Greenwoods and Freehills Weekly Tax Highlights - Week Ended 6.2.09

Introduced 4.2.09

The Government has introduced the Household Stimulus Package Bill 2009 and associated Explanatory Memorandum. The Bill will provide for household stimulus payments in the form of a single income family bonus, a back to school bonus, a training and learning bonus and a farmers hardship bonus. The bonus in each case is $950. The Bill has now passed the House of Representatives.   

GST Announcement

Released 6.2.09

The Assistant Treasurer has announced that the GST law will be amended following the Federal Court's decision in DCT v PM Developments Pty Ltd [2008] FCA 1886. The amendments will ensure that representatives of incapacitated entities are liable for GST on post appointment transactions. The amendments will be backdated to 1 July 2000.

Appeals Update

Travelex Limited v FCT [2008] FCA 1961: The taxpayer has appealed to the Full Federal Court. The Federal Court had held that the sale of foreign currency to an outbound traveller was not a GST-free supply.

Brady King Pty Ltd v FCT (No 2) [2008] FCA 1918: The taxpayer has appealed to the Full Federal Court. The Federal Court had held that the valuation obtained by the taxpayer did not comply with the requirements of the GST Act.

Martinazzo and FCT [2009] AATA 63, Martinazzo and FCT [2009] AATA 62 and Martinazzo and FCT [2009] AATA 61, 30 January 2009: The AAT has handed down three related decisions involving a crane and plant hire business operated by a family through various entities including a partnership, a company and a family trust.

In AATA 63, the AAT found that the partnership was assessable on a balancing charge arising from the sale of cranes and other equipment. The AAT found that the taxpayers had failed to establish the partnership was not the owner of the cranes and equipment.

In AATA 62, the AAT concluded that the partnership was liable for GST in relation to the sale of the cranes and equipment as the sales were taxable supplies.

In AATA 63, the AAT found that payments, which had been made to a son of the family, should be assessed as salary and wages despite the taxpayer claiming that the payments were in the nature of a loan.

Undershaft (No 1) Ltd v FCT [2009] FCA 41, 3 February 2009:  The Federal Court has held that the Commissioner of Taxation does not have the right to tax capital gains made by a company resident in the UK and a company resident in the Netherlands from the sale of shares in Australian insurance companies. The Court determined that the 'income taxes' described in the Double Taxation Agreements with the UK and the Netherlands includes capital gains tax. The ATO had argued that the these treaties did not apply to capital gains as the treaties predated the introduction of the capital gains tax.