Tax Month – October 2012

M o r g a n’ s    T a x    M o n t h

– October 2012 Developments –

This is a collection of developments in Australian tax law and practice that occurred in October 2012 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

MITs with energy efficient buildings – concessional withholding tax rate Bill introduced (1)

Crimes Legislation Amendment (Serious Drugs, Identity Crime and Other Measures) Bill 2012 was introduced (2)

FOI (Parliamentary Budget Office) Bill introduced – to give new FOI exemptions (3)

Regulatory Powers (Standard Provisions) Bill introduced (4)

Various Bills referred to the Senate Legal and Constitutional Affairs Legislation Committee for report in November (5)

More Bills referred to more Parliamentary committees (6)

Federal Circuit Court of Australia Legislation Amendment Bill 2012 – passed by House of Reps (7)

*Removing tax impediments for business restructures: draft legislation released (8)

Limited recourse debt arrangements: draft legislation released to extend Div 243 to arrangements where in substance the debtor is not fully at risk (9)

*Medical expenses tax offset – draft legislation to reduce the benefit and then means test the reduced benefit – per the 2012 Budget announcement (10)

*NFP/Charities Bills pass Senate with 34 Government amendments and now return to the House of Representatives (11)

Tax Laws Amendment (2012 Measures No 5) Bill 2012 has passed the House of Reps with 3 Government amendments (12)

 

Announcements

*MYEFO 2012-13: monthly PAYG installments for big companies; pension phase assets’ income to remain exempt after death, and other super changes (13)

Asian Century White Paper released by Government – including guidance on tax policy (14)

US FATCA laws – ASFA urges Inter-governmental Agreement (15)

*US IRS delays key FATCA start dates – which is the date by which non-US (foreign) financial institutions are expected to comply (16)

Government’s Forward Work Program for Tax Measures updated (17)

Assistant Treasurer discusses Part IVA Reforms and Transfer Pricing in his speech (18)

SA to reduce red tape for their Not for Profits and harmonise reporting (19)

*Assistant Treasurer speaks about the Australian Charities and Not-for-profit Commission – ‘report once and use often’ framework (20)

‘Not-for-profit’ sector Consultation Code to create governance standards (21)

*Taxation of trust income – Treasury issues a further paper to better articulate two of the policy options (22)

*Business Tax Working Group draft final report: company tax rate cut not recommended (23)

*Australian Charities will no longer be charged an annual fee as they move from ASIC to ACNC (24)

*Basel III and Tier 2 capital instruments not to become ‘debt interests’ under Australian tax law on Australia adopting Basel III capital reforms – draft regulations released (25)

 

 

CASES AND APPEALS

High Court

*FCT v Qantas Airways Limited – Commissioner wins Qantas High Court GST case (26)

Mills appeal – High Court transcript (27)

 

Full Federal Court

*Howard v FCT – Damages assessable to taxpayer; no fiduciary duty (28)

*Stewart & Ors v Australian Crime Commission – Wickenby: Full Court confirms no claim for privilege for certain documents (29)

 

Federal Court

Young v FCT – Insufficient evidence to support claim for credit for tax withheld (30)

*Pratt Holdings Proprietary Limited v FCT – No deduction for transfer of losses under mining provisions despite favourable ruling (because of retrospective legislation) (31)

 

Federal Magistrates Court

Federal Circuit Court of Australia Legislation Amendment Bill 2012 – passed by House of Reps (32)

 

Administrative Appeals Tribunal (AAT)

*Re Boyn and FCT – Commissioner incorrectly calculated tax payable on ETP by allocating deductions and c/f losses to the less favourable component (33)

No new evidence admissible to AAT review of private ruling objection decision – about application of non-commercial losses provisions to farming losses (34)

*Re Nash and FCT – GIC deductible in years to which it is referable (35)

Re NaughtsnCrosses Pty Ltd and Innovation Australia – R&D activities not systematic or experimental (36)

 

Other Courts & Tribunals

*Commissioner of Australian Federal Police v Dickson and Ors – No revocation of orders to provide statement of assets in alleged tax fraud matter (37)

R v Liles – Former accountant sentenced to jail term in Wickenby prosecution (39)

DCT v Seabrook – Freezing order over $30m worth of assets (40)

