report
Panama Papers – ICIJ announces searchable database of 300,000 off-shore entities and structures kept secret and the response of various nations
No ‘backpacker tax’ on 1 July 2016 – Government will review this proposed measure and enact any change prospectively
Announcements – Budget (General)
Budget Tax Announcements – ATO website pages including a list of starting dates
CASES AND APPEALS
High Court
Bell Group companies in liquidation – WA legislation to give the WA Government discretion as to how to distribute the proceeds of the liquidations held to be unconstitutional as inconsistent with Federal tax legislation
Bywater Investments Limited (Hua Wang Bank Berhad) v Commissioner of Taxation – HC grants leave to appeal residency decision
Blank v FCT – High Court gives leave to the Taxpayer to appeal the 3-2 FFC decision that USD 160m paid, in instalments, on termination of his employment, based on his profit participation scheme, was ordinary income
ACN 005 057 349 Pty Ltd v Comr of State Revenue – recovery of double assessed of land tax
Full Federal Court
FCT v Seven Network Limited – Payments to the IOC for the broadcasting rights to the Olympics (i.e. for the ‘use’ their ITVR Signal) not ‘royalties’ within the Double Tax Treaty and required no withholding – Commissioner loses appeal
Federal Court
FCT v Bosanac – Summary judgment for $15m; claim of “conscious maladministration” fails; tax still relevantly ‘contestable’ even if bankrupted
Charara v FCT – AAT erred in exercising its s42A(5) power to dismiss his GST review application of self represented taxpayer for failure to prosecute it (denied procedural fairness etc.)
Featherby v FCT – No grounds to re-open case to hear further submissions from taxpayer (exceptional circumstances, especially for submissions)
FCT v AP Energy Investments Pty Ltd – a Chinese company was not liable for CGT on sale of shares in Australian mining company because of the first instance Tribunal decision as to the value of ‘mining information’
Delis & Anor v Tax Practitioners’ Board – Federal Court upholds AAT’s decision refusing registration of the tax agent because he was not a ‘fit and proper person’
Administrative Appeals Tribunal (AAT)
Other Courts & Tribunals
DCT v Holton – Court upholds the liability of director for $264,000 the amount his company withheld from wages and had not remitted to the ATO
Appeals
FCT v Rawson Finances Pty Ltd – taxpayer appeals Federal Court’s order that a letter of request be sent to the judicial authorities in Israel under the Foreign Evidence Act 1994
FCT v Bosanac – taxpayers appeal to the Full Federal Court – conscious maladministration alleged from assessments to both husband ($9.3m) and wife ($5.6m) despite wife having no business experience
COMMISSIONER’S PUBLICATIONS & NEWS
Decision Impact statements
Rulings
TR 2016/2 – TOFA – swaps – to be covered under accrual/realisation rules they must meet the definition in s230-120(1) of the ITAA97
Determinations
FBT car parking threshold is $8.48 and Luxury Car Tax threshold is $64,132
Law Companion Guides
LCG 2015/4-14 – Managed Investment Trusts (MIT) and Attributions MITs (AMITs) – Law Companion Guides updated for Royal Assent of the package of 4 Bills
Class Rulings & Product Rulings
CR 2016/24 & 25 – Early Retirement Scheme and Scheme of Arrangement and payment of an ‘interim’ and ‘special’ dividend
CR 2016/29 & 30 – Bank clients using their debit card for entertainment fringe benefits and the application of the ‘scrip for scrip’ rollover provisions to the acquisition of ‘Recall Holdings Limited’
CR 2016/31-33 – FBT car log book; FBT entertainment; off market take over
PR 2016/4 & 5 – W.A. Blue Gum Project 2016 & AgriWealth 2016 Softwood Timber Project
ATO Interpretative Decisions
Practice Statements
PS LA 2016/2 – Transfer pricing penalties for Subdiv 815-A: 25% or 10% if reasonably arguable rising (c/f 50% or 25% for post transition Subdiv 815B adjustments)
Practical Compliance Guides
Tax Alerts
Other ATO news or statements
