tax on the couch topics - ntaa€¦ · setting up a tax-effective pension under the...

Tax on the Couch

© Tax on the Couch

TAX ON THE COUCH TOPICS HOT TOPICS – MONTH-BY-MONTH 2011 December 2011 Hot Topic Tax issues with staff Christmas parties November 2011 Hot Topic Capitalising investment loan interest October 2011 Hot Topic GST and the going concern exemption September 2011 Hot Topic Superannuation pensions August 2011 Hot Topic The Carbon Tax July 2011 Hot Topic The PSI Rules June 2011 Hot Topic Budget 2011 May 2011 Hot Topic Excess contributions tax April 2011 Hot Topic Setting up a tax-effective pension under the ‘proportioning rule’ March 2011 Hot Topic Beneficiaries claiming deductions against trust income January/February 2011 Hot Topic FBT and Car Parking Fringe Benefits 2010 December 2010 Hot Topic Xmas Parties and Gifts November 2010 Hot Topic Applying the CGT main residence exemption – Part II October 2010 Hot Topic Applying the CGT main residence exemption September 2010 Hot Topic Non-commercial losses and the new 2010 income test August 2010 Hot Topic Company Losses July 2010 Hot Topic UPEs and Corporate Beneficiaries

Tax on the Couch

© Tax on the Couch

June 2010 Hot Topic Henry Review and Budget 2010 May 2010 Hot Topic The Bamford Case April 2010 Hot Topic Section 23AG changes – Taxation of foreign earnings of resident taxpayers March 2010 Hot Topic Selling a Business January/February 2010 Hot Topic The New Tax Agent Services Regime 2009 December 2009 Hot Topic The FBT treatment of employer Christmas functions and gifts November 2009 Hot Topic Determining departing clients Australian residency in light of changes to S.23AG of the ITAA 1936 October 2009 Hot Topic The Small Business Roll-over September 2009 Hot Topic One-off profit-making transactions August 2009 Hot Topic Practical Tips for Division 7A July 2009 Hot Topic SMSFs and Unit Trusts after 30 June 2009 June 2009 Hot Topic Budget 2009 May 2009 Hot Topic The Education Tax Offset April 2009 Hot Topic The Small Business and General Business Tax Break (the investment allowance) March 2009 Hot Topic Loss or destruction of an asset January/February 2009 Hot Topic Changes to the Margin Scheme 2008 December 2008 Hot Topic FBT and Xmas Time November 2008 Hot Topic Salary packaging after the 2008 Budget October 2008 Hot Topic First Home Saver Accounts

Tax on the Couch

© Tax on the Couch

September 2008 Hot Topic Instalment warrants: New ability of SMSFs to borrow August 2008 Hot Topic Tax Time 2008: Work related expenses July 2008 Hot Topic Taxation of trusts: Trust income vs Net income June 2008 Hot Topic Budget 2008 May 2008 Hot Topic Deceased Estates April 2008 Hot Topic Common audit traps and planning tips with car expense claims March 2008 Hot Topic Superannuation Co-contribution January/February 2008 Hot Topic FBT minor benefits exemption 2007 December 2007 Hot Topic Superannuation issues (including Employment Termination Payments and Instalment warrants) November 2007 Hot Topic Salary Packaging October 2007 Hot Topic Issues relating to the horse industry September 2007 Hot Topic Div.7A Update August 2007 Hot Topic GST Going Concern Exemption July 2007 Hot Topic Tax consequences of a shareholder making payments under a guarantee for a company June 2007 Hot Topic Budget 2007 May 2007 Hot Topic Changes to the CGT small business concessions April 2007 Hot Topic Advanced issues in relation to rental properties March 2007 Hot Topic Managing an ATO audit January/February 2007 Hot Topic Simplified Superannuation

Tax on the Couch

© Tax on the Couch

2006 December 2006 Hot Topic FBT and Christmas Parties November 2006 Hot Topic Family Trust Elections and Interposed Entity Elections October 2006 Hot Topic Margin scheme – Division 75 of the GST Act September 2006 Hot Topic Rental Properties August 2006 Hot Topic The main residence exemption July 2006 Hot Topic Trust distributions to bucket companies June 2006 Hot Topic Budget 2006 May 2006 Hot Topic The ins-and-outs of superannuation pensions April 2006 Hot Topic FBT: LAFHA –Living away from home allowance fringe benefits March 2006 Hot Topic Tips and traps with the CGT small business concessions January/February 2006 Hot Topic Taxation issues involving Partnerships of Discretionary Trusts 2005 December 2005 Hot Topic Rules for SMSFs investing in unit trusts November 2005 Hot Topic S.23AG and Foreign Earnings October 2005 Hot Topic: Commercial Debt Forgiveness – The Basics! September 2005 Hot Topic Rental Properties August 2005 Hot Topic Service Trusts Under Attack! July 2005 Hot Topic Choice of super fund measures – from 1 July 2005 June 2005 Hot Topic Year-end tax planning May 2005 – Promotional CD-Rom The ATO and Part IVA

Tax on the Couch

© Tax on the Couch

ATO TOPICS – MONTH-BY-MONTH 2011 December 2011 ATO Hot Topic Registered Agent Risk Differentiation Framework November 2011 ATO Hot Topic Starting and stopping pensions and Access Manager October 2011 ATO Hot Topic Auskey, SBR and updates to the ABR’s September 2011 ATO Hot Topic Common mistakes with rental property claims and property transactions August 2011 ATO Hot Topic Employer obligations and Pre-filling of tax returns July 2011 ATO Hot Topic Work Related Expenses June 2011 ATO Hot Topic Tax avoidance schemes and income tax return fraud May 2011 ATO Hot Topic Fringe Benefits Tax April 2011 ATO Hot Topic GST compliance March 2011 ATO Hot Topic Employer obligations and PAYG January/February 2011 ATO Hot Topic Superannuation Update 2010 December 2010 ATO Hot Topic The High Wealth Individual and the Wealthy Australian’s taskforces November 2010 ATO Hot Topic The Small & Medium Enterprises lodgment campaign for 2010 October 2010 ATO Hot Topic Helping clients with tax debts September 2010 ATO Hot Topic Rental property issues August 2010 ATO Hot Topic Super Updates July 2010 ATO Hot Topic Work Related Expenses June 2010 Treasury Hot Topic Are you SBR ready? Implementing Standard Business Reporting in your tax practice

Tax on the Couch

© Tax on the Couch

May 2010 ATO Hot Topic Excess Contributions Tax and SMSFs April 2010 ATO Hot Topic Employee Share Schemes March 2010 ATO Hot Topic Small Business Benchmarks January/February 2010 ATO Hot Topic Reforms to Income Tests 2009 December 2009 ATO Hot Topic International Tax Avoidance and Evasion November 2009 ATO Hot Topic Small business and general business tax break October 2009 ATO Hot Topic Work Related Expenses (WREs) and Partnership and Trust Distributions September 2009 ATO Hot Topic Standard Business Reporting August 2009 ATO Hot Topic Same sex relationships and Taxation July 2009 ATO Hot Topic Luxury Car Tax June 2009 ATO Hot Topic FBT and Non-Profit Organisations May 2009 ATO Hot Topic Employment Termination Payments April 2009 ATO Hot Topic Fringe Benefits Tax March 2009 ATO Hot Topic Selling or closing a business January/February 2009 ATO Hot Topic Research & Development Tax Concessions 2008 December 2008 ATO Hot Topic Accessing Superannuation Benefits November 2008 ATO Hot Topic Work Related Expenses October 2008 ATO Hot Topic Business Real Property September 2008 ATO Hot Topic Employee Share Schemes

Tax on the Couch

© Tax on the Couch

August 2008 ATO Hot Topic SMSFs – Auditor competency requirements July 2008 ATO Hot Topic Tax governance for wealthy Australians June 2008 ATO Hot Topic Offshore Voluntary Disclosure Initiative May 2008 ATO Hot Topic Fuel Tax Credits April 2008 ATO Hot Topic Fringe Benefits Tax (FBT) March 2008 ATO Hot Topics State of the Industry research results SMSF Transitional Provisions for In House Assets January/February 2008 ATO Hot Topic GST Division 129 & 135 Adjustments 2007 December 2007 ATO Hot Topic Personal Services income November 2007 ATO Hot Topic Gifts of shares to non-profit organisations October 2007 ATO Hot Topic Small Business Concessions Program September 2007 ATO Hot Topic Superannuation August 2007 ATO Hot Topic Division 7A July 2007 ATO Hot Topic CGT concessions for small business June 2007 ATO Hot Topic “Small Business” Alignment – focus on GST implications May 2007 ATO Hot Topic Superannuation Guarantee and employer superannuation obligations April 2007 ATO Hot Topic Common problems identified in rental property audits March 2007 ATO Hot Topic CGT issues (including Deceased Estates, Marriage Breakdown, and Compensation payments) January/February 2007 ATO Hot Topic Natural Disasters

Tax on the Couch

© Tax on the Couch

2006 December 2006 ATO Hot Topic Promoter Penalty Law November 2006 ATO Hot Topic Identity Crime October 2006 ATO Topic Shortfall interest charge September 2006 ATO Topic Horse Racing August 2006 ATO Topic The new fuel tax system July 2006 ATO Topic Service arrangements June 2006 ATO Topic Review of Self-Assessment (ROSA) May 2006 ATO Topic The ATO's Easier, Cheaper & More Personalised Program April 2006 ATO Topic Consolidation Basics March 2006 ATO Topic Employees vs. Contractors and the ATO’s New Decision Tool January/February 2006 ATO Topic Part IVA 2005 December 2005 ATO Topic Superannuation Issues November 2005 ATO Topic ATO’s Strategic Framework October 2005 ATO Topic Digital Certificates September 2005 ATO Topic ATO Compliance Program August 2005 ATO Topic Security and other issues July 2005 ATO Topic Tax Time lodgment and administrative messages June 2005 ATO Topic ATO SMSF compliance strategy May 2005 – Promotional CD-Rom The ATO and Part IVA

Tax on the Couch

© Tax on the Couch

ALL TOPICS COVERED 2011 DECEMBER 2011 Monthly Legislative Update

Exposure draft: Miscellaneous amendments – The draft bill proposes miscellaneous amendments to improve the operation of the tax laws, including providing the Commissioner with discretion to extend the two-year ownership period to apply the CGT main residence exemption to a deceased's dwelling; and ensuring that in certain circumstances taxpayers can have a direct Small Business Participation Percentage for the purposes accessing the small business CGT concessions.

