Greenwoods & Freehills Weekly Tax Highlights 24.11.06-01.12.06

Treatment of UK Limited Liability Partnerships Under Foreign Hybrid Rules

ATO Documents

Released 22.11.06

Taxation Determination 
TD 2006/74: Income tax: consolidation: membership: where a consolidatable group comes into existence at some time during a day can the head company make a choice under section 703-50 of the Income Tax Assessment Act 1997 specifying that day as the day on and after which the consolidatable group is taken to be consolidated? 
Draft Taxation Ruling
TR 2006/D12: Income tax: consolidation: errors in tax cost setting amounts of reset cost base assets 
Taxation Ruling
TR 2006/14: Income tax: capital gains tax: consequences of creating life and remainder interests in property and of later events affecting those interests 
Class Ruling
CR 2006/116: Income tax: return of capital: Altera Capital Limited 
CR 2006/117: Income tax: return of capital: Sofcom Limited 
CR 2006/118: Income tax: Westpac Banking Corporation Restricted Share Plan
Notices of Withdrawal 
IT 2245: Addendum to ATO Prosecution Policy 
Addenda
TD 1992/150: Income tax: can an amount of interest payable to a taxpayer under the Taxation (Interest on Overpayments) Act 1983 be applied by the Commissioner against an amount of tax which is assessed but not yet due and payable by the taxpayer? 
TD 1993/50: Income tax: do credits of tax instalment deductions constitute an amount of relevant tax ... paid by a person for the purposes of subsection 9(1) of the Taxation (Interest on Overpayments) Act 1983 (TIOPA)? 
Errata
TD 2000/53: Income tax: can a taxpayer that uses 13 four weekly accounting periods or 12 accounting periods, some of four weeks and others of five weeks, calculate their PAYG instalment amount for an instalment quarter having regard to their normal accounting periods? 
TD 2000/54: Income tax: can a taxpayer calculate their Pay As You Go (PAYG) instalment amount for an instalment quarter having regard to their commercial accounting periods if they have changed the day on which their tax period ends under section 27-35 of A New Tax System (Goods and Services Tax) Act 1999? 

Released 30.11.06

PS LA 2006/17: Self managed superannuation funds - disqualification of individuals to prohibit them from acting as a trustee of a self managed superannuation fund
PS LA 2006/18: Self managed superannuation funds - enforceable undertakings
PS LA 2006/19: Self managed superannuation funds - notice of non-compliance

Released 01.12.06

Interpretative Decisions
ATO ID 2006/321: Superannuation Guarantee Charge (SGC): two employment contracts
ATO ID 2006/322: Tobacco Producer Licence: notification by tobacco producers of any loss of tobacco seed, tobacco plant or tobacco leaf
ATO ID 2006/323: Tobacco Producer Licence: conditions that relate to transportation of bales
ATO ID 2006/324: Shipping of excisable goods to the Joint Petroleum Development Area
ATO ID 2006/325: Consolidated Group: mutuality principle 1 December 2006
ATO ID 2006/326: Assessability of salary and wages received while working as a director of studies and a teacher at an education institution in China
ATO ID 2006/327: Capital Allowances: balancing adjustment event - 'section 73BA depreciating asset' - existing full-scale test model - discontinued use
ATO ID 2006/328: Capital Allowances: cost - 'section 73BA depreciating asset' - new full-scale test model - re-use of components from earlier test model
Withdrawn Interpretative Decisions
ATO ID 2006/298: Deductibility of compound interest on a line of credit facility

Appeal Update

Tax Cases

Cajkusic v FCT [2006] FCAFC 164, Full Federal Court, 24 November 2006: The Full Federal Court (Kiefel, Sundberg and Edmonds JJ) has held that a trustee had a power under a trust deed to determine the “distributable income” of a trust, notwithstanding the fact that it did not equal the “net income” for the purposes of s.95. The appeal arose from an AAT decision which held that the trust was not entitled to deductions for contributions made pursuant to an employee benefit arrangement, and as a result, the beneficiaries were liable for tax on the increased distributions. On appeal, the Full Federal Court agreed that the trustee had the power to determine distributable income pursuant to the terms of the relevant trust deed. As the distributable income was negative, and it followed that the beneficiaries were not presently entitled to anything. However, the Court made it clear that the liability for tax on the s.95 net income fell on the trustee in accordance with s.99A.