Greenwoods & Freehills Weekly Tax Highlights - Week Ended 30.4.10
Henry Review final report released
The Government released the final report of the"Australia's Future Tax System Review" (the Henry Review) on Sunday 2 May 2010. Greenwoods & Freehills has issued a tax brief analysing the report and the Government's response.
ATO documents
Released 28.4.10
Class Ruling
CR 2010/11: Income tax: James Cook University Business Partnership Program Scholarship
Product Ruling
PR 2010/9: Income tax: Macquarie Eucalypt Project 2010 (pre 1 July 2010 Growers)
Taxation Determination
TD 2010/12: Income tax: can Part IVA of the Income Tax Assessment Act 1936 apply to an asymmetric swap scheme?
Draft Taxation Determination
TD 2010/D1: Income tax and fringe benefits tax: can a non-resident employer be: (a) required to withhold amounts from salary and wages paid to an Australian resident employee for work performed overseas under section 12-35 of Schedule 1 to the Taxation Administration Act 1953 ? (b) subject to obligations under the Fringe Benefits Tax Assessment Act 1986 in relation to benefits provided to an Australian resident employee in relation to work performed overseas?
Notice of Withdrawal
IT 2440: Income tax: individuals: release from payment of tax on grounds of serious hardship: guidelines for determining the existence of serious hardship
Addendum
TD 92/162: Income tax: is the cost of a corporate box with associated advertising signs allowable as a deduction?
Released 30.4.10
Interpretative Decisions
ATO ID 2010/100: Consolidation: entry history rule - characterisation of foreign exchange gains and losses
ATO ID 2010/101: Capital Gains Tax: main residence exemption - interaction with non-resident provisions
ATO ID 2010/102: Capital gains tax and foreign residents: meaning of 'happening to' a CGT asset in section 855-40 of the ITAA 1997
ATO ID 2010/103: Employee share scheme: timing of deduction for money provided to the trustee of an employee share trust
ATO ID 2010/104: Excess contributions tax: restitution of a 'mistaken' contribution
ATO ID 2010/91: Legal expenses: misrepresentation
ATO ID 2010/92: Assessability of dividend income sourced in France received by an Australian resident individual
ATO ID 2010/93: Foreign tax credits: distributions from a USA Corporate Limited Partnership to a foreign hybrid limited partnership - section 160AF of the ITAA 1936
ATO ID 2010/94: Foreign tax credits: distributions from a USA Corporate Limited Partnership to a foreign hybrid limited partnership - section 770-10 of the ITAA 1997
ATO ID 2010/95: Sale of shares for less than market value
ATO ID 2010/96: Capital allowances: 'tax break' - used principally in Australia
ATO ID 2010/97: Third party recipient deemed to be an associate: friend of an employee
ATO ID 2010/98: Capital gains tax: majority underlying interests - ultimate owners
ATO ID 2010/99: Capital gains tax: majority underlying interests - transfer of pre-CGT asset
Withdrawn Interpretative Decisions
ATO ID 2001/296: Superannuation: Undeducted Purchase Price (UPP) - lifetime pension commenced before 1 July 1983
ATO ID 2001/306: Capital Gains: Extension of time to acquire replacement assets for CGT small business roll-over
ATO ID 2001/406: Capital Gains: CGT Small Business Roll-over: Extension of time for active asset test.
ATO ID 2001/462: Superannuation - Request for Approval of Another Method for Surcharge Calculations
ATO ID 2001/57: CGT: Loss on Disposal of Life Assurance Policy
ATO ID 2001/603: Capital Gains Tax: Deceased estates - NRMA shares received on demutualisation as beneficiary of a deceased estate
ATO ID 2001/619: Capital gains tax: Small business roll-over: extension of time to acquire replacement asset
ATO ID 2001/722: Excise - Payments - Diesel and Alternative Fuels Grants Scheme - Approved form of Application for Registration
ATO ID 2001/763: Superannuation, retirement and employment termination: Subsection 27C(1A) discretion to treat all or part of a pre-July 1983 component of an eligible termination payment (ETP) as tax free
ATO ID 2001/767: Superannuation, retirement and employment termination - Eligible Termination payment - Compensation for personal injury
ATO ID 2002/101: Assessability of prizes from investment-related sweepstake conducted by a bank
ATO ID 2002/105: Medicare levy surcharge - hospital cover - travel insurance
ATO ID 2002/137: Superannuation, retirement & employment termination: Eligible termination payment (ETP) and ETP exemptions & exclusions
ATO ID 2002/188: Assessability of ordinary income - Residency - applied to extend visa for further 2 years
ATO ID 2002/189: Prior Year Loss - Method for deducting tax loss of a prior year in a later income year by an individual
ATO ID 2002/195: Medicare Levy Surcharge - policy requires $1000 excess per person
ATO ID 2002/196: Assessability of a Commonwealth Government grant
ATO ID 2002/219: Medicare Levy Surcharge - taxpayer covered under parent's family membership
ATO ID 2002/476: Superannuation, retirement & employment termination: Eligible termination payments and Eligible service period