Tax Laws Amendment (2011 Measures No. 8) Bill 2011 – This Bill proposes to, amongst other things, provide the Commissioner with a discretion to disregard certain ‘disentitling events’ to give effect to primary production elections.

Exposure draft: Buy-backs of shares and non-share equity interests – The draft legislation contains implements recommendations of the Board of Taxation to improve the taxation arrangements relating to the buy-back of shares and non-share equity interests.

Superannuation Guarantee (Administration) Amendment Bill 2011 – This Bill proposes to amend the SGAA 1992 to increase the age at which SG no longer needs to be provided for an employee from 70 to 75; and incrementally increase the SG charge percentage from 9% to 12%.

Monthly Rulings Update TR 2011/5 – Income tax: objections against income tax assessments ID 2011/77 – Payment of death benefit to former stepchild: meaning of 'child' and 'dependant' ID 2011/82 – Assessable income: recoupments – Insurance proceeds for destruction of capital works TD 2011/D11 – Income tax: when is the shortfall interest charge incurred for the purposes of S.25-5(1)(c) of

the Income Tax Assessment Act 1997? GSTR 2011/D4 – Goods and services tax: financial assistance payments

Monthly Case Update Allowance was not a travel allowance and, therefore, taxpayer denied deductions for unsubstantiated

expenses – Fardell v FCT [2011] AATA 725. Maximum net asset value test (for purposes of the small business CGT concessions) includes liability for

agents commission arising from the CGT event – FCT v Byrne Hotels Qld Pty Ltd [2011] FCAFC 127. Alienation of PSI rules apply to income of a taxpayer not carrying on a personal services business –

Confidential v. FCT [2011] AATA 682. Childcare premises used predominantly for deriving rent not an active asset for purposes of accessing the

small business CGT concessions – Vaughan v FCT [2011] AATA 758. Assessments valid despite inconsistency with private ruling – Mount Pritchard & District Community Club

Limited v FCT [2011] FCAFC 129.

Other Developments Tax Practitioners Board releases new information sheet – Reports or other advice incorporating tax agent

services provided by a third party.

Hot Topic Tax issues with staff Christmas parties.

ATO Hot Topic Registered Agent Risk Differentiation Framework.

NOVEMBER 2011 Monthly Legislative Update

Exposure draft – Standard deductions Exposure draft – MySuper Exposure draft – SBE depreciation TLAB No.7 2011

Tax on the Couch

© Tax on the Couch

Monthly Rulings Update PS LA (draft) 3545 – Remission of administrative penalties relating to schemes TR 2011/4: Charities

Monthly Case Update Superannuation guarantee constitutionally valid - Roy Morgan Research Pty Ltd v Commissioner of Taxation

[2011] HCA 35 (28 September 2011) ATO not entitled to delay GST refunds subject to audit investigation - Multiflex Pty Ltd v Commissioner of

Taxation [2011] FCA 1112 (30 September 2011) Ineffective salary sacrifice arrangement for former taxation officer - Turner and Commissioner of Taxation

[2011] AATA 693 (6 October 2011) Monetary penalties imposed on trustees of SMSF - Olesen v Parker [2011] FCA 1096 (23 September 2011) Taxpayer not required to pay a 25% tax shortfall penalty - Helbers and Commissioner of Taxation [2011] AATA

657 (23 September 2011) Taxpayer required to pay a 25% Tax shortfall penalty - Aurora Developments Pty Ltd v Commissioner of

Taxation (No. 2) [2011] FCA 1090 (23 September 2011)

Other Developments Small business benchmarks based on 2009 statistics released Australian Tax Forum – a tax plan for our future Capital gains tax relief for taxpayers affected by natural disasters

Hot Topic Capitalising interest on investment loans

ATO Hot Topic Starting and stopping pensions and Access Manager

OCTOBER 2011 Monthly Legislative Update

Exposure draft – Financial supply provisions Exposure draft (revised) - Indirect tax self-assessment

Monthly Rulings Update MT 2011/D3 - Administrative penalties: voluntary disclosures SMSFR 2011/D2 – Self managed superannuation funds: limited recourse borrowing arrangements –

application of key concepts TR 2011/3 – Fringe benefits tax: meaning of ‘cost price’ of a car, for the purpose of calculating the taxable

value of car fringe benefits.

Monthly Case Update Fees paid on entering a franchise agreement were not deductible under the general provisions of the

‘Blackhole’ provision of S.40-880 of the ITAA97; however franchise renewal fees were deductible under the prepayment rules over the 5 year eligible service period – Inglewood and Districts Community Enterprises Limited and Commissioner of Taxation [2011] AATA 607

GST was not payable on canceled or unused non-refundable airfare tickets – Qantas airways limited v FC of T [2011] AATA 977

The Commissioner’s discretion under Subsection 340-140 (4) to not include an incorrectly withdrawn superannuation benefit as assessable income of the members of a SMSF was correctly not exercised. – Smith V FC of T [2011] AATA 563.

Other Developments Consultation on excess contributions refund NTLG FBT sub-committee minutes of 12 May 2011 – published 19th of August 2011

Hot Topic GST and the going concern exemption

ATO Hot Topic AUSkey, SBR and updates to the ABR’s

Tax on the Couch

© Tax on the Couch

SEPTEMBER 2011 Monthly Legislative Update

Draft legislation – Removing income tax barriers to make it easier for people to contribute to a Special Disability Trust

Draft Regulations – Streamlining Deductions for the Cost of Disability Insurance through Superannuation

Monthly Rulings Update PS LA 2011/27 – Matters the Commissioner considers when determining whether the ATO view of the law

should only be applied prospectively TD 2011/19 – Tax administration: what is a general administrative practice for the purposes of protection from

administrative penalties and interest charges?

Monthly Case Update A payment received by a former employee of the ATO when she terminated her employment was not a

'genuine redundancy payment' – The Taxpayer and Commissioner of Taxation [2011] AATA 499 Receipt of damages for 'conversion' of a taxpayer’s assets (and transfer of title) was not a taxable supply –

Reglon Pty Limited v Commissioner of Taxation [2011] FCA 805 An amount received by a taxpayer from their super fund and then contributed to another super fund was not a

‘roll-over superannuation benefit’, meaning their excess non-concessional contributions tax assessment was upheld – Player v Commissioner of Taxation [2011] FCA 869

Taxpayer not entitled to majority of work related expenses claimed – Kaley and Commissioner of Taxation [2011] AATA 480

Taxpayer that bought and sold a number of shares in a relevant year was engaged in the business of share trading during that year and could claim losses or outgoings incurred in the process – The Taxpayer and Commissioner of Taxation [2011] AATA 545

Taxpayer with a permanent place of abode outside Australia was not a resident of Australia despite other connections to Australia (and not liable to tax overseas either) – Mynott and Commissioner of Taxation [2011] AATA 539

Other Developments GST low value threshold: Draft Productivity Commission Report Commissioner’s speech – “At your service: here to help and look after the interests of businesses making good

and honest choices”

Hot Topic Superannuation pensions

ATO Hot Topic Common mistakes with rental property claims and property transactions

AUGUST 2011 Monthly Legislative Update

Tax Laws Amendment (2011 Measures No 6) Bill 2011 introduces amendments that: extend the FBT exemption for fly-in fly-out arrangements to Australian residents working in remote locations overseas; exempt the Outer Regional and Remote Payment from income tax; and update the list of Deductible gift recipients

Fairer Private Health Insurance Incentives Bill 2011; Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2011 and Fairer Private Health Insurance Incentives (Medicare Levy Surcharge - Fringe Benefits) Bill 2011 – This package of Bills proposes to “income test” a person’s entitlement to the 30% Private Health Insurance Rebate

Superannuation Industry (Supervision) Amendment Regulations 2011 (No 2) introduces new rules for SMSF trustees when investing in collectables and personal use assets

Monthly Rulings Update GSTR 2011/D2 – GST: Residential premises and commercial residential premises GSTR 2000/21A3 (Addendum) – GST: The margin scheme for supplies of real property held prior to 1 July

2000 GSTR 2006/7A3 (Addendum) – GST: How the margin scheme applies to a supply of real property made on or

after 1 December 2005 that was acquired or held before 1 July 2000

Tax on the Couch

© Tax on the Couch

GSTR 2006/8A3 (Addendum) – GST: The margin scheme for supplies of real property acquired on or after 1 July 2000

TD 2011/D8 – Income tax: Does a taxpayer's purpose of 'paying their home loan off sooner' mean that Part IVA of the Income Tax Assessment Act 1936 cannot apply to an 'investment loan interest payment arrangement' of the type described in this Taxation Determination?

