Tax Month – November 2017

 

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

– November 2017 Developments –

This is a collection of developments in Australian tax law and practice that occurred in November 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 (2017 Measures No 2) Regulations 2017 – to streamline the GST ‘tourist refund scheme’ and to exempt the Defence Industry science and technology charity: MITRE from income tax
• Singapore-Australia Free Trade Agreement – regulations to determine regional value content and FTA record keeping and duty refunds
• Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 enacted – limit travel deductions for residential rental; limit depreciation deductions; implement an annual foreign owner vacancy fee (dwelling occupied less than 183 days)

Announcements

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BASE EROSION & PROFIT SHIFTING (BEPS)

• ICIJ releases The ‘Paradise Papers’ (Bermuda) – echoes of the ‘Panama Papers’ – 13 million documents, from over 50 years leaked from Appleby law firm involving multi-nationals, politicians, political donors (and more … )
• Labor’s tax policies to fight international tax avoidance: ‘tax haven’ notice to shareholders; beneficial owners register; whistleblower bounties; CbC excerpts published; tax domicile disclosed for Federal procurement
• Implementing the OECD Hybrid Mismatch Rules – draft bill to insert new Div 832 of the ITAA97
• ATO grants extension of time to lodge CbC reports – for December Balancers – to 15 February 2018
• OECD releases ‘mutual agreement procedure’ (MAP) statistics for 2016 released and discussed
• OECD/BEPS – Multi-lateral Convention (MLI) – Parliament’s Joint Standing Committee on Treaties’ Report supports the ‘multi-lateral treaty’ approach
• OECD approves the 2017 update to the OECD Model Tax Convention

CASES AND APPEALS

High Court

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Full Federal Court

• FCT v Hacon Pty Ltd & Ors – no private ruling required – discretion not to rule activated
• Zappia v CofT – Taxpayer fails to discharge her onus of proof by relying on facts found by the Commissioner in his objection decision 

Federal Court

• Fastbet Investments Pty Ltd v DCT – taxpayer fails in action to challenge the Commissioner’s demand for mortgage security over each of its parcels of land
• DCT v SMAR Nominees Pty Ltd (in liq) – winding up order, obtained in ignorance of the action, set aside by consent, on evidence of solvency and arrangements to pay the tax and liquidators fees
• DCT v Ma – DCT granted freezing orders over Australian assets for collection of NZ tax debts

Administrative Appeals Tribunal (AAT)

• Watts v CofT – work related deductions denied – expensive cloths required but not vocationally specific and for travel expenses up to the Commissioner’s reasonable limits, although not incurred – 50% penalty upheld
• VPRX v CofT – Agreement to sell domain name with website, produced a stream of receipts, detected by AUSTRAC, and assessed as income under an associated ‘revenue share agreement’ with 75% penalty

Other Courts & Tribunals

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Appeals

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COMMISSIONER’S PUBLICATIONS & NEWS

Decision Impact statements

• Commissioner of Taxation v. Jayasinghe – Commissioner’s ‘Decision Impact Statement’ on High Court decision that income from UN was not exempt

Rulings

• TR 2017/D7 – Commissioner will expand the scope of his ruling on when a company ‘carries on a business’ to the substantive law (not just when the 27.5% lower corporate rate applies)

Determinations

• TD 2017/22 Addendum – Foreign equity distributions to corporate beneficiaries can hold a can “hold” a direct control interest in a foreign company and a corporate beneficiary can have a 10% ‘participation’ interest – but not until year end when the income entitlement arises
• TD 2017/20 – Family Trust Distribution Tax: extended definition of ‘distribute’ is not limited to beneficiaries but will exclude ordinary business transactions on arm’s length terms

 

Law Companion Guides

• LCG 2015/3 – CbC reporting – Addendum deleted paragraph about exempting entities exempt from tax under Div 50 – Commonwealth and State Entities

Class Rulings & Product Rulings

• Class Ruling CR 2017/74 – CGT treatment of disposal of PaperlinX Step-Up Preference Securities in exchange for Spicers ordinary shares
• CR 2017/78-81 – Scheme of Arrangement and Special Dividends; Fuel Tax Credit Report generated by the GPSI fleet system; early retirement scheme

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 statement regarding the ‘Paradise Papers’ – ATO with JITSIC will add this, to their efforts in processing the ‘Panama Papers’ – targeting Australian connections

GST DEVELOPMENTS

Legislation & Announcements (GST)

• Treasury publishes Exposure Draft of legislation requiring purchasers of new residential premises to pay GST

Treasury Laws Amendment (2017 Measures No 2) Regulations 2017 – to streamline the GST ‘tourist refund scheme’ and to exempt the Defence Industry science and technology charity: MITRE from income tax

Cases (GST)

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Rulings, Etc. (GST)

• Collection models for GST on low value imports – Productivity Commissioner report released saying the recently legislated model has limitations and may not work but see how it goes over the next 5 years
• GST-free Adult and Community Education Courses: ATO updates its website guidance

SUPERANNUATION DEVELOPMENTS

Legislation, Announcements etc. (Super)

• ATO finalises its position in relation to SMSF event-based reporting – annually in respect of members with less than $1m transfer balance account balances and quarterly for others

Cases (Super)

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Rulings & Other things (Super)

• SMSF property investments service provider pleads guilty to dishonesty obtaining client money and knowingly dealing with the proceeds of crime – refused bail, awaiting sentence in June 2018 and in jail for other offences

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

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BOARD OF TAXATION

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EXTERNAL SUPERVISORS – IGT, JCPAA & ANAO etc.

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TAX PRACTITIONERS BOARD & LEGISLATION

Mendonca and Tax Practitioners Board – AAT held it had no jurisdiction to review Board’s decision not to investigate a complaint – as it did not relate to ‘tax agent services’

STATE TAXES

Legislation & Announcements (State)

• NSW State Debt Recovery Bill 2017 introduced – NSW State Revenue Commissioner to be allowed to recover other NSW agency receivables using all his powers (ouch)
• NSW: Revenue Legislation Amendment (Surcharge) Bill passed – exemption from Foreign owned purchaser surcharge for development of homes & form of declaration for small business exemption from insurance duty
• SA: Budget Measures Bill 2017 – Legislative Council votes to remove bank levy but House of Assembly disagrees
• Vic taxes: State Taxation Acts Further Amendment Bill 2017 – Congestion Tax exemption; foreign purchaser additional duty; first home buyer duty concession; absentee owners land tax surcharge; land tax exemption; payroll tax exemption for training organisations

Cases (State)

• ACT duty: land tax – Samani & Anor v Comr for ACT Revenue – land tax assessed as not sufficient evidence Commissioner told property rented not principal residence
• NSW land tax: Teebee Holdings Pty Ltd atf Teebee Property Trust v Chief Comr of State Revenue – primary production exemption denied for nominal tree farming on 9 of 73 hectares – zoned rural and environmental and residential

 

Rulings & Other (State)

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OTHER DEVELOPMENTS

• US Major Tax Reform – House of Reps passes Bill as debate moves to the Senate – biggest overhaul of US Code since Regan in 1986 – lower & fewer rates, fewer deductions, exacerbates deficit, drives economy, markets love it, some republican Senators hate it (interesting times…)

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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.