Annual tax returns for the 2016 financial year – Commissioner registers ‘legislative instruments’ creating the requirement to lodge
Managed investment trusts – ATO information on MIT’s electing in early from 1 July 2015
ATO timetable for reporting of non-resident accounts (under ‘CRS’ & FATCA’) – starting 1 July 2017 and applying to all foreign accounts in the 2018 calendar year
GST DEVELOPMENTS
Legislation & Announcements (GST)
GST – Tax and Superannuation Laws Amendment (2016 Measures No 1) Bill 2016 – now Act No. 52 of 2016 with amendments to the ‘cross-border’ provision to allow ‘resident agents’ to continue being liable for ‘non-residents’ GST
NDIS supplies made GST-free supplies under 2013 Ministerial Determination extended 12 months to 30 June 2017 to enable a full review
Cases (GST)
Re: Paul J Castan & Son Pty Ltd atf Castan Investments Unit Trust and FCT – owner of hotel made supplies of commercial residential premises not the operator (which had exclusive control but not ownership)
Rulings, Announcements, Etc (GST)
PCG 2016/7 – GST joint ventures in energy and resource industry – Practical Guidance on supplies involving common participants or operations or both
LCG 2016/1 – GST: new law for supplies into Australia, including a new test for carrying on enterprise in Australia
SUPERANNUATION DEVELOPMENTS
Legislation, Announcements etc. (Super)
Cases (Super)
Rulings & Other things (Super)
Review of retirement income stream regulation – Government releases Review Report recommending that the current annual minimum drawdown requirements be continued but that other requirements be relaxed
AUSTRALIAN CHARITIES & NOT-FOR-PROFITS (ACNC) SECTOR
Private Ancillary Fund and Public Ancillary Fund Guidelines amended for ACNC, to reduce ‘red tape’, investment strategy to consider charity status and conflicts of interest and allow Ancillary funds to provide loan guarantees to donee DGRs
BOARD OF TAXATION
Voluntary ‘Tax Transparency Code (TTC) – Board recommendations for Large companies (over $500m turnover) and Medium companies (over $100m turnover) – report released
Report on implementing OECD’s BEPS Action 2 to eliminate hybrid mismatch arrangements – report released with announcement to legislate
EXTERNAL SUPERVISORS – IGT, JCPAA & ANAO etc.
External scrutiny of ATO – Committee tables its report: no big changes but better coordination needed between supervising authorities and ATO-IGoT improve communication
Recommendations on 2015 Annual Report of the ATO – Standing Committee on Tax and Revenue’s report handed down
TAX PRACTITIONERS BOARD & LEGISLATION
Tax (financial) advisers’ code of professional conduct – draft TPB Information Sheets on Code of Professional Conduct obligations: conflicts of interest; know your client; best interests of client; etc.
STATE TAXES
Legislation & Announcements (State)
NSW: State Revenue Legislation Amendment Bill 2016 – receives Royal Assent – various tax changes included
NT Budget 2016-17: 50% discount on transfer duty for first home buyers for 14 months (capped at $10,000)
WA Budget 2016-17: land tax – no increase and reduced rate options will be examined
Cases (State)
NSW stamp duty – Perizon Nominees Pty Ltd v Chief Comr of State Revenue – “no double duty” concession (to avoid both contract and transfer being taxed) did not apply as the family trust transferee did not exist at contract time
NSW payroll tax – Namoi Tyreright Pty Ltd v Chief Comr of State Revenue – discretion to degroup refused because business was not independent and of connections to others in the group
NSW land tax: Theophilas v Chief Comr of State Revenue – Principal Place of Residence (PPR) concession not available as taxpayer moved to another house he ‘owned’ whilst his was rebuilt
Vic land tax: Kameel Pty Ltd v Comr of State Revenue – Vendor taxpayer wins appeal; purchaser in possession is deemed the owner of land under s15
Vic stamp duty: Michaelides & Anor v Com of State Revenue – alteration in the trust/trust property – exemption denied – taxpayers lose appeal
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.