ATO guide to Division 7A and unpaid present entitlements – This document clarifies certain supplementary issues relating to the ATO views expressed in TR 2010/3 and PS LA 2010/4.

Monthly Case Update The AAT has affirmed the Commissioner's decision to refuse to exercise his discretion and revoke the

disqualification of a person as an SMSF auditor for failing to fulfil his statutory duties – Confidential v. Commissioner of Taxation [2011] AATA 403

A couple are denied a deduction for interest on loans made to their discretionary trust and in relation to investment properties which they made available to the trust on the basis that there was an insufficient nexus between the interest expenses and their derivation of assessable income as beneficiaries of the trust – Antonopoulos v. Commissioner of Taxation [2011] AATA 431

Federal Court orders the reinstatement of a deregistered company to enable the ATO to pursue unpaid debts – Deputy Commissioner of Taxation v Australian Securities and Investments Commission [2011] FCA 524

The ATO has issued a Decision Impact Statement to provide its response to the Federal Court decision in a case concerning the tax treatment of payments made by the trustee of a unit trust on the redemption of units and, in particular, whether redeeming unitholders would be assessed on trust capital gains apportioned to them – NSD 1190 of 2009: Colonial First State Investments Ltd v Commissioner of Taxation

Other Developments ATO Compliance program for 2011-12 ATO administrative guidance: Improving the taxation of trust income

Hot Topic The Carbon Tax

ATO Hot Topic Employer obligations and Pre-filling of tax returns

JULY 2011 Monthly Legislative Update

Tax Laws Amendment (2011 Measures No. 4) Bill 2010 (which includes measures relating to reportable employer superannuation contributions, the low income tax offset for minors, and deductibility of premiums for certain TPD insurance policies)

Tax Laws Amendment (2011 Measures No. 5) Bill 2011 (which includes measures relating to beneficiaries of trusts carrying on primary production activities, streaming capital gains and franked distributions of trusts, phasing out the dependent spouse tax offset, and providing for a single statutory rate of 20% to determine the taxable value of car fringe benefits)

Draft Rules for SMSF Investment in Collectables and Personal Use Assets

Monthly Rulings Update GSTR 2011/D1 – Goods and services tax: tax invoices PS LA 2011/24 – Excess contributions tax: Remission of certain administrative penalties where an individual

or superannuation provider does not comply with obligations in relation to a release authority PS LA 2011/25 – Reconstructing records and making reasonable estimates for taxpayers affected by disasters PS LA 3461 (draft) – Remission of additional superannuation guarantee charge imposed under S.59(1) of the

Superannuation Guarantee (Administration) Act 1992 TA 2011/4 – Deductibility of unpaid directors fees

Monthly Case Update Property developer disposed of property lots to a related party “outside the ordinary course of business” – A &

C Sliwa Pty Ltd and Commissioner of Taxation [2011] AATA 390 Legal practitioner could not claim a deduction for expenses incurred in obtaining an Australian pilot’s licence

and aviation training – The Taxpayer and Commissioner of Taxation [2011] AATA 318

Tax on the Couch

© Tax on the Couch

Other Developments Deductions for study and job seeking expenses as a result of the Anstis decision The Garnaut Review 2011: Australia in the Global Response to Climate Change Non-commercial loss rules update

“You asked for it!” – Viewers queries Can a company client that is thinking about selling its business pay out a genuine redundancy payment (and

get the benefit of the redundancy ‘tax-free’ benefits based on years of service) to the directors of the company?

Hot Topic The PSI Rules

ATO Hot Topic Work Related Expenses

JUNE 2011 Monthly Legislative Update

General Parliamentary update including Bills passed and introduced Taxation of trusts: ATO’s administrative approach and practical tips leading up to 30 June

Monthly Rulings Update TA 2011/3 – Arrangements involving holiday travel claimed as a work related, investment or self-education

expense TR 2011/D2 – Income tax and fringe benefits tax: charities

Monthly Case Update Payment held to be a transitional termination payment despite change of employer policy – Perfrement and

Commissioner of Taxation [2011] AATA 264 Contractors held to be employees for superannuation guarantee purposes – On Call Interpreters and

Translators Agency Pty Ltd v Commissioner of Taxation (No 3) [2011] FCA 366 Civil penalty order imposed against the trustee of an SMSF – Olesen v MacLeod [2011] FCA 229 SMSF a non-complying superannuation fund despite the fact only one out of its three trustees caused

breaches – Triway Superannuation Fund and Commissioner of Taxation [2011] AATA 302

Other Developments Future of Financial Advice reforms (including the accountants' exemption in relation to SMSFs) ATO advice regarding FBT and the recent natural disasters Hints for tax planning for the end of the financial year

Hot Topic Budget 2011

ATO Hot Topic Tax avoidance schemes and income tax return fraud

Tax on the Couch

© Tax on the Couch

MAY 2011 Monthly Legislative Update

Tax Laws Amendment (2011 Measures No. 2) Bill 2011 includes changes to the current system for exempting Australian taxes, fees and charges from GST, provides for SIS Regulations to be introduced in relation to SMSF investments in collectables and personal use assets, and amends the ITAA 1997 to provide the Commissioner with discretion to extend the main residence exemption from CGT and to allow the nomination of controllers of discretionary trusts for the purposes of the CGT small business concessions;

Exposure draft legislation on changes to enable the streaming of capital gains and franked distributions as well as changes to ensure that low tax entities, especially exempt entities, cannot be used inappropriately to reduce the tax payable on the taxable income of a trust;

Senate Economics Legislation Committee report on amendments to capital protected borrowings measures in Tax Laws Amendment (2010 Measures No 5) Bill 2010 raised concerns about the reliance on amendments introduced by press release in circumstances where the legislation is released more than six months after the announcement.

Monthly Rulings Update TD 2011/2 – FBT: For the purposes of S.135C of the Fringe Benefits Tax Assessment Act 1986, what is the

exemption threshold for the fringe benefits tax year commencing on 1 April 2011? TD 2011/3 – FBT: For the purposes of S.28 of the Fringe Benefits Tax Assessment Act 1986 what are the

indexation factors for valuing non-remote housing for the fringe benefits tax year commencing on 1 April 2011? TD 2011/4 – FBT: For the purposes of Division 7 of Part III of the Fringe Benefits Tax Assessment Act 1986,

what amount represents a reasonable food component of a living-away-from-home allowance for expatriate employees for the fringe benefits tax year commencing on 1 April 2011?

TD 2011/5 – FBT: What are the rates to be applied on a cents per kilometre basis for calculating the taxable value of a fringe benefit arising from the private use of a motor vehicle other than a car for the fringe benefits tax year commencing on 1 April 2011?

TD 2011/6 – FBT: What is the benchmark interest rate to be used for the fringe benefits tax year commencing on 1 April 2011?

PS LA 2843 (draft) – Exercise of the Commissioner's discretion under section 109RB of Division 7A. TD 2011/D4 – Tax administration: What is a general administrative practice for the purposes of protection from

administrative penalties and interest charges?

Monthly Case Update In a test case, the Federal Court confirms that a supply of land was not the supply of going concern under

S.38-325 of the GST Act – Aurora Developments Pty Ltd v Commissioner of Taxation [2011] FCA 232; The NSW Supreme Court has declared that an SMSF was created as a valid and effective express trust

despite some problems with the documentation – Sutherland v Woods [2011] NSWSC 13; The Federal Court held that ATO audit teams investigating an accountant and two of his clients as part of

Project Wickenby should have access to confidential accounting advices prepared for the taxpayers – Stewart & Others v Deputy Commissioner of Taxation [2011] FCA 336;

The AAT held that a taxpayer was assessable on so much of a payment of $11.6 million paid into an executive trust on his behalf which represented "accrued" bonuses foregone, but not on that part of the payment that represented future or contingent bonuses as that amount had not been derived – Sent v Commissioner of Taxation [2011] AATA 198.

Other Developments Study expenses for full-time students receiving Youth Allowance – ATO will automatically amend 2007 to 2010

assessments (inclusive) of eligible taxpayers to allow a deduction of $550 for study expenses for each year that they were eligible;

Expectations/Predictions about what could be in the May 2011 Federal Budget; Financial planners’ exemption from tax agent regime extended to 1 July 2012.

“You asked for it!” – Viewers queries If an SMSF borrowed to buy a house that has been destroyed in a natural disaster, can it be rebuilt?

Hot Topic Excess contributions tax.

ATO Hot Topic Fringe Benefits Tax.

Tax on the Couch

© Tax on the Couch

APRIL 2011 Monthly Legislative Update

Discussion paper on the proposed standard deduction for the cost of work-related expenses and the cost of managing tax affairs;

Exposure draft legislation to extend the current FBT exemption for fly-in fly-out arrangements to residents working overseas;

Discussion paper on proposed reforms to Division 6 of the ITAA 1936, including the introduction of a statutory definition of ‘distributable income’ and amendments to allow the streaming of franked dividends (including attached franking credits) and capital gains to specific beneficiaries;

Consultation paper on proposed amendments to allow, from 1 July 2012, individuals aged 50 and over with total superannuation balances below $500,000 to make up to $50,000 in concessional superannuation contributions per year; and

Discussion paper on the design and implementation of proposed amendments to the rules affecting the application of GST to cross-border transactions.

