Released 28.1.10

LeasePlan Australia Limited v Commissioner of Taxation: The ATO has released a decision impact statement following the Federal Court’s decision that a taxpayer was entitled to input tax credits for the acquisition of second-hand motor vehicles from unregistered persons which would be leased back to those persons and then sold at an agreed residual value. The ATO has accepted the decision, and recognised that the same analysis may apply with respect to the acquisition of other second-hand goods in similar circumstances. GSTR 2005/3 will be amended to reflect the decision, and refunds may be available to taxpayers that, given the ATO’s previous position, have overpaid GST on comparable transactions.

Appeals Update

Travelex Limited v Commissioner of Taxation [2009] FCAFC 133 (29 September 2009): The taxpayer has lodged an application for special leave to appeal to the High Court. The Full Federal Court decided that the sale of foreign currency was not a GST-free supply.

South Steyne Hotel Pty Ltd v Commissioner of Taxation [2009] FCAFC 155 (20 November 2009): The taxpayer has lodged an application for special leave to appeal to the High Court. The Full Federal Court’s decision concerned various GST implications of leasing and/or selling serviced apartments.

Tax Case

Lean v Commissioner of Taxation [2010] FCAFC 1 (28 January 2010): The Full Federal Court has dismissed the taxpayer's appeal against the Commissioner’s denial of a deduction claimed under s.25-45 for funds misappropriated under a Ponzi scheme by the taxpayer’s investment manager.
Section 25-45 (loss by theft etc.) requires the stolen or misappropriated amount to have been included in the taxpayer’s assessable income for the income year, or for an earlier income year. The Court held that no part of the misappropriated funds represented amounts included in the taxpayer’s assessable income. In the Court’s view, the act of applying assessable income towards expenses or an investment breaks the necessary connection for the purposes of s.25-45 – i.e. once the funds had left the taxpayer’s hands they could no longer be regarded as money included in his assessable income for the purposes of s.25-45.

Progress of Legislation

Federal Parliament resumes on Tuesday, 2 February 2010 for its 2010 Autumn Sittings (which are scheduled to conclude on 18 March 2010).

As at 29.1.10

Bill	Explanatory Memorandum	Intro House	Passed House	Intro Senate	Passed Senate	Date of Royal assent / Act Number	Description
Carbon Pollution Reduction Scheme (Consequential Amendments)No 2 Bill 2009	EM	22.10.09			.		Carbon Production Reduction Scheme, Income Tax And GST Treatment
Customs Tariff Amendment (2009 Measures No 1) Bill 2009 [No 2]	EM	22.6.09	22.6.09	23.6.09	13.8.09	27.8.09/74	Bill to increase the customs duty rate applying to certain alcoholic beverages
Excise Tariff Amendment (2009 Measures No 1) Bill 2009 [No 2]	EM	22.6.09	22.6.09	23.6.09	13.8.09	27.8.09/73	Bill to increase the excise rate applying to certain alcoholic beverages
Income Tax (TFN Withholding Tax (ESS)) Bill 2009	EM	21.10.09	16.11.09	17.11.09	2.12.09	14.12.9/132	Bill to increase the excise rate applying to certain alcoholic beverages
International Tax Agreements Amendment Bill (No. 1) 2009	EM	19.3.09	16.9.09	17.9.09	17.9.09 .	8.10.09/105	Tax Information Exchange Agreement: British Virgin Islands and Isle of Man
International Tax Agreements Amendment Bill (No. 2) 2009	EM	25.11.09			.		New Zealand Treaty, Belgian Protocol; Jersey Allocation of taxing rights
Tax Agent Services (Transitional Provisions and Consequential Amendments) Bill 2009	EM	24.6.09	27.10.09	29.10.09	29.10.09	16.11.09/114	Employee Share Schemes
Tax Laws Amendment (2009 Measures No 4) Bill 2009	EM	25.6.09	7.9.09	8.9.09	10.9.09	18.9.09/88	R&D, Prescribed private funds, Demutualisation of friendly societies, Consolidation
Tax Laws Amendment (Budget Measures No. 2) Bill 2009	EM	21.10.09	16.11.09	17.11.09	2.12.09	14.12.09/133	Employee Share Schemes, Non-Commercial Losses, Lost Superannuation
Tax Laws Amendment (Confidentiality of Taxpayer Information) Bill 2009	EM	19.11.09					Disclosure and Secrecy Provisions
Tax Laws Amendment (Medicare Levy and Medicare Levy Surcharge) Bill 2009	EM	28.5.09	4.6.09	15.6.09	15.6.09 .	23.6.09/41	Medicare Levy and Medicare Levy Surcharge
Tax Laws Amendment (2009 GST Administration Measures) Bill 2009	EM	25.11.09			.		GST,
Tax Laws Amendment (Political Contributions and Gifts) Bill	EM	27.8.08	13.10.08	14.10.08	3.2.09 .		Removes Tax Deductibility of Political Donations, GST
Tax Laws Amendment (2009 Measures No 5) Bill 2009	EM	16.9.09	29.10.09	16.11.09	26.11.09 .	4.12.09/118	GST, PAYG Instalments, Bushfire Appeal
Tax Laws Amendment (2009 Measures No. 6) Bill 2009	EM	25.11.09			.		CGT Cloning Exemption, Super Fund Mergers, DGR, Flood Victim Payments, Spirits Excise Rates

These notes are in summary form designed to alert clients to tax developments of general interest. They are not comprehensive , they are not offered as advice and should not be used to formulate business or other fiscal decisions.

Liability limited by a scheme approved under Professional Standards Legislation.