 

Appeals

Re Nelson and FCT – taxpayer appeals AAT decision that he was not carrying on primary production business and not entitled to deductions (41)

*Australia and New Zealand Banking Group Limited v Konza – taxpayer will not be seeking leave to appeal from decision that s264 gave right to Vanuatu details (42)

Re: Bell and FCT – taxpayer appeals Small Business CGT case again – to Full Federal Court (43)

*Fowler v FCT – Taxpayer appeals from Federal Court decision that he acquired employee share scheme shares about 2 months later than he contended (44)

SCCASP Holdings as trustee for the H&R Super Fund v FCT – Trustee appeals decision to treat trust distribution as ‘special income’ (45)

Re Boyn and FCT – Taxpayer appeals ETP decision to Federal Court (46)

 

 

COMMISSIONER’S PUBLICATIONS

Decision Impact statements

LVR (WA) Pty Ltd case – ATO Decision Impact Statement – AAT copied ATO’s submissions without attribution (47)

 

Rulings

Determinations

*TD 2012/21 – No CGT event E1 or E2 if trust changed under a valid power unless trust terminates (48)

*TD 2012/22 – ‘Proportionate approach’ to the calculation of a beneficiary’s assessable income from a trust (49)

TD 2012/D8 – Reasonable food and drink amounts for LAFHA recipients (50)

*TD 2012/D9 – Ordinary income from allowing wind farming on a farm, is not and “assessable primary production income” for Div 392 averaging purposes (51)

TD 2012/D10 – Interest deductible on full recourse loan used to fund pre-paid interest on capital protected borrowing (52)

 

Class Rulings & Product Rulings

CR 2012/84 and 85 – Employer contributions to redundancy trust; early retirement scheme (53)

CR 2012/86-89 – FBT expense payments; special dividend; early retirement schemes (54)

CR 2012/94-97 – Convertible preference shares; stock plan; employer contributions; disability payments (55)

CR 2012/90-93 – Demerger; return of capital; employee share scheme; early retirement scheme (56)

CR 2012/98-101 – Preference shares; ESS; conversion of a co-operative; exchangeable securities (57)

 

 

ATO Interpretive Decisions (ATOIDs)

Practice Statements

Tax Alerts

Other Commissioner news

ATO data matching program for contractor payments (58)

Tax agent lodgment program 2012-13 update (59)

*Tax Commissioner concludes his term at end of year and takes up a 5 year term at FIRB (60)

*Commissioner of Taxation’s 2011-12 Annual Report released – showing a 10.3% increase in revenues (despite Government spending to a huge deficit) (61)

ATO releases its dispute management plan 2012-13 (62)

*Alcoa signs Annual Compliance Agreement with the ATO (63)

 

 

GST DEVELOPMENTS

Legislation & Announcements (GST)

Cases (GST)

J & M Hirezi & Ors and FCT – AAT upholds 50% penalties for failing to account correctly for GST (64)

Re Subloo’s Investments Pty Ltd & Ors and FCT – BASs lodged with out GST – 75% intentional disregard plus 20% uplift penalties upheld (65)

Re Wynnum Holdings No 1 Pty Ltd & Ors and FCT – Taxpayer appeals to Federal Court against disallowance of ITC’s for ‘commercial residential premises’ (66)

 

Rulings & Other things (GST)

GST treatment of cross-border transport: Treasury releases consultation paper (67)

 

 

SUPERANNUATION DEVELOPMENTS

Legislation (Super)

SuperStream data and payment standards – draft regs released (68)

Superannuation merger/rollover relief Bill and SMSF Auditor registration Bills – Coalition won’t pass without their amendments (69)

Portability of superannuation between Australia and NZ – Bill introduced (70)

SMSF auditor registration – draft SIS Regs released (71)

MySuper (Further Measures): Tranche 4 of draft legislation released (72)

SuperStream data and payments – draft Standard and schedules released (73)

Unclaimed Money and Other Measures: Bill introduced – bring forward the time at which money is recognised as lost or unclaimed (74)

*Default super funds in modern awards: Fair Work Amendment Bill 2012 introduced – Expert Panel and Full Bench at Fair Work Commission to determine (75)

 

Cases (Super)