Monthly Rulings Update TR 2011/D1 – Fringe benefits tax: meaning of 'cost price' of a car, for the purpose of calculating the taxable

value of car fringe benefits; TD 2011/D1 – Income tax: does it follow merely from the fact that an investment has been made by a trustee

that any gain or loss from the investment will be on capital account?

Monthly Case Update AAT confirms that the sale of land by the taxpayer was a taxable supply and not a compulsorily acquisition –

SXGX v FCT [2011] AATA 110; Federal Court dismisses application to impose a civil penalty on SMSF trustee for breach of the SIS Act –

Dolevski v Hodpik Pty Ltd [2011] FCA 54; NSW Court of Appeal finds that the 14-day period within which a director must take certain action in response

to a director's penalty notice runs from the date of delivery of the notice (and not from the date of its posting) – Soong v DCT [2011] NSWCA 26.

Other Developments An address by the Commissioner of Taxation – Self-managed super: making sure it works for you and the

community.

“You asked for it!” – Viewers queries If a trust distributes to a company, will this be a deemed dividend under Division 7A?

Hot Topic Setting up a tax-effective pension under the ‘proportioning rule’.

ATO Hot Topic GST compliance.

MARCH 2011 Monthly Legislative Update

Tax Laws Amendment (2010 Measures No. 5) Bill 2010, including changes to the main residence CGT exemption, allowing super funds to claim deductions for insurance policies relating to terminal medical condition benefits, and including school uniforms as an eligible expense for the education expenses tax offset);

Tax Laws Amendment (2011 Measures No. 1) Bill 2011, including changes to increase the flexibility of First Home Saver Accounts by allowing the money to be paid to an approved mortgage where the accountholder purchases a house in the interim;

Tax Laws Amendment (2011 Measures No. 2) Bill 2011, includes changes to the current system for exempting Australian taxes, fees and charges from GST, provide GST-free treatment for the sale of recreational boats exported within 12 months, require SMSFs to comply with regulations regarding investments in collectables and personal use assets, and to clarify the definition of reportable employer superannuation contributions;

Tax Laws Amendment (2011 Measures No. 3) Bill 2011, includes additional listed deductible gift recipients; Tax Laws Amendment (Temporary Flood Levy) Bill 2011 and Income Tax Rates (Temporary Flood Levy) Bill

2011, introduce a one-off, progressive levy on taxable incomes above $50,000 for the 2012 income year; and

Tax on the Couch

© Tax on the Couch

Consultation paper on a proposed tax break for businesses that invest in eligible assets or capital works to improve the energy efficiency of their existing buildings.

Monthly Rulings Update TD 2011/1 – Income tax and fringe benefits tax: Non-resident employer obligations: PAYG withholding and

FBT; SMSFD 2011/1 – Self Managed Superannuation Funds: Superannuation benefits – timing of payment by

cheque.

Monthly Case Update AAT upholds a superannuation excess contributions tax assessment issued for breach of the $1m transitional

non-concessional contributions cap – Player v FCT [2011] AATA 35; The Federal Court has ruled that a labour hire business that employed workers to provide physical assistance

in the home to elderly and disabled persons was required to make SG contributions – FCT v Newton [2010] FCA 1440;

The AAT has upheld a non-compliance notice issued to an SMSF trustee for the provision of non-commercial loans made to the member indirectly via a related unit trust – ZDDD v FCT [2011] AATA 3.

Other Developments All things flood, including the proposed flood levy, tax exemption for assistance payments, activity statement

deferrals and disaster declaration for tax purposes; An update on the Federal Government’s paid parental leave scheme.

“You asked for it!” – Viewers queries Loss of livestock due to flooding.

Hot Topic Beneficiaries claiming deductions against trust distributions.

ATO Hot Topic Employer obligations and PAYG.

JANUARY/FEBRUARY 2011 Monthly Legislative Update

Tax Laws Amendment (2010 Measures No. 5) Bill 2010, including changes to the main residence CGT exemption, allowing super funds to claim deductions for insurance policies relating to terminal medical condition benefits, and including school uniforms as an eligible expense for the education expenses tax offset)

Release of Discussion Papers on various proposed changes to the tax laws, including 'Improving the Operation of the Anti-Avoidance Provisions in the Income Tax Laws', Exempting Taxes, Fees and Charges from the GST, and Margin Scheme changes

Monthly Rulings Update TR 2010/8 – Income tax: Division 7A – application of S.109RB(1) of the ITAA 1936 TD 2010/D9 – Income tax: Division 7A – unpaid present entitlements - factors the Commissioner will take into

account in determining the amount of any deemed entitlement arising under S.109XI of the ITAA 1936 TD 2010/D10 – Income tax: Division 7A – payments and loans through interposed entities – factors the

Commissioner will take into account in determining the amount of any deemed payment or notional loan arising under S.109T of the ITAA 1936

TR 2010/D7 – Income tax: business related capital expenditure – S.40-880 of the ITAA 1997 core issues

Monthly Case Update ATO Decision Impact Statement on case of Commissioner of Taxation v Anstis [2010] HCA 40, and

Government’s response Capital gain distributed to a superannuation fund from a fixed trust was “special income” – Allen (Trustee), in

the matter of Allen’s Asphalt Staff Superannuation Fund v Commissioner of Taxation [2010] FCA 1276 Property acquired was to be used predominately for residential accommodation, so purchaser unable to claim

input tax credits – Sunchen Pty Ltd v Commissioner of Taxation [2010] FCAFC 138 Franking credits were income of a trust that could be distributed by the trustee in accordance with the deed –

Thomas Nominees Pty Ltd v Thomas and Ors [2010] QSC 417

Tax on the Couch

© Tax on the Couch

Other Developments Proposed Changes to Trust Laws Government response to the recommendations of the Super System (Cooper) Review Retail Coalition: lobby to remove the $1000 GST-free threshold on purchases made online Regulating Financial Planners Who Provide Tax Agent Services

Hot Topic FBT and Car Parking Fringe Benefits

ATO Hot Topic Superannuation Update

2010 DECEMBER 2010 Monthly Legislative Update

New Bills, including the Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (Budget and Other Measures) Bill 2010, which deals with changes to FTB and special disability trusts (amongst other things)

Regulations and draft regulations, including the Tax Agent Services Amendment Regulations 2010 (No. 1) and Draft Regulations dealing with transitional relief in respect of income tax deductibility of TPD insurance premiums by superannuation funds

Monthly Rulings Update PS LA 2010/4 – Division 7A: trust entitlements – To provide practical guidance on the administrative aspects of

Taxation Ruling TR 2010/3 TA 2010/6 – The use of an unrelated trust to access funds of a private company in an attempt to circumvent

Division 7A TA 2010/5 – The use of an unrelated trust to circumvent superannuation lending restrictions

Monthly Case Update Expenses incurred in undertaking university study were allowable deductions against youth allowance –

Commissioner of Taxation v Anstis [2010] HCA 40 The obligation to pay income tax (or GIC) is a 'present legal obligation' as at the end of the income year for

Div.7A purposes – Commissioner of Taxation v H [2010] FCAFC 128 Husband employing his wife to assist with his rental property not entitled to claim a deduction for wages and

superannuation contributions – Brown and Commissioner of Taxation [2010] AATA 829 and France and Commissioner of Taxation [2010] AATA 858

Amounts received by taxpayer were ETPs that included invalidity payments – Sills and Commissioner of Taxation [2010] AATA 843

Taxpayer required to make increasing adjustment for input tax credits previously claimed as there was no evidence of consideration being paid within 12 months of the invoice – QFP Professional Tomato Project 98 and Ors and Commissioner of Taxation [2010] AATA 864

Other Developments Government and Superannuation (including speech by the Assistant Treasurer and Minister for Financial

Services and Superannuation and the release of the National Survey into Community Attitudes and Values Towards Superannuation)

50 per cent tax discount for interest income – revised policy The new SMSF Member Verification System Fair Work Australia Decision regarding salary sacrificing: Casey Grammar School v Independent Education

Union of Australia [2010] FWA 8218

“You asked for it!” – Viewers queries “Under our trust deed, distributions must be made “each financial year (or within two months thereafter)”. Is

this time frame required by trust law?”