ATO ID 2002/50: Medicare Levy Surcharge - liability whilst overseas
ATO ID 2002/635: Excise - Payments - Diesel and Alternate Fuels Grants Scheme - use of more than one fuel in a vehicle
ATO ID 2002/637: Excise - Collections - Tobacco - Home growing of tobacco
ATO ID 2002/650: Rental Property Expenses - cost of obtaining an estimate of construction
ATO ID 2002/659: Retirement income entities: In-house assets and leasing property from a member
ATO ID 2002/69: Medicare Levy - Defence Force termination payment
ATO ID 2002/703: Retirement income entities : Lease arrangement between members and their self managed superannuation fund after 11 August 1999
ATO ID 2002/704: Savings Bonus for Older Australians - Late claim
ATO ID 2003/1165: Energy Grants (Credits) Scheme: on - road diesel fuel
ATO ID 2003/1166: Energy Grants (Credits) Scheme: off-road diesel fuel
ATO ID 2003/137: Retirement income entities - Trade Dollars (Barter Credits)
ATO ID 2003/138: Retirement income entities - Contribution of Trade Dollars (Barter Credits)
ATO ID 2003/47: Capital Gains Tax: CGT event - poker machine entitlement acquired by a NSW registered club
ATO ID 2003/7: Fringe benefits tax: Third party recipient deemed to be an associate - same sex partner of an employee
ATO ID 2003/700: Off-road entitlements - Use of eligible fuel at certain premises - Vessels as residential premises
ATO ID 2003/733: Entitlement to claim DAFGS grant for diesel fuel where it has already been claimed on the entity's behalf by another entity
ATO ID 2003/826: Capital gains tax: main residence exemption - interaction with non-resident provisions
ATO ID 2003/877: Energy Grants (Credits) Scheme: On-road entitlements - is diesohol (a blend of diesel and ethanol) an on-road diesel fuel?
ATO ID 2004/194: Diesel and Alternative Fuels Grants Scheme: transitional provisions - late acceptance of claim forms
ATO ID 2004/231: Water licences - leasing of water licences to a related party
ATO ID 2004/273: Medical Expense Tax Offset: expenses paid by another and subsequently reimbursed
ATO ID 2004/349: Assessability of dividend income sourced in France received by an Australian resident individual
ATO ID 2004/596: Energy Grants Credits Scheme: off-road credit - purchase of fuel
ATO ID 2004/791: Energy Grants (Credits) Scheme: off-road - purchase of fuel provided to a contractor for use in their equipment while providing the contracted service
ATO ID 2004/839: Energy Grants (Credits) Scheme: on-road - claiming an energy grant for on-road diesel fuel purchased prior to 1 July 2003 where an on-road grant has been paid on part of the fuel purchase
ATO ID 2004/868: Energy Grants (Credits) Scheme: off-road - claiming an energy grant for off-road diesel fuel purchased prior to 1 July 2003 where a diesel fuel rebate has been paid on part of the fuel purchase
ATO ID 2004/870: Energy Grants (Credits) Scheme: purchase of fuel - replacement of contaminated fuel
ATO ID 2004/891: Energy Grants (Credits) Scheme: off-road diesel fuel - LPG
ATO ID 2004/892: Energy Grants (Credits) Scheme: off-road diesel fuel - natural gas
ATO ID 2004/898: Energy Grants (Credits) Scheme: off-road diesel fuel
ATO ID 2005/112: Self Managed Superannuation Funds - SIS payment standards
ATO ID 2005/177: Capital gains tax and foreign residents - meaning of 'happening to' an asset in Subdivision 768-H
ATO ID 2005/317: Energy Grants (Credits) Scheme: Off-road diesel fuel - blend of diesel and ethanol
ATO ID 2006/50: Energy Grants (Credits) Scheme: off-road - diesel used as a saw lubricant
Financial advisers: “Future of Financial Advice” reforms
Released 26.4.10
The Government has released an Information Pack on the “Future of Financial Advice” package of proposed reforms. There are three key proposed reforms, which will apply from 1 July 2012:
• A prospective ban on conflicted remuneration structures, including commissions and any form of volume based payment. In addition, percentage-based fees (known as assets under management fees) can only be charged on ungeared products or investment amounts.
• The introduction of a statutory fiduciary duty for financial advisers requiring them to act in the best interests of their clients and to place the interests of their clients ahead of their own when providing personal advice to retail clients.
• The introduction of an adviser charging regime, containing a range of alternative means by which consumers can pay for advice and including a requirement for retail clients to agree to fees and to annually renew/opt-in to an adviser’s continued services.
Foreign source income anti-roll-up fund measures: draft legislation
Released 28.4.10
Treasury has released exposure draft legislation to introduce the foreign source income anti-roll-up fund measures announced as part of the ongoing review of the CFC and FIF regimes. The proposed measures follow the Government’s decision to repeal the FIF rules, and are intended to operate as a specifically targeted anti-avoidance rule to prevent the accumulation of income in certain offshore funds.
