Released 12.2.10

New Interpretative Decisions
ATO ID 2010/30: Capital allowances: business related costs - limitation of deduction - in relation to a lease or other legal or equitable right
ATO ID 2010/31: Division 250: assets put to tax preferred use
ATO ID 2010/32: German Kommanditgesellschaft and managed investment trusts: are limited partners 'members'?
ATO ID 2010/33: German Kommanditgesellschaft and managed investment trusts
ATO ID 2010/34: Capital gains tax: roll-over relief - compulsory acquisition - easement created
ATO ID 2010/35: Capital works: destruction and balancing deduction - using 'your area' immediately before destruction of capital works
ATO ID 2010/36: Capital works: destruction - deduction and balancing calculations - reasonable reduction of balancing deduction
ATO ID 2010/37: Deductions: tax indemnity payment
ATO ID 2010/38: Bounty and subsidies: financial assistance received in commencing a business - whether received 'to commence a business'
ATO ID 2010/39: Dividends paid on redeemable preference shares treated as a 'cost' for the purposes of subparagraph 820-890(1)(b)(ii) of the Income Tax Assessment Act 1997
ATO ID 2010/40: Consolidation: tax cost setting rules - acquisition of a MEC group
Withdrawn Interpretative Decisions
ATO ID 2003/175: CGT small business roll-over: replacement asset acquired by different entity
ATO ID 2003/19: Group company loss transfers - incorporation of income company in the deduction year
ATO ID 2003/59: Transfer of income tax losses: wholly owned groups - non-resident holding company
ATO ID 2004/419: Capital gains and losses: exemptions - expiry of a lease - non-assessable non-exempt income
ATO ID 2005/50: Energy Grants (Credits) Scheme: off-road credit - electricity generation - retail service - school
ATO ID 2006/80: Energy Grants (Credits) Scheme: off-road credit - generation of electricity at an airfield
ATO ID 2006/81: Energy Grants (Credits) Scheme: off-road credit - generation of electricity for more than one enterprise
ATO ID 2006/82: Energy Grants (Credits) Scheme: off-road - is a health retreat providing a retail or hospitality service?
ATO ID 2007/164: Capital Gains Tax: rollover relief - compulsory acquisition - easement created
ATO ID 2008/120: Deferred capital loss or deduction: asset transferred between non-residents

Tax Laws Amendment (2010 Measures No. 1) Bill 2010

Introduced 10.2.10

The Government has introduced Tax Laws Amendment (2010 Measures No. 1) Bill 2010 and the accompanying explanatory memorandum into the House of Representatives. The Bill contains a number of measures. Most importantly the Bill clarifies the operation of the consolidation regime and its interaction with other parts of the law. The consolidation changes include amending the tax cost setting rules, modifying the choices to form or change a consolidated group and clarifying the rules surrounding conversion to a multiple entry consolidated group. The Bill also introduces an optional superannuation clearing house service, amends the law to protect investors in Forestry Managed Investment schemes, allows Managed Investment Trusts to make an irrevocable election to apply the CGT regime to certain assets and introduces an income tax test on the eligibility criteria for the entrepreneurs tax offset.

Tax Laws Amendment (2010 GST Administration Measures No. 1) Bill 2010

Introduced 10.2.10

The Government has introduced Tax Laws Amendment (2010 GST Administration Measures No. 1) Bill 2010 and the accompanying explanatory memorandum into the House of Representatives. The Bill will amend the GST Act to ensure that adjustments are required in all situations in which consideration is paid by an entity in the supply chain to a third party which effectively alters the consideration paid. The Bill also confirms that the rule allowing attribution in the current period applies to all input tax credits.

Taxation Regulations

Released 11.2.10

Income Tax Amendment Regulations 2010 (No 1): The Regulations preserve the effect of table item 4 in Reg 20 in the Income Tax Regulations 1936 to ensure that the Commissioner of Taxation may amend an individual taxpayer’s income tax assessment for up to four years, rather than two, if an employee share scheme integrity rule about share trading and investment companies is not met. This aligns the period over which the Commissioner can amend the taxpayer’s income tax assessment with the period over which he can amend the taxpayer’s employer’s income tax assessment.

Income Tax Assessment Amendment Regulations 2010 (No 1): The Regulations amend the Income Tax Assessment Regulations 1997 to provide a valuation methodology for certain unlisted rights acquired under an employee share scheme. The valuation tables in the Regulations apply to unlisted rights which are included in a taxpayer’s assessable income on or after 1 July 2009, have an exercise period of 10 years or less, and for which the time they are taxed under the employee share scheme tax rules is not aligned with the time of disposal of the right or underlying share.

Income Tax Assessment Amendment Regulations 2010 (No. 2): The Regulations amend the Income Tax Assessment Regulations 1997 to remove redundant provisions that define and list funds by name as ‘prescribed private funds’.

Taxation Administration Amendment Regulations 2010 (No. 1): The Regulations amend the Taxation Administration Regulations 1976 to replace certain numerical rates with references to rates in the Income Tax Rates Act 1986 with which they are aligned.

Superannuation Regulations

Released 11.2.10

Superannuation Industry (Supervision) Amendment Regulations 2010 (No. 1): The Regulations amend the Superannuation Industry (Supervision) Regulations 1994 to update legislative references that were impacted by the Better Super reforms of 2007, which introduced changes to taxation and other rules for superannuation, and correct two minor grammatical errors.

Appeal Update

Meridien Marinas Horizon Shores Pty Limited v Commissioner of Taxation [2009] FCA 1594 (24 December 2009): The Taxpayer has appealed to the Full Federal Court. The case was a GST matter in which the Federal Court had affirmed that a supply of berths that were used by vessels as residences did not constitute a supply of commercial accommodation.

Tax Case

Forrest v Commissioner of Taxation [2010] FCAFC 6 (5 February 2010): The Full Federal Court has allowed a deduction for interest payments on a loan used to purchase units in a unit trust. The Court concluded that the income of the trust, other than realised and unrealised capital gains, was held on a fixed trust for the unit holders. The Court found that the AAT had previously erred in finding that the trust was a discretionary trust and that interest payments were not deductible as the taxpayer was not presently entitled to a share of the income of the trust estate. The Court found that the question of present entitlement was not relevant in this context. The Court did however dismiss the taxpayer's appeal against a decision that a donation to a charitable trust was an eligible termination payment.

Progress of Legislation

On 10 February 2010, International Tax Agreements Amendment Bill (No. 2) 2009 and Tax Laws Amendment (2009 Measures No. 6) Bill 2009 were both passed by the House of Representatives and now move on to the Senate

As at 10.2.10

Bill	Explanatory Memorandum	Intro House	Passed House	Intro Senate	Passed Senate	Date of Royal assent / Act Number	Description
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	10.209		.		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	10.2.10		.		CGT Cloning Exemption, Super Fund Mergers, DGR, Flood Victim Payments, Spirits Excise Rates
Tax Laws Amendment (2010 Measures No. 1) Bill 2010	EM	10.2.10			.		Consolidation, Superannuation Clearing House, Managed Investment Trust, Forestry Managed Investment Schemes, Entrepreneurs Tax Offset.
Tax Laws Amendment (2010 GST Administration Measures No. 1) Bill 2010	EM	10.2.10			.		GST

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.