Tax Month – May 2018

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

– May 2018 Developments –

This is a collection of developments in Australian tax law and practice that occurred in May 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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ACTS, BILLS AND ANNOUNCEMENTS

Acts, Bills & Draft Legislation

• 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
• Treasury Laws Amendment (Tax Integrity and Other Measures No 2) Bill 2018 – introducing: Hybrid Mismatch Rules; Film Producer Offset; Tax Exemption for World Twenty20 Cricket; Korean War Memorial DGR
• Treasury Laws Amendment (Accelerated Depreciation for Small Business Entities) Bill 2018 – to extend the ‘Small Business Entity’ instant asset write-off, by 12 months, to 30 June 2019 – Senate Committee recommends passing Bill
• Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018 passes Lower House – introducing offences and penalties for ‘sales suppression tools’ and adding ‘cleaning’ and ‘courier’ payments as reportable to the ATO

Announcements

• Labor’s Budget Reply – bigger tax cuts than the Government’s but it will only agree to Stage 1 of Government’s 3 stage measure
• Allocation of profits within professional firms – a flurry of recent developments
• Budget Measure – limiting CGT Concessions to partners of ‘small’ partnerships, resulting in many ‘Everett’ assignments of partnership interests being subject to prohibitive CGT again
• $10k cash payment limit – Government commences consultation on this Budget ‘black economy’ measure to start on 1 July 2019
• Corporate tax avoidance – Senate committee releases final report – 13 recommendation after a 3.5 year torrid inquiry – legislation already fixed some problems

2018 FEDERAL BUDGET ANNOUNCEMENTS (not GST or Super)

• $20,000 instant asset write-off extended by another 12 months, to 30 June 2019
• Ban on cash payments over $10,000 to counter the ‘black economy’ – Federal Budget measure
• Significant Global Entity’ – change to definition – same $1b global turnover but wider group of ‘parent entities’ that can establish the ‘global’ group
• Managed Investment Trusts (MITs) – 56 countries added to the list entitled to the lower 15% withholding rate (new information sharing countries since 2012)
• Measures to target ‘illegal phoenixing’ – including extending the DPN regime to GST (to make directors liable), restricting ‘related creditors’ voting rights, withholding refunds when returns outstanding

CASES AND APPEALS

High Court

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Full Federal Court

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Federal Court

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Other Courts & Tribunals

• Guss v Storace (Australian Taxation Office) – Service of the Final Notice was proved and the offence for failing to lodge his 2010 – 2013 returns was upheld

Administrative Appeals Tribunal (AAT)

• Jonshagen v CofT – No extension of time to object against a scheme assessment in the 2000 year – 2nd time round after failing previously in the 1998 and 1999 years

Appeals

• —

COMMISSIONER’S PUBLICATIONS & NEWS

Decision Impact statements

• Denmark Community Windfarm Ltd v CofT – Grant to establish wind farms triggers an assessable recoupment as ‘indemnity’ and depreciation under the optional method for ‘small business entities’ & now a DIS

Rulings

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Determinations

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Law Companion Rulings

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Class Rulings & Product Rulings

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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

• ATO updates its audit risk ‘guidelines’ on allocation of profits within professional firms
• Post Budget meeting of ATO’s ‘Professional Firms Working Group’ – income splitting guidance after crimping Small Business CGT relief exposes many ‘Everett’ assignments again

GST DEVELOPMENTS

Legislation & Announcements (GST)

• GST – turnover on selling Australian hotel rooms now counts again for registering for GST – ‘levelling the playing field’ for online bookings
• The Budget war on phoenix activity – DPN liability of directors will extend to unpaid GST liabilities of their companies (but which GST liabilities?)

Cases (GST)

• Decleah Investments Pty Ltd v CofT – GST: ‘margin scheme’ applied to taxpayer’s 1 July 2000 value – value based on discounting actual (not predicted) cash flows was ‘not contrary’ to the relevant professional valuation standards

Rulings, Etc. (GST)

• Amazon – ‘geo-blocks’ Australians back to its (thinly stocked and uncompetitive) Australian hub rather than have the US pay Australian GST from 1 July 2018

SUPERANNUATION DEVELOPMENTS

Legislation, Announcements etc. (Super)

• Exemption from ‘at least part-time’ Work test for member and employer contributions – for first year 65-74 year olds fail the test, if balance under $300k
• Family Law ‘superannuation splitting’ – Determination gazetted, setting 4.9% as the 2017/18 adjustment to the ‘base amount’ split of ‘defined benefit’ and SMSF interests, when ultimately paid to the non-member spouse
• Early release of super on ‘Compassionate Grounds’ – Commissioner of Taxation becomes the ‘regulator’ on 1 July 2018 (replacing the Chief Executive of Medicare)

Cases (Super)

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Rulings & Other things (Super)

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

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BOARD OF TAXATION

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EXTERNAL SUPERVISORS – IGT, JCPAA & ANAO etc.

• IGT will investigate the ‘Four Corners’ allegations that the ATO has abused its ‘garnishee’ collections powers

TAX PRACTITIONERS BOARD & LEGISLATION

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STATE TAXES

Legislation & Announcements (State)

• 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

Cases (State)

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Rulings & Other (State)

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OTHER DEVELOPMENTS

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[i]           Sources – abbreviations: ‘KPMG DTN’: 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’.