Board of Taxation’s employee share schemes review
Released 23.4.10
The Board of Taxation has released its Review into Elements of the Taxation of Employee Share Scheme Arrangements. The Review makes a series of recommendations on the way in which listed and unlisted shares and rights issued under ESS arrangements should be valued for tax purposes. Very broadly, the Review recommends that any sanctioned methodology should be in accordance with the ordinary meaning of market value, and that the Commissioner should release pubic guidance for taxpayers on acceptable valuation methodologies. The Review does not recommend the introduction of separate tax deferral rules for start-up, R&D and speculative-type companies.
Australia-Turkey sign double tax agreement
Announced 29.4.10
Australia and Turkey have signed a comprehensive tax treaty.
Self-Managed Super Solutions
Released 29.4.10
The Super System Review has released its preliminary report, Self-Managed Super Solutions, containing the following key preliminary recommendations on SMSFs:
• Prohibiting investment in collectables and personal-use assets (such as artworks, wine collections, exotic cars and yachts).
• Tightening the SMSF registration process, including the introduction of member identity requirements to reduce instances of fraud and illegal early release schemes.
• Reducing the potential to benefit illegally from related party transactions by prohibiting the acquisition of in-house assets and imposing restrictions on the way in which a SMSF can transact with related parties.
Appeals Update
Handbury Holdings Pty Ltd v Commissioner of Taxation [2009] FCAFC 141 (9 October 2009): The High Court has refused the taxpayer special leave to appeal. The Full Federal Court had decided that debt extinguished as part of a debt for equity swap which resulted in a subsidiary exiting its tax consolidated group should be included in the Step 4 (liabilities) amount of the “exit ACA” calculation for the subsidiary (s.711-20(1)). This gave rise to a capital gain for the head company taxpayer under CGT event L5 at the time of the deconsolidation.
Tax Cases
Commissioner of Taxation v Rozman (No 2) [2010] FCA 387 (23 April 2010): The Federal Court has confirmed its earlier decision that the private company “deemed dividend” rule in s.109C could apply where a company directed a debtor to pay an amount to one of its shareholders. This was after considering two arguments to the contrary put forth by the taxpayer that the Federal Court did not deal with in its earlier decision. Firstly, the taxpayer argued that if s.109C encompassed payments by direction then s.109T (payments made through interposed entities) would be redundant. The Federal Court disagreed, on the basis that s.109T could apply where the interposed entity makes a payment without having been directed to do so by the company. Secondly, the taxpayer argued that s.109Y (which limits the deemed dividend amount to the company’s “distributable surplus”) prevented s.109C from applying in cases of payments by direction. The Federal Court disagreed, finding that whilst s.109C was subject to s.109Y, the latter provision did not prevent s.109C from applying in cases of payments of direction.
Progress of Legislation
Federal Parliament is now in recess until its scheduled resumption on 11 May 2010 (the day the Federal Budget will be handed down).As at 30.4.10
|
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] |
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] |
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 | |
|
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 | ||
|
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 | ||
|
25.11.09 |
10.2.10 |
22.2.10
|
25.2.10
|
11.3.10/13 |
New Zealand Treaty, Belgian Protocol; Jersey Allocation of taxing rights | ||
|
Tax Agent Services (Transitional Provisions and Consequential Amendments) Bill 2009 |
24.6.09 |
27.10.09 |
29.10.09 |
29.10.09 |
16.11.09/114 |
Employee Share Schemes | |
|
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 | ||
|
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 |
19.11.09 |
|
|
|
|
Disclosure and Secrecy Provisions | |
|
Tax Laws Amendment (Medicare Levy and Medicare Levy Surcharge) Bill 2009 |
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 |
25.11.09 |
10.2.10 |
22.2.10
|
11.3.10
|
24.3.10/20 |
GST | |
|
27.8.08 |
13.10.08 |
14.10.08
|
25.210
|
|
Removes Tax Deductibility of Political Donations, GST | ||
|
16.9.09 |
29.10.09 |
16.11.09
|
26.11.09
|
4.12.09/118 |
GST, PAYG Instalments, Bushfire Appeal | ||
|
25.11.09 |
10.2.10 |
22.10.10
|
11.3.10
|
24.3.10/19 |
CGT Cloning Exemption, Super Fund Mergers, DGR, Flood Victim Payments, Spirits Excise Rates | ||
|
10.2.10 |
10.3.10 |
11.3.10
|
|
|
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 |
10.2.10 |
10.3.10 |
10.3.10
|
11.3.10
|
24.3.10/21 |
GST | |
|
17.2.10 |
|
|
|
|
Division 7A, TFN, Carbon Technology exemptions, DGR | ||
|
Tax Laws Amendment (2010 GST Administration Measures No. 2) Bill 2010 |
18.2.10 |
|
|
|
|
GST | |
|
17.2.10 |
|
|
|
|
Tax Law Rewrite |