T a x T e c h n i c a l – M o n t h l y N e w s
– October 2016 Developments –
This is a collection of developments in Australian tax law and practice that occurred in October 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 ANNOUNCEMENTS
Acts, Bills & Draft Legislation
Debt- Equity rules – draft legislation to implement the Board of Taxation’s recommendations to aggregate schemes when they are interdependent and designed to operate together (giving integrity rules more certainty)
Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016 (phased company tax rate reduction) – senate committee recommends passing it but Labor dissent recommends limiting reduction to $2m turnover
Treasury Laws Amendment (Income Tax Relief) Bill 2016 – increasing the threshold for the 32.5% rate to $87,000 – Senate Committee recommends that it be passed and it is ultimately enacted
‘Backpacker Tax’ – Bills introduced to implement a 19% tax to $37k, a registration system for employers with a 19% withholding rate, reduced visa price, increased passenger movement charge and Parliamentary report
New Australia-Germany DTA – Bill to give it force of law, in Australia, passed both houses and received Royal Assent as Act No. 64 of 2016
Law Enforcement Legislation Amendment (State Bodies and Other Measures) Bill 2016 introduced – greater access to Cwth information and powers to state authorities and rectifying meaning of ‘lawfully acquired’ (proceeds of crime)
DRAFT Treasury Laws Amendment (Enterprise Incentives) Bill 2016: no s1274 public disclosure for ordinary share ESS interests, not listed, only offered to employees – if issuer is sub-10 year incorporated and sub-$50m turnover
Announcements
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BASE EROSION & PROFIT SHIFTING (BEPS)
G20/OECD BEPS Project – Action 14: effective dispute resolution mechanisms to resolve tax treaty-related disputes – Key documents released to implement Mutual Agreement Procedure for ‘peer review and monitoring’
G20/OECD BEPS Project – network of more than 1,000 relationships now in place to automatically exchange information between tax authorities
CASES AND APPEALS
High Court
Financial Synergy Holdings Pty Ltd v FCT – High Court refuses Commissioner leave to appeal – time for determining the market value of acquiring a pre-CGT asset remains its actual not deemed (pre-CGT) time
FCT v Jayasinghe – Commissioner seeks leave to appeal the FFC majority decision that the taxpayer was entitled to tax exemption on his UN remuneration under international immunities legislation
Full Federal Court
Tech Mahindra Limited v FCT (No 2) – Suppression order refused for unsuccessful taxpayer found to be subject to Australian royalty withholding tax on payments for work done in India
Federal Court
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Administrative Appeals Tribunal (AAT)
Re Edwards and FCT – Lump sum payment for arrears in workers’ compensation paid to a policeman assessable in year of receipt but eligible for smoothing tax offset
Re ZDCW and FCT – Tax debt release refused because of non-essential assets, taxpayer mortgages given to his wife after first application and wife withdrawing her offer to contribute in the second application
Re Moriarty and FCT – third application for release unsuccessful – $440k in liabilities over 7 years, hardship likely but discretion to release not excercised – excessive expenditure, other borrowings, 7 years all lodged late
Re NZWINEIMPORTS Pty Ltd and FCT – AAT rules that WET and GST liability of wine importer to be recalculated
Other Courts & Tribunals
DCT v Acimovic – Commissioner succeeds in application for rectification of consent order for debt owed of $612,103
Appeals
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COMMISSIONER’S PUBLICATIONS & NEWS
Decision Impact statements
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Rulings
TR 2016 /D2 – draft ruling on when an equity distribution received by an Australian corporate tax entity, from a foreign company, is NANE income
Determinations
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Law Companion Guides
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Class Rulings & Product Rulings
CR 2016/68-69 – ANZ Capital Notes 4; merger of Royal Automobile Club of Queensland Limited and QT Mutual Bank Limited
PR 2016/8 – Investment in Luxembourg umbrella managed fund investing in Australian companies
CR 2016/70-72 – Scrip-for-scrip rollover for merger of OneVue Holdings Limited and Diversa Limited; Scrip-for-scrip rollover for Royal Dutch Shell plc; off-market share buy-back for Telstra Corporation Limited