Tax on the Couch

© Tax on the Couch

Hot Topic Xmas Parties and Gifts

ATO Hot Topic The High Wealth Individual and the Wealthy Australian’s taskforces


Review of lapsed or previously defeated Bills re-introduced including, amongst others: o Tax Laws Amendment (2010 Measures No 4) Bill 2010 which propose to increase the net medical

expenses tax offset threshold to $2,000 from 1 July 2010 and the commencement of annual indexation of the threshold from 1 July 2011;

o Superannuation Legislation Amendment Bill 2010 which, amongst others, includes changes concerning fund deductions for disability insurance premiums paid for the 2005 to 2011 income years; acquiring an asset in specie from a related party following the relationship breakdown; and the Commissioner’s discretion for ECT purposes; and

Exposure Draft Tax Laws Amendment (First Home Saver Accounts) Bill 2010 which proposes to allow FHSA savings to be paid into an “approved mortgage” after the end of a minimum qualifying period, rather than into superannuation, if a home is purchased prior to the minimum release conditions being met

Monthly Rulings Update Application of Division 165 of A New Tax System (Goods and Services Tax) Act 1999 where a land owner

engages the services of an associate to arrange construction of residential premises for lease under an arrangement described in TA 2009/5 – GSTR 2010/1

Income tax, PAYG Withholding and FBT: Tax consequences on the issue, holding and redemption of bonus units as part of an employee benefits trust arrangement – TR 2010/6

SMSF: Limited recourse borrowing arrangement – Re-financing – ID 2010/169 SMSF: Limited recourse borrowing arrangement – Joint investors – ID 2010/172 SMSF: Limited recourse borrowing arrangement – Charge – ID 2010/185

Monthly Case Update The AAT confirmed that a taxpayer was not entitled to a capital loss of $2.6m in relation to the release of

related party debts on the basis that the market value substitution rule applied to determine the cost base of the debts – QFL Photographics Pty Ltd v FCT [2010] AATA 758;

The AAT has held that only part of the interest paid or payable by a taxpayer on loans from his mother that were on-lent, interest-free, to his company were deductible – Tanti v FCT [2010] AATA 549;

The Supreme Court of Western Australia has confirmed that a valid trust had been created over property. As a result, the taxpayer was personally liable for CGT on sale – Saunders v DCT [2010] WASC 261;

AAT held that a trust arrangement entered into by a taxpayer was ineffective to divest him of ownership of shares for CGT purposes – MacMahon v FCT [2010] AATA 724.

Other Developments New association lifts the bar on financial planners Super funds and taxation: Working together for effective compliance

“You asked for it!” – Viewers queries What are the tax implications of paying a dividend from share capital?

Hot Topic Applying the CGT main residence exemption – Part II

ATO Hot Topic The Small & Medium Enterprises lodgment campaign for 2010

Tax on the Couch

© Tax on the Couch


Review of recently enacted Bills, including the: o Tax Laws Amendment (2010 GST Administration Measures No.2) Bill 2010 which, amongst other

things, amends the provisions relating to GST groups, GST joint ventures and tax invoices with effect from 1 July 2010; and

o Corporations Amendment (Corporate Reporting Reform) Bill 2010 which, amongst other things, amends the income tax law to ensure that dividends paid in accordance with new rules contained in the corporations law (i.e., other than “out of profits”) continue to be treated as assessable income of the shareholder and are frankable for tax purposes.

o Foreign income tax offset and the Medicare levy – ATO administrative treatment.

Monthly Rulings Update Business related costs: Expenditure in relation to a lease not obtained – ATO interpretative decision (‘ID’)

2010/157; GST and tax invoice for multiple recipients – ATO ID 2010/144; GST and tax invoice issued by another entity – ATO ID 2010/146; The deductibility of credit card fees incurred in paying income tax under S.8-1 (general deduction provisions),

S.25-5 (the cost of managing tax affairs) or S.25-25 (borrowing costs) of the ITAA 1997– ATO ID 2010/159, ID 2010/160 and ID 2010/161;

Monthly Case Update Full Federal Court confirms that ordinary income derived by a taxpayer in relation to land transferred to him

(and reported on a cash basis) should be based on the market value of the land on the date of transfer – Tagget v FCT [2010] FCAFC 109;

Court affirms purchase price of land is GST-exclusive, based on special conditions clauses – A F C Holdings Pty Ltd v Shiprock Holdings Pty Ltd [2010] NSWSC 985;

AAT confirms that debts of $3.8 million owed to a taxpayer by related entities were “CGT assets” that had to be taken into account in determining if the taxpayer passed the maximum net asset value test for purposes of applying the small business CGT concessions – AAT case [2010] AATA 591, Re Cannavo and FCT;

Federal Court has dismissed a taxpayer's application for a review of a Deputy Commissioner's decision to "withhold" GST refunds that were payable under the GST Act – PFTF Stock Pty Ltd v DCT [2010] FCA 557.

Other Developments Tax Practitioners Board – Exposure draft information sheet for tax software developers released.

“You asked for it!” – viewers queries [new segment] Personal services income.

Hot Topic Applying the CGT main residence exemption

ATO Hot Topic Helping clients with tax debts


“Promises, Promises” With the election being called and all bills before parliament lapsing as a result, this month we consider some of the tax related election promises from the two major parties

Monthly Rulings Update Addendum to TD 93/29 Income tax: if an employee incurs legal expenses recovering wages paid by a

dishonoured cheque, are these legal expenses an allowable deduction under section 8-1 of the Income Tax Assessment Act 1997

SMSFD 2010/D1 Self Managed Superannuation Funds: for the purposes of the Superannuation Industry (Supervision) Regulations 1994, can a benefit payable with a cheque or promissory note be 'cashed' at the time the cheque or note is issued?

Tax on the Couch

© Tax on the Couch

Monthly Case Update Part IVA: "Alternative postulate" to be established by taxpayer - Commissioner of Taxation v Trail Bros Steel &

Plastics Pty Ltd [2010] FCAFC 94 No deduction for transport of bulky equipment - Brandon and Commissioner of Taxation [2010] AATA 530 Excess super contributions tax assessments effectively upheld - McMennemin and Commissioner of Taxation

[2010] AATA 573 Establishing if a taxpayer is a share trader- Smith and Commissioner of Taxation [2010] AATA 576 Tax prosecution summary

Other Developments Increases to education tax refund limits and updated Medicare levy surcharge thresholds ATO warning on incorrect Reportable Employer Superannuation Contributions (RESCs) on payment

summaries Deadline past for transitional arrangements for new registrations under the tax agent regime NTAA’s ‘Do something campaign’ - the response.

Hot Topic Non-commercial losses and the new 2010 income test

ATO Hot Topic Rental property issues

AUGUST 2010 Monthly Legislative Update

New Bills, including the: o Superannuation Legislation Amendment Bill 2010 (which makes various minor amendments

announced in the May 2010 Budget and other changes such as those in relation to claiming deductions for TPD insurance premiums); and

o Tax Laws Amendment (2010 Measures No 4) Bill 2010 (which makes various amendments including those in relation to: the CGT treatment of water entitlements; foreign currency gains and losses; CGT scrip for scrip rollover; and increasing the threshold for the net medical expenses tax offset).

Draft regulations to exclude certain groups (e.g., in-house advisers and asset custodians) from the operation of the tax agent services regime, and to defer the operation of the regime to financial planners.

Monthly Rulings Update Division 7A benchmark interest rate for the 2011 income year – TD 2010/18 The reasonable travel and overtime meal allowance expense amounts for the 2011 income year – TD 2010/19 Taxpayer alert on the non-market value acquisition of shares or options by SMSFs – TA 2010/3 ATO practice statement on disqualification and/or referral to a professional association of SMSF approved

auditors – PS LA 2010/2 When a dividend will be included as capital proceeds from the disposal of shares under a contract of sale or a

scheme of arrangement – TR 2010/4.

Monthly Case Update High Court allows publication of court documents: Wickenby project – Hogan v Australian Crime Commission &

Ors [2010] HCA 21 Liabilities incurred after CGT event included in CGT: maximum net asset value test – The Taxpayer and

Commissioner of Taxation [2010] AATA 455 Meaning of "in the vicinity of" for car parking fringe benefits – Virgin Blue Airlines Pty Ltd v Commissioner of

Taxation [2010] FCA 631 Superannuation guarantee charge assessment disallowed – Care Provider and Commissioner of Taxation

[2010] AATA 475

Other Developments “Let’s DO SOMETHING” campaign – Henry Report recommendation relating to deductions for expenses that

are “incurred wholly, exclusively and necessarily in the performance of the duties of the employment” ATO Compliance program 2010-11 Final report of the Cooper System review

Tax on the Couch

© Tax on the Couch

Hot Topic Company Losses

ATO Hot Topic Super Updates

JULY 2010 Monthly Legislative Update

New Bills, including the: o Tax Laws Amendment (2010 Measures No. 3) Bill 2010 (which makes various amendments, including

those in relation to the superannuation co-contribution and special disability trusts); and o Superannuation Industry (Supervision) Amendment Bill 2010 (which makes amendments in relation to

limited recourse borrowing arrangements).

Monthly Rulings Update The ATO’s response to Bamford and their approach to cases involving Division 6 of Part III of the ITAA 1936 –

PS LA 2010/1 and Decision Impact Statement S310 and S311/2009 (Commissioner of Taxation v. Phillip Bamford & Ors; Phillip Bamford & Anor v Commissioner of Taxation);

Application of S.109RB(1) of Division 7A of the ITAA 1936 – TR 2010/D3

Monthly Case Update Vacant land, without any living facilities, cannot be "residential premises" – Vidler v Commissioner of Taxation

[2010] FCAFC 59 Redundancy payment received by a 76 year old taxpayer not a “genuine redundancy payment” – Coker and

Commissioner of Taxation [2010] AATA 367 Settlement payment made to former employee (for unlawful termination of employment) a redundancy

payment – Hughes v Loy Yang Power Management Pty Ltd [2010] FMCA 81 Taxpayer could have met the unrelated clients test and was entitled to a personal services business

determination – Yalos Engineering Pty Ltd and Commissioner of Taxation [2009] AATA 390

Other Developments “Let’s DO SOMETHING” campaign (including a history of the removal of deductions from 1975) Prevention is the new cure – speech by Second Commissioner regarding Compliance Program for 2010/11

Hot Topic UPEs and Corporate Beneficiaries (TR 2010/3)