*Re Fraser and FCT – Deduction denied for personal superannuation contribution (76)

*Re Lynton and FCT – Excess super contributions tax – financial hardship not “special circumstances” (77)

*Re Yrorita and FCT – Early access to superannuation included in taxpayer’s assessable income (78)

 

Rulings (Super)

Announcements etc (Super)

CPAs say Australia should reconsider allowing super as a lump sum as it is failing in its objective to get Australians to save for their retirement (79)

*MySuper authorisation and transition requirements released by APRA (80)

ASFA recommends changes to ‘Further MySuper Bill’ (3^rd Tranche) (81)

*Further MySuper Bill (3^rd Tranche): Parliamentary Joint Committee report released (82)

*MySuper transition: APRA draft prudential practice guide (SPG 410) released (83)

*ASIC register for SMSF auditors to start 31 January 2013 (84)

*Productivity Commission releases report on choice of ‘default super funds’ to go into modern awards – Fair Work Panel to chose (85)

Small Business Superannuation Clearing House passes $500m in payments (86)

 

 

CARBON TAX

Linking carbon price to the EU trading price and abolishing the floor price (87)

 

 

MINERALS & PETROLEUM RENT RESOURCE RENT TAX

BOARD OF TAXATION

*‘Permanent establishments’ under the ‘business profits’ treaty article – Board of Taxation releases paper on adopting the OECD ‘functionally separate entity’ approach (88)

 

 

EXTERNAL SUPERVISORS – IGoT; OMBUDSMAN & ANAO

*Inspector-General’s review into ATO benchmarking to target cash economy – recommendations and ATO’s response (89)

*New Tax Inspector-General Work Program announced (90)

*Integrity of overseas Commonwealth law enforcement operations: Committee hearing (91)

*Inspector-General of Taxation Annual Report 2011-12 released (92)

*ATO’s transfer pricing management: IGT review announced (93)

*ATO compliance risk assessment tools: IGT review (94)

 

 

TAX PRACTITIONERS BOARD & LEGISLATION

Tax Practitioners Board v Campbell – Fine and injunction for breach of Tax Agents Act (95)

Tax Practioners’ Board – valuers don’t have to be registered as tax agents (generally) (96)

Tax Practitioners’ Board guidance on holding trust moneys (97)

Tax Practitioners’ Board Annual Report 2011-12 (98)

 

 

STATE TAXES

Legislation (State)

NSW – State Revenue Legislation Further Amendment Bill 2012 – becomes law (99)

SA: Payroll Tax (Miscellaneous) Amendment Bill 2012 introduced (100)

Tas: Taxation Legislation (Miscellaneous Amendments) Bill introduced (101)

*Vic: Fire Services Property Levy Bill now law – due to replace current levy 1 July 2013 (102)

*Vic: State Taxation and Other Acts Amendment Bill 2012 introduced (103)

 

Cases (State)

Lis-Con Concrete Constructions Pty Ltd v Comr of State Revenue – Qld payroll tax: Court orders objections be determined in view of unreasonable delay (104)

 

Rulings (State)

Other (State)

SA: Earlier payroll tax exemption for film producers (105)

*SA Govt announces changes to assist new home buyers (106)

 

 

OTHER DEVELOPMENTS

Reserve Bank lowers cash rate 25 basis points to 3.25% (107)

*Secretary to Treasury calls for discussion on “sustainability of the tax system” (108)

AUSTRAC highlights financial intelligence in tackling tax evasion (109)

CPI increased 1.4% over the September 2012 quarter 2012 – applicable now only for FBT purposes (110)

 

 

THE END

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NB: I have gathered these articles from various sources for the purposes of study and teaching and I have acknowledged the sources. None of this publication should reproduced in breach of copyright belonging to the acknowledged source. The headings to the articles are often mine (and shouldn’t necessarily be attributed to the publisher).

Source Abbreviations: ‘EDTN’ = Electronic Daily Tax News, published by CCH; ‘LTN’ = Latest Tax News published by Thomsons; and ‘Taxvine’ is the weekly publication by the Tax Institute of Australia; Greenfields = Greenfields Financial Services; TaxBar = Melbourne Tax Bar Association Newsletter at www.vicbar.com.au / Members / Bar Associations / Tax