Greenwoods and Freehills Weekly Tax Highlights - Week Ended 12.12.08

ATO Documents

Released 10.12.08

Taxation Ruling
TR 2008/9: Income tax: meaning of 'Australian superannuation fund' in subsection 295-95(2) of the Income Tax Assessment Act 1997
Taxation Determination
TD 2008/28: Income tax: when is income tax of a private company a 'present legal obligation' for the purposes of the distributable surplus calculation under subsection 109Y(2) of Division 7A of Part III of the Income Tax Assessment Act 1936?
Draft Taxation Determination
TD 2008/D17: Income tax: in accounting for a Dividend Re-investment Plan, can a company taint its share capital account for the purposes of Division 197 of the Income Tax Assessment Act 1997?
Law Administration Practice Statement
PS LA 2529 (draft): Time limit on recovery by the Commissioner

Released 12.12.08

Interpretative Decisions
ATO ID 2008/161: Superannuation entities: tax offset - no-TFN contributions income - successor fund
ATO ID 2008/162: Excess Contributions Tax: notional taxed contributions - PSS Defined Benefit Interest 
ATO ID 2008/163: Capital Allowances: business related costs - taxable purpose
ATO ID 2008/164: Step 2 of entry: allocable cost amount - deferred tax liabilities
ATO ID 2008/165: Excise: previously paid duty - recycled product
Withdrawn Interpretative Decisions
ATO ID 2002/1022: Entitlement to Class A franking credits for an early balancing life insurance company where taxable contributions are transferred from a related superannuation fund under section 275 of the Income Tax Assessment Act 1936 (ITAA 1936)
ATO ID 2002/1023: Entitlement to Class A franking credits for an early balancing life insurance company where taxable contributions are transferred from an unrelated superannuation fund under section 275 of the Income Tax Assessment Act 1936 (ITAA 1936)
ATO ID 2002/1024: Entitlement to Class A franking credits for a late balancing life insurance company where taxable contributions are transferred from a related superannuation fund under section 275 of the Income Tax Assessment Act 1936 (ITAA 1936)
ATO ID 2002/1025: Entitlement to Class A franking credits for a late balancing life insurance company where taxable contributions are transferred from an unrelated superannuation fund under section 275 of the Income Tax Assessment Act 1936 (ITAA 1936)
ATO ID 2003/368: Group company loss transfer: Subdivision 170-A - assessable foreign income
ATO ID 2003/1158: GST and flavoured nuts
ATO ID 2004/361: GST and chocolate coated coffee beans 
ATO ID 2004/435: GST and pease pudding
ATO ID 2004/479: GST and product consisting principally of fish roe
ATO ID 2004/537: GST and green barley powder
ATO ID 2004/565: Foreign tax credit and refundable tax offsets
ATO ID 2004/941: Assessable foreign income - Australian source loss - whether election to offset tax losses against assessable foreign income applies

Commissioner of Taxation v McNeil [2007] HCA 5: The Tax Office has issued a revised Decision Impact Statement on the High Court decision in FCT v McNeil in which the High Court held that the market value of "sell-back rights" issued to a taxpayer under a share-buyback arrangement was assessable as ordinary income. The revision expands the ATO's view of the decision with respect to call options, dividends, other types of rights, dividend reinvestment, and rights in relation to equity in another entity.

Australia's Future Tax System Consultation Paper 

Released 10.12.08

The Tax System Review Panel has released its consultation paper, providing the basis for further community input into 2009. The paper reports on the views expressed in submissions delivered to the review. The paper reports on several areas that have been highlighted by the submissions. These include taxes on business and investments, personal taxes, the retirement income system and the number of not for profit organisations establishing business ventures. 

Perdikaris v DCT [2008] FCAFC 186, 5 December 2008: The Full Federal Court has unanimously upheld the decision at first instance. The Full Court confirmed that the Court at first instance was correct in finding that the Commissioner had not made a "decision" that was amenable to review. The Court therefore dismissed the taxpayer's request for a judicial review of the decision to deny substantial tax credits.  

Hastie Group Ltd v FCT [2008] FCAFC 187, 9 December 2008: The Full Federal Court has affirmed that a head company of a consolidated group could not access franking credits accumulated by one of its subsidiaries. The court rejected the taxpayers argument that the subsidiaries former status as head of a group at the time of acquisition should be ignored. The Court stated that, according to the relevant provisions, the tax history of subsidiary members was to be inherited by the taxpayer. 

Cumins v DCT [2008] FCAFC 185, Full Federal Court, North, 9 December 2008: In a taxpayer's ongoing challenge to the validity of a bankruptcy notice issued to him for over $38m, the Full Federal Court has unanimously dismissed his arguments in relation to the claim. These included a claim that the notice was invalidated by a failure to issue various credits and that an omission of a four cent rounding produced a misstatement of the debt owing.  

National Mutual Life Association of Australia Ltd v FCT [2008] FCA 1871, 10 December 2008: The Federal Court has held that, a capital contribution made by the taxpayer in relation to its wholly owned UK subsidiary did not form part of the cost base of shares it held in the subsidiary. The Court noted that at the time of the shares disposal, the expenditure was not reflected in the "state or nature of the shares" as required under law.  

DCT v PM Developments Pty Ltd [2008] FCA 1886, 12 December 2008: The Federal Court has ruled that a liquidator of a company is not personally liable for GST or any related GIC payable on the sale of a real property by the company. The company had entered into a contract to sell a property development upon appointment of the liquidator. GST applied to the contract. The Commissioner issued a ruling which stated that the liquidator was liable for the GST on the sale of the property. The Court disagreed with this interpretation and said that the company and not the liquidator was the party which was liable for the GST incurred.

Tax Laws Amendment (2008 Measures No 5) Bill 2008 and Tax Laws Amendment (Education Refund) Bill 2008 received Royal Assent on 9 December 2008, becoming Act No 145 and Act No 141 of 2008 respectively. 

As at 12.12.08