ATO Hot Topic Work Related Expenses

JUNE 2010 Monthly Legislative Update

Draft legislation relating to: o Managed investment trusts o Paid Parental Leave scheme o Extension of Tax Deductible Donation Support to All Volunteer Fire Brigades o Superannuation Funds Acquiring Assets from Related Parties (Relationship breakdowns) o Transitional relief in respect of income tax deductibility of total and permanent disability (TPD)

insurance premiums by superannuation funds; and o Taxation treatment of Special Disability Trusts

Monthly Rulings Update

Trauma insurance policies and the sole purpose test – SMSFD 2010/1 S.17A of the SIS Act and enduring powers of attorney – SMSFR 2010/2

Monthly Case Update Update on appeals (including Forrest’s case, Darrelen Pty Ltd v FCT, South Steyne and Anstis) ATO can rely on ASIC’s records to serve notices to taxpayers – Robertson v Deputy Commissioner of Taxation

[2010] NSWCA 58

Tax on the Couch

© Tax on the Couch

As taxpayer “engaged” as an employee when receiving workers’ compensation payments, no deduction for personal superannuation contributions – Van Prooyen and Commissioner of Taxation [2010] AATA 281

Contract of sale of a property rectified to add GST – Ashton v Monteleone [2010] NSWSC 258

Other Developments Super System Review releases phase three preliminary report: "SMSFs should focus on the main game:

retirement savings" Overhaul of Financial Advice (including accountants' exemption regarding SMSF advice) Coverage of Tax Agent Services Regime: in-house advisors, custodians, financial planners Tax Practitioners Board’s Exposure Drafts – Code of Professional Conduct and “Fit and proper person”

Hot Topic Henry Review and Budget 2010

Treasury Hot Topic Are you SBR ready? Implementing Standard Business Reporting in your tax practice

MAY 2010 Monthly Legislative Update

Tax Laws Amendment (2010 Measures No 2) Bill 2010 (includes changes to the operation of Division 7A and the extension of the TFN withholding arrangements to closely held trusts (including family trusts))

Tax Laws Amendment (Transfer of Provisions) Bill 2010

Monthly Rulings Update FBT rates and thresholds for the FBT year commencing 1 April 2010 - TD 2010/2 to TD 2010/6 TA 2010/2 - SMSF trust deeds and excess contributions tax Taxation Determinations: Agricultural and non-forestry MISs and Part IVA (TDs 2010/7 - 11)

Monthly Case Update Constitutional challenge to validity of superannuation guarantee legislation - On Call Interpreters and

Translators Agency Pty Ltd v Commissioner of Taxation (No 2) [2010] FCA 258 Mobile home park used to derive “rent” and therefore owner not entitled to small business CGT concessions on

sale - Tingari Village North Pty Ltd and Commissioner of Taxation [2010] AATA 233 Court refers evidence raised in case about cash business to ATO in matrimonial dispute - First East Auction

Holdings Pty Ltd v Ange [2010] VSC 72 Payments made by debtors of company directly to shareholder’s account liable to Division 7A - Commissioner

of Taxation v Rozman [2010] FCA 324

Other Developments Report from most recent minutes of the Superannuation Consultative Committee Approved Auditors (SCCAA)

Working Group meeting (including issues regarding in house assets and the SMSF annual return) Assistant Treasurer’s announcements (including Tax Relief for Investors in Instalment Warrants and Additional

Certainty for the Taxation of Overseas-Based Employees) Lodgment opportunity in PS LA 2004/1 (GA) has been extended until 31 May 2010

Hot Topic The Bamford Case

ATO Hot Topic Excess Contributions Tax and SMSFs

APRIL 2010 Monthly Legislative Update

Tax Laws Amendment (Political Contributions and Gifts) Bill 2010 Exposure draft legislation - GST: Cross Border Transport Services

Tax on the Couch

© Tax on the Couch

Monthly Rulings Update TR 2010/1 - Superannuation contributions SMSFR 2010/1 - The application of S.66(1) of the SIS Act 1993 to the acquisition of an asset by an SMSF from

a related party ID 2010/42 - Amendment of assessments: Exception to the two year period of review if an individual is a

beneficiary of a trust ID 2010/54 - CGT: Foreign source capital gains made by a resident trust for CGT purposes ID 2010/55 - CGT: Australian source capital gains made by a resident trust for CGT purposes

Monthly Case Update Taxpayer liable for luxury car tax on a Hummer vehicle imported from the USA - Dreamtech International Pty

Ltd v FCT [2010] FCA 109 The AAT has affirmed the Commissioner's decision to impose an administrative penalty on a taxpayer in

relation to an incorrect BAS they lodged - AAT Case [2010] AATA 148, Re Andriopoulos and FCT The AAT has affirmed the Commissioner's decision that a taxpayer operating a licensed brothel has

underreported her GST liabilities - AAT Case [2010] AATA 155, Re Harrison v FCT A taxpayer fails to substantiate claims for GST input tax credits made in relation to his mowing business and,

therefore, a notice of assessment issued by the Commissioner stands - AAT Case [2010] AATA 138, Re Douglass v FCT

Other Developments Highlights of the Commissioner's recent speech, A common caring: nest building with self-managed super

funds

Hot Topic Section 23AG changes - Taxation of foreign earnings of resident individuals

ATO Hot Topic Employee Share Schemes


Package of three bills to effect three private health insurance tiers and increase the rate of Medicare levy surcharge (Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009 [No. 2], Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2009 [No. 2] and Fairer Private Health Insurance Incentives Bill 2009 [No. 2])

Tax Laws Amendment (2010 Measures No 1) Bill 2010 Tax Laws Amendment (2010 Measures No.2) Exposure Draft: TFN Withholding for closely held trusts

Monthly Rulings Update ATO ID 2010/14 – Claiming deductions for annual licence fees to use accounting and tax return preparation

computer software

Monthly Case Update Taxpayer entitled to deduction for interest paid on a loan used to purchase units in a Hybrid trust – Forrest v

Commissioner of Taxation [2010] FCAFC 6 Taxpayer not entitled to claim an input tax credit for the acquisition of a residential rental property for

development – Sunchen Pty Ltd V FCT [2010] FCA 21 Taxpayer not entitled to deduction for misappropriation by investment manager of proceeds from sale of

shares – Lean v FCT [2010] FCAFC 1 Supply of spectacles (comprising GST-free prescription lenses with taxable frames) a single supply for GST

purposes; discount on frames did not need to applied to the lenses – AAT Case [2010] AATA 22, Re Luxxotica Retail Australia Pty Ltd V FCT

Other Developments Haiti and Deductible Gift Recipients Education tax refund reminder The risk of illegal early release of super benefits

Tax on the Couch

© Tax on the Couch

Hot Topic Selling a Business

ATO Hot Topic Small Business Benchmarks

JANUARY/FEBRUARY 2010 Monthly Legislative Update

New Bills, including Tax Laws Amendment (2009 Measures No. 6) Bill 2009 and Tax Laws Amendment (2009 GST Administration Measures) Bill 2009

Further draft GST Administration legislation Other draft legislation

Monthly Rulings Update TR 2009/D8 – Division 7A loans: trust entitlements GSTD 2009/D2 – Are there GST consequences where a land owner engages the services of an associate to

arrange construction of residential premises for lease? TD 2009/D17 – Treaty shopping and Part IVA TD 2009/D19 - Can a private equity entity make an income gain from the disposal of the target assets it has

acquired?

Monthly Case Update GST consequences of strata titling serviced apartments and making supplies of residential premises – South

Steyne Hotel Pty Ltd v Commissioner of Taxation [2009] FCAFC 155 No entitlement to reduce GST payable when cash back provided to end consumers by wholesaler - The

Electrical Goods Importer and Commissioner of Taxation [2009] AATA 854 Trust can prove it was entitled to offset prior year capital losses against current year capital gain – Clark v

Commissioner of Taxation [2009] FCA 1401

Other Developments Crackdown on Phoenix Activity Superannuation guidance: NTLG Superannuation Sub-group meeting – Meeting minimum pension payments Release of Report into Personal Services Tax Laws

Hot Topic The New Tax Agent Services Regime

ATO Hot Topic Reforms to Income Tests


Exposure draft legislation - Tax Laws Amendment (Transfer of Provisions) Bill 2009 Tax Laws Amendment (2009 Budget Measures No.2) Bill 2009 Income Tax (TFN Withholding Tax (ESS)) Bill 2009 Laws to be amended - Deductibility of insurance premiums for superannuation disability benefits Discussion paper - Extending the TFN withholding rules to closely held trusts and family trusts Law to be amended - Failed forestry MIS and protecting tax deductions

Tax on the Couch

© Tax on the Couch

Monthly Rulings Update SMSFD 2009/D1 Self Managed Superannuation Funds: can a trustee of a self managed superannuation fund

purchase a trauma insurance policy in respect of a member and still satisfy the sole purpose test in Section 62 of the Superannuation Industry (Supervision) Act 1993?

PS LA 2009/8 The Commissioner's determination under paragraph 71(1)(e) of the Superannuation Industry (Supervision) Act 1993 that an asset is not an in-house asset of a self-managed superannuation fund.

