Tax Month – November 2018

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

– November 2018 Developments –

This is a collection of developments in Australian tax law and practice that occurred in November 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.

• —

Announcements

• Labor’s negative gearing restrictions – TTI digs into detail and reveals it applies to all investment types, but on an aggregate basis – total investment deductions capped at total investment income
• ‘Small business’ – Minister announces support for resolving Federal tax disputes: (1) new Concierge service for advice about an AAT appeal and (2) special division in the AAT for post application support and legal fee support, if ATO appeals AAT decision

Cases

High Court

• —

Full Federal Court

• —

Federal Court

• Burton v CofT – only 50% ‘foreign income tax offset’ (FITO) for US capital gains tax, levied on the whole gain (because of our 50% CGT discount)

Administrative Appeals Tribunal (AAT)

• EE&C Pty Ltd as Trustee for the Tarcisio Cremasco Family Trust v CofT – Deed of settlement effective to contract out of objection rights for taxpayer – no basis for AAT review
• Mavris v CofT – AAT’s decision, partly infavour of the Taxpayer (on LCT) was not invalidated by his death after the hearing and submissions – no statutory basis and pointless
• Ransley v CofT – Profit on sale of mining shares assessable as ‘ordinary income’ – not a capital gain protected by ‘scrip for scrip’ rollover – 50% ‘reckless’ penalty upheld

Other Courts & Tribunals

• DCT v Doyle – Taxpayer fails to stay recovery of $14m tax debt – merits of objections unclear and no extreme hardship (no defence as tax debts ‘conclusively payable under tax law)

Appeals

• —

Rulings

Decision Impact statements

• —

Rulings

• TR 2018/7 – Employee Remuneration Trust (non-Div 83A ESS interests) – employer deduction on contribution; employee tax on benefits; tax effect on trustee; FBT; Div 7A deemed dividends; 13-month pre-payment rule

Determinations

• —

Law Companion Rulings

• —

Class Rulings & Product Rulings

• —

ATO Interpretative Decisions

• —

Practice Statements

• —

Practical Compliance Guides

• —

Tax Alerts

• —

Other ATO news or statements

• ATO collects share sale data from an additional source – to help ‘prefil’ tax returns and ensure disclosures are correct and complete
• FBT – the ‘Grinch who stole Christmas’? It’s that time of year again…
• ATO appoints provisional liquidator for 8 labour hire businesses – preserve assets and records whilst ‘broader enforcement’ action is underway

GST 

Legislation & Announcements (GST)

• ‘Tampon Tax’ gone – Health Minister makes a s38-47 determination, making the supply of various ‘feminine hygiene products’ GST-free from 1 January 2019

Cases (GST)

• —

Rulings, Etc. (GST)

• GST property withholding credits delayed by incorrect vendor information – ATO advises steps necessary for prompt credits
• TA 2018/3 – Tax Alert relating to GST underreported by developers on development works on land from Government Entities – including by mis-applying the ‘margin scheme’

Superannuation

Legislation etc. (Super)

• Minister announces changes to the superannuation law – relating to the way ‘market-linked pensions’ are treated under the $1.6m ‘transfer balance cap’ rules & keeping rolled over death benefits tax free
• Comprehensive Income Product for Retirement (CIPRs) – start date deferred to 1 July 2022 and account balance threshold increased from $50k to $100k

Cases (Super)

• —

Rulings etc. (Super)

• ASIC disqualifies two separate Queensland SMSF auditors – breach of ‘independence requirements’ auditing their own funds, the fund of an immediate family member and the fund of a close family member
• Australian Financial Complaints Authority (AFCA) opening for business as of Thursday 1 November 2018 – replacing the Financial Ombudsman Service (FOS) and Credit and Investments Ombudsman (CIO) and the Superannuation Complaints Tribunal (SCT)
• APRA releases superannuation statistics for September 2018 – $2.7b total assets, SMSFs $775b, equities 51%, Rate of Return 8.1%, Industry Funds 48 (SMSFs 500k)

State Taxes

Legislation & Announcements (State)

• —

Cases (State)

• Vic payroll tax: Nationwide Towing & Transport Pty Ltd v Comr of State Revenue – no payroll tax on payments to subcontractors, to provide ‘roadside assistance’ to stranded RACV members, under the ‘relevant contractor’ provisions

Rulings & Other (State)

• —

Other Developments

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

• ACNC – standards made for ‘registered entities’ operating outside Australia – activities consistent with its charitable purpose; obey Australian Laws; no fraud or bribery; protect vulnerable people

Base Erosion & Profit Shifting (BEPS)

• UK announces a 2% unilateral, and temporary, ‘Digital Services Tax’ (DST) on ‘within scope’ revenues linked to UK users – large: ‘social media platforms’, ‘online market places’ and ‘search engines’
• UK Budget 2018: BEPS and other corporate tax measures – PE changes, Hybrid Mismatches, Diverted Profits Tax, Non-UK companies with UK property businesses and Hybrid Capital Instruments

Board of Taxation

• The Tax Practitioners Board’s 2017/18 Annual Report – revealing growth in total registrations since inception and overall complaints numbers and outcomes

Inspector General; National Audit Office, JCPAA

• —

Miscellaneous

• —

Tax Practitioners Board

• Ham v Tax Practitioners Board – The Court agreed with the AAT and TPB that it was correct not to re-register the former tax agent – not a ‘fit and proper person’ because of ‘actual dishonesty’ to a long standing client and friend, without remorse

[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; ‘TaxVine’: The Tax Institute’s ‘TaxVine’.