CR 2016/73-80 – CGT scrip-for-scrip roll-overs; special dividend; early retirement scheme
CR 2016/81-83 – Special dividend in Ascanio Scheme of Arrangement; early retirement schemes by ‘Ward McKenzie’ and ‘Henwood Downs’
ATO Interpretative Decisions
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Practice Statements
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Practical Compliance Guides
PCG 2016/10 – FBT: Fleet cars and simplified representative average business use approach for calculating car fringe benefits for 20+ employer chosen fleets under luxury car tax threshold
PCG 2016/D16 on the meaning of ‘fixed interests’ and ‘fixed trusts’ including the Commissioner’s power to treat interests as ‘fixed’ under s272-5 of the ITAA36, Schedule 2F (relating to trust losses)
Tax Alerts
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Other ATO news or statements
Crowdfunding – ATO’s discussion paper about the tax implications for the ‘Promoter’, ‘Intermediary’ and ‘Contributors’
GST DEVELOPMENTS
Legislation & Announcements (GST)
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Cases (GST)
Re FKYL and FCT– sale of 4 new residential premises taxable – not rented for 5 years; ‘margin scheme’ did not reduce tax (no written agreement); building costs not fully creditable (non-creditable rental); 25% shortfall penalty
Rulings, Announcements, Etc (GST)
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SUPERANNUATION DEVELOPMENTS
Legislation, Announcements etc. (Super)
Superannuation reforms – tranche 3 – reducing non-concessional contributions limit from $180k to $100k pa and simplifying ‘release authority’ provisions
Cases (Super)
Ward v FCT – no excess super contribution – a misleading super fund statement and adviser confusion were ‘special circumstances’ – Tribunal’s view too narrow, dicta out of context
Rulings & Other things (Super)
SMSF trustees using LRBAs to acquire assets – ATO announces voluntary survey to gather information (and NOT for compliance purposes)
Superannuation sector – AUSTRAC’s first ‘money laundering and terrorism financing’ risk assessment
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
Death of a tax agent or BAS agent – next of kin please advise TPB for notice of the precise date when registration will cease (about 60 days after TPB notice)
Re Kishore v Tax Practitioners Board – registration terminated for not acting with ‘honesty and integrity’ in separation from former employer (requirement not limited to ‘provision of tax agent services’ only)
Re Three Wickets Pty Ltd v Tax Practitioners Board – individual’s and corporate agent’s registration terminated for breach of the ‘fit and proper person test’ triggered by his own failure to lodge ($500k liabilities)
Conveyancers may need to register with TPB – foreign resident capital gains withholding (lawyers are ok – they are exempted from regulation)
STATE TAXES
Legislation & Announcements (State)
Tas: Duties Amendment (Motor Vehicle Industry Red Tape Reduction) Bill 2016 receives Royal Assent – broadening the permitted use of ‘demonstrator’ vehicles under the exemption
Tasmanian taxes: Taxation and Related Legislation (Miscellaneous Amendments) Bill 2016 – harmonise payroll tax for owner-drivers; duty of vesting of dutiable property and tax free land tax threshold for sporting clubs etc.
Vic taxes – State Taxation Acts Further Amendment Bill 2016 introduced – amend payroll tax on exempt component of vehicle allowances and land tax for ‘absentee’ trusts
Cases (State)
NSW land tax: Lloyd & Anor v Chief Comr of State Revenue – principal place of residence exemption refused to couple who had not lived in the house for the 4 years since purchase
NSW payroll tax: The National Institute of Dramatic Art (NIDA) v Chief Comr of State Revenue – despite being charitable, payroll tax exemption refused under ‘school or college’ carve out – ‘school like activities’ predominant
Qld payroll tax: Brisbane Bears – Fitzroy Football Club Ltd v Comr of State Revenue – payment for the right to use the image of players for marketing and promotional purposes held to be taxable ‘wages’
WA land tax: Rapp and Comr of State Revenue – land tax imposed on the portion of the PPR exempt land that became non-exempt on the subdivision (up to 5 years before the subdivision under the Act)
Rulings & Other (State)
NSW: duty and land tax surcharges on ‘foreign persons’ – ruling adopting the extensions to the definition of ‘foreign person’ set out in the Foreign Acquistions and Takeovers Act 1975
Qld stamp duty: ‘additional (3%) foreign acquirer duty’ applies to AFAD residential land from 1 October 2016
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.