ATO ID 2009/117 Capital Allowances: tax break - asset not part of a set. ATO ID 2009/128 Capital Allowances: tax break - substantially identical assets

Monthly Case Update Appeals to High Court: Bamford v FCT [2009] FCAFC 66 (‘Bamford')

Case 12/2009, YXFP v FCT [2009] ATC AATA 805 FCT v Anstis [2009] FCAFC 154 Russell v FCT [2009] FCA 1224

Other Developments Is Dr Henry's "end game" the abolition of tax refunds? Small business benchmarks - new ATO compliance tool ATO update - Excess contributions tax ATO review - GST and integrity of business system risks

Hot Topic The FBT treatment of employer Christmas functions and gifts

ATO Hot Topic International Tax Avoidance and Evasion


Consultation paper: The new Research and Development Tax Incentive Tax Laws Amendment (2009 GST Administration Measures) Bill 2009 Tax Laws Amendments (2009 Measures No 5) Bill 2009 Tax laws amendments (2009 Measures No 6) Bill 2009: Company losses Division 7A and non-commercial loan rules in support of rural communities and small business operators Tax Laws Amendment (2009 Budget Measures No.2) Bill 2009: Employee share schemes


GSTD 2009/10 Are there any GST consequences when a partner in a partnership takes goods held as trading stock for private or domestic use?

TD 2009/D9 Does a change of Responsible Entity of a registered agricultural managed investment scheme affect the tax outcomes for participants of the arrangement that continues to be implemented in accordance with the relevant product ruling.

TD 2009/D10 Does the disposal or termination of an interest in a non-forestry managed investment scheme outside the control of the taxpayer result in a denial of deductions ?

TD 2009/D11 Is payment received by an investor in a non-forestry managed investment scheme upon winding up ordinary or statutory income?

Monthly Case Update

Appeals to High Court: Commissioner of Taxation v Star City Pty Limited [2009] FCAFC 19 and Hogan v Australian Crime commission [2009] FCAFC 71

ASIC has been successful in pursuing an advisor (and his clients) over illegal 'phoenix' activity in ASIC v Somerville & Ors [2009] NSWSC 934

Interviewers were engaged as 'employees' and not contractors for super guarantee purposes in Roy Morgan Research Pty Ltd and the Commissioner of Taxation [2009] AATA 702

A Superannuation fund was made non-complying due to residency issues in CBNP Superannuation fund and Commissioner of Taxation [2009] AATA 709

Tax on the Couch

© Tax on the Couch

Other Developments (00:47:50) Capital Allowances: Beauty industry assets - draft effective lives Unpaid present entitlement Self-managed superannuation funds - common mistakes and other compliance issues

Hot Topic (00:58:40)

Determining departing clients Australian tax residency in light of changes to S23AG of the ITAA36 ATO Hot Topic (01:14:50)

Small business and general business tax break OCTOBER 2009 Monthly Legislative Update

General legislative update Abolition of trust cloning exception


PS LA 2009/7 - Approach to certain trust issues pending resolution of the Bamford litigation TR 2009/D4 – Tax consequences on the issue, holding and redemption of bonus units as part of an employee

benefits trust arrangement TD 2009/D5 – Can Part IVA apply to an employee savings plan? TD 2009/D6 – Can Part IVA apply to a salary deferral arrangement?

Monthly Case Update

Private company dividends paid to a superannuation fund were 'special income': FFWX and Commissioner of Taxation [2009] AATA 657

Interest with respect to a loan used to satisfy a guarantee was deductible: Willersdorf-Greene and Commissioner of Taxation [2009] AATA 649

No project pool/depreciation deductions for taxpayer conducting an experimental "biotechnology" project from his home unit: Confidential and Commissioner of Taxation [2009] AATA 627

CGT small business concessions – Partnership not an 'entity' for the purposes of the old $5 million net asset test: White v Commissioner of Taxation [2009] FCA 880

Other Developments

ATO issues warning to charitable funds Parliamentary report on aspects of agribusiness managed investment schemes Henry Review: Company tax reduction? Speech by Second Commissioner of Taxation: Commissioner's powers of general administration

Hot Topic

The Small Business Roll-over ATO Hot Topic

Work Related Expenses (WREs) and Partnership and Trust Distributions PLUS: A comprehensive list of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked.

Tax on the Couch

© Tax on the Couch


Forward work program of tax law reforms Exposure Draft: Tax Agent Services Regulations Exposure Draft: GST and representatives of incapacitated entities Reform of Tax Treatment of Special Disability Trusts (SDTs)


TD 2009/17 – Is interest on a loan fully deductible when the borrowed moneys are settled by the borrower on trust to benefit the borrower and others?

Monthly Case Update

ATO decision to make an SMSF non-complying, for breaching the in-house asset rules, upheld: JNVQ and Commissioner of Taxation [2009] AATA 522

GST: Renting out newly built apartments an “application” for a non-creditable purpose: GXCX and Commissioner of Taxation [2009] AATA 569

Joint trustee of a service trust jointly liable (with the other trustees) for the GST of the trust (and penalties): Hutson and Commissioner of Taxation [2009] AATA 574

No “threshold test” in the PSI rules: Horner and Commissioner of Taxation [2009] AATA 537 Other Developments

West Australian Health Department: “Salary packaging scandal” ATO’s Compliance Program: 2009/10

Hot Topic

One-off profit making transactions ATO Hot Topic

Standard Business Reporting PLUS: A comprehensive list of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked. AUGUST 2009 Monthly Legislative Update

General Legislative Update Taxation of Employee Share Schemes Exposure Draft – Changes to Non-Commercial Losses Tax Agent Services (Transitional Provisions and Consequential Amendments) Bill 2009


GSTR 2009/4 – New residential premises and adjustments for changes in extent of creditable purpose SMSFR 2009/3 – Unpaid trust distributions payable to an SMSF SMSFR 2009/4 – The meaning of 'asset', 'loan', 'investment in', 'lease' and 'lease arrangement' in the definition

of an 'in-house asset' Other rulings of interest

Monthly Case Update

Football players’ management fees deductible: Spriggs v Commissioner of Taxation; Riddell v Commissioner of Taxation [2009] HCA 22

Sale of vacant residential land not a supply of “residential premises”, and consideration for a supply can include additional compensation payment: Vidler and Commissioner of Taxation [2009] AATA 395

Failure to provide a tax invoice not enough reason to avoid contract: HG & R Securities Pty Limited v Sayer [2009] NSWSC 427

Attempted repayment of loans by means of promissory notes not effective: Confidential and Commissioner of Taxation [2009] AATA 435

Appeal: Bamford v Commissioner of Taxation [2009] FCAFC 66

Tax on the Couch

© Tax on the Couch

Other Developments Assistant Deputy Commissioner’s speech: 10 rounds with the regulator Second Commissioner’s speech: Tax Time in difficult times

Hot Topic

Practical Tips for Division 7A ATO Hot Topic

Same-sex relationships and Taxation PLUS: A comprehensive list of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked. JULY 2009 Monthly Legislative Update

General Legislative Update of new bills introduced Carbon Pollution Reduction Scheme Bills (especially the Carbon Pollution Reduction Scheme Amendment

(Household Assistance) Bill 2009) Tax Laws Amendment (2009 Measures No 3) Bill 2009 – particularly the changes to PAYG instalments Update: Taxation of employee share schemes


TR 2009/D3 – Superannuation contributions Taxpayer alerts (TA 2009/10 through to TA 2009/16) SGR 2009/2 – SGR 2009/2 – Superannuation guarantee: Ordinary time earnings and Salary and wages

Monthly Case Update

Trustee can determine capital gain is trust income: Bamford v Commissioner of Taxation [2009] FCAFC 66 Car parked in garage of business next door to employee’s house subject to FBT: Jetto Industrial Pty Ltd and

Commissioner of Taxation [2009] AATA 374 No deduction for accounting course: Yan and Commissioner of Taxation [2009] AATA 377 No rental deductions allowed because rental property not genuinely available for rent: Bonaccordo and

Commissioner of Taxation [2009] AATA 385 Other Developments

Will the Government raise the superannuation preservation age? Commissioner’s speech: “From the Commissioner's desk - We live in interesting times” Board of Taxation to conduct two post implementation reviews (particularly Alienation of Personal Services

Income) Inspector-General: Review into the Tax Office’s Administration of the Superannuation Guarantee Charge

Hot Topic

SMSFs and Unit Trusts after 30 June 2009 ATO Hot Topic

Luxury Car Tax PLUS: A comprehensive list of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked. JUNE 2009 Monthly Legislative Update

General Legislative Update including Legislation proposed for introduction in the 2009 Winter sittings Exposure Draft: Demutualisation of Friendly Societies and Capital Gains Tax Expansion of the Optional CGT Loss Roll Over for Complying Super Funds that Merge

Tax on the Couch

© Tax on the Couch

Monthly Rulings Update TR 2009/2 - Genuine redundancy payments TR 2009/D2 - Trading stock: treatment of discounts, rebates and other trade incentives offered by sellers to

buyers MT 2009/1 – Refunds of indirect tax: What constitutes notification by an entity to the Commissioner? PS LA 2009/3 - Time limit on recovery by the Commissioner

Monthly Case Update

Letter to SMSF trustee not a binding death benefit nomination: Donovan v Donovan [2009] QSC 26 Trusts did not satisfy conditions for CGT retirement exemption: Davies and Commissioner of Taxation [2009]

AATA 297 Company acquiring artworks and antiques carrying on an enterprise: Commissioner of Taxation v Swansea

Services Pty Ltd [2009] FCA 402 FLASHBACK!: Sun Newspapers Ltd. and Associated Newspapers Ltd. v. Federal Commissioner of Taxation

(1938) 61 CLR 337 Other Developments

Year-end planning Inspector-General of Taxation announces Terms of Reference for Review into delayed or changed ATO views APRA Letter: Valuation of Unlisted Assets – General Principles for Trustees “Communiqué of Principles for Superannuation”

Hot Topic

Budget 2009 ATO Hot Topic

FBT and Non-Profit Organisations PLUS: A comprehensive list of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked. MAY 2009 Monthly Legislative Update

General Legislative Update Tax Laws Amendment (2009 Measures No 2) Bill 2009 (including the new provision of increased access to the

small business CGT concessions) Government announcement: Extension of the CGT main residence exemption


GSTD 2009/D1 – Trading stock taken for private use General update of finalised rulings (including GSTD 2009/1 – In specie distribution by a discretionary trust to a

beneficiary, and SMSFR 2009/2 - Meaning of ‘borrow money’ or 'maintain an existing borrowing of money') Monthly Case Update

Tax bonuses held to be valid – Pape v The Commissioner of Taxation & Anor [2009] HCATrans 61 Taxpayer with sport boat not carrying on an enterprise – Rendyl Properties Pty Limited and Commissioner of

Taxation [2009] AATA 177 Student on Youth Allowance entitled to deductions for self-education expenses – Anstis v Commissioner of

Taxation [2009] FCA 286 (STOP PRESS! The Commissioner has appealed to the Full Federal Court against this decision, since Tax on the Couch was filmed)

Employee taxpayer not able to claim deduction for occupancy costs of home, log book also invalid – Ovens and Commissioner of Taxation [2009] AATA 166

Other Developments

Commonwealth and Taxation Ombudsman: Re-raising written-off tax debts ATO: “Making it easy to comply” Assistant Treasurer: Should the Government consider empowering the Commissioner of Taxation to modify tax

laws?

Tax on the Couch

© Tax on the Couch

Hot Topic The Education Tax Offset

ATO Hot Topic

Employment Termination Payments PLUS: A comprehensive list of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked. APRIL 2009 Monthly Legislative Update

General Legislative Update Tax Laws Amendment (2009 Measures No 1) Bill 2009 Tax Laws Amendment (2008 Measures No 6) Bill 2008 –passed by House of Reps with amendments Household stimulus package Bills receive Royal Assent Exposure draft Tax Agent Services (Transitional Provisions and Consequential Amendments) Bill 2008

released Equal treatment for de facto couples (whether same-sex or opposite-sex)

Family Law (Superannuation) Amendment Regulations No.1 Family Law Amendment Regulations 2009 (No.1) Proclamation – Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008

Government announces FBT law to be amended to ensure salary sacrificed donations do not attract FBT Capital Gains Tax relief for transformation of water rights – Discussion Paper GST and incapacitated entities – GST law to be amended with effect from 1 July 2000


ATO has withdrawn TR 2007/8 and GSTR 2008/D1 regarding registered agricultural MIS TA 2009/4 – Land owner’s use of a registered associate to maximise input tax credit entitlements and reduce

GST payable under the margin scheme TA 2009/5 – Use of an associate to obtain GST benefits on construction of residential premises for lease

Monthly Case Update

Analyst assessable on company’s income as taxpayer fails results test – Taneja v Commissioner of Taxation [2009] AATA 87

AAT has no jurisdiction to rule on wrong private ruling – Investa Properties Ltd v Commissioner of Taxation [2009] AATA 121

Rental prepayment is on capital account – Commissioner of Taxation v Star City Pty Ltd [2009] FCAFC 19 Consideration from the sale of shares held on trust not dividends – Aitken and Anor v Commissioner of

Taxation [2009] AATA 83 Other Developments

Private rulings register to stay Measures to cope with the global financial crisis – ATO visits, variation of PAYG instalments by

superannuation funds and Pension drawdown relief ATO help for bushfire and flood victims – extension of time to lodge SGC statement, deferral of activity

statements, lodgement deferrals, administrative matters concerning claiming donations, ATO reminder regarding GST concession for charitable fundraising events

Government assistance and early superannuation access SMSF auditors – ATO compliance issues from 2008

Hot Topic

New 30% investment allowance ATO Hot Topic

Fringe benefits tax PLUS: A comprehensive list of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked.

Tax on the Couch

© Tax on the Couch


General Legislative Update Government’s “Nation Building and Jobs Plan” (including Tax Bonuses and the Small Business and General

Business Tax Break) Optional Capital Gains Tax Roll Over for Complying Superannuation Funds with Capital Losses – Discussion

Paper GST Treatment of Automatic Teller Machine services – Draft Regulations


SGR 2009/1 – Superannuation guarantee: payments made to sportspersons SMSFR 2009/1 – Business real property for the purposes of the SIS Act

Monthly Case Update

Categorisation of supplies made in connection with individual rooms in a former hotel for GST purposes – South Steyne Hotel Pty Ltd v Commissioner of Taxation [2009] FCA 13

Main residence exemption not available if never actually moved in – Couch and Commissioner of Taxation [2009] AATA 41

Salaries paid into foreign bank accounts by employer of Australian based aircrew for an international airline not exempt from tax under S.23AG – Overseas Aircrew Basing Limited v Commissioner of Taxation [2009] FCA 7

Other Developments

NTLG draft minutes: Amendment period for individuals or STS taxpayers NTLG draft minutes: Division 7A loans – part repayment before lodgment day ATO’s Partnerships and Trust distribution project

Hot Topic Loss or destruction of an asset

ATO Hot Topic

Selling or closing a business PLUS: A comprehensive list of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked. JANUARY/FEBRUARY 2009 Monthly Legislative Update

General Legislative Update Tax Laws Amendment (2008 Measures No 6) Bill 2008


GSTR 2008/D5 – New residential premises and adjustments for changes in extent of creditable purpose TD 2008/D16 – Is interest on a loan fully deductible when the borrowed moneys are settled by the borrower on

trust to benefit the borrower and others? SMSFD 2008/3 - Is there any restriction in the SIS legislation on an SMSF trustee accepting a BDBN from a

member? TD 2008/28 - When is income tax of a private company a 'present legal obligation' for the purposes of the

distributable surplus calculation in Div.7A of the ITAA 1936? TD 2008/D19 – Distributable surplus: Can the Commissioner take into account the value of the company's

assets not shown in the company's accounting records? Monthly Case Update

Taxpayer entitled to be endorsed as a charitable organisation even though it engaged in commercial activities – Commissioner of Taxation of the Commonwealth of Australia v Word Investments Limited [2008] HCA 55

Assets of a family trust 'property' of the parties to the marriage – Kennon v Spry; Spry v Kennon [2008] HCA 56 Taxpayer entitled to a deduction for legal expenses incurred in defending charges – Commissioner of Taxation

v Day [2008] HCA 53 Taxpayers who invested in an MIS carrying on a business – Hance v Commissioner of Taxation [2008] FCAFC

196

Tax on the Couch

© Tax on the Couch

Damages received not ‘income according to ordinary concepts’ – Commissioner of Taxation v Sydney Refractive Surgery Centre Pty Limited [2008] FCAFC 190

Other Developments

Australia’s Future Tax System Review Panel: Released of new consultation papers Rudd Government tax initiatives: 10% temporary investment allowance and Reduction of the Quarterly PAYG

Instalment due in February 2009 for Small Businesses Hot Topic

Changes to the margin scheme ATO Hot Topic

Research & Development Tax Concessions PLUS: A comprehensive list of all releases during the past two months (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked.

Tax on the Couch

© Tax on the Couch


Increased Access to the Small Business Capital Gains Tax Concessions via the $2 Million Aggregated Turnover Test

Reforms to Income Tests – 2008/09 Budget Measures Abolishing the CGT Trust Cloning Exception


SGR 2008/D2 – Superannuation guarantee: meaning of the terms 'ordinary time earnings' and 'salary or wages'

GSTR 2008/D4 – Goods and services tax: cancellation fees SMSFR 2008/D5 – Self Managed Superannuation Funds: the meaning of 'asset', 'loan', 'investment in', 'lease'

and 'lease arrangement' in the definition of an 'in-house asset' in the Superannuation Industry (Supervision) Act 1993

Monthly Case Update

Casual employee who worked overseas not entitled to foreign income exemption – McCabe and Commissioner of Taxation [2008] AATA 904

Legal expenses for dismissal from employment deductible – Romanin v The Commissioner of Taxation [2008] FCA 1532

Validity of Director Penalty Notices upheld – Deputy Commissioner of Taxation v. Falzon [2008] QCA 327 Beneficiary of trust did not disclaim trust interest within a reasonable time – Confidential and Commissioner of

Taxation [2008] AATA 927 Taxpayer not entitled to a personal services business determination – The Engineering Company and

Commissioner of Taxation [2008] AATA 934 Other Developments

Senate Committee hearing on Disability Trusts Review of the tax arrangements applying to managed investment trusts

Hot Topic

FBT and Xmas Time ATO Hot Topic

Accessing Superannuation Benefits PLUS: A comprehensive list of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked. NOVEMBER 2008 Monthly Legislative Update

Tax Laws Amendment (2008 Measures No 5) Bill 2008 Tax Laws Amendment (Education Refund) Bill 2008 Temporary Residents' Superannuation Legislation Amendment Bill 2008 and Superannuation (Departing

Australia Superannuation Payments Tax) Amendment Bill 2008 National Rental Affordability Scheme Bills


SMSFR 2008/D4 – Borrowings of money for the purposes of S. 67 of the SIS Act Monthly Case Update

Transfer of property to SMSF not exempt from CGT – Kafataris v The Deputy Commissioner of Taxation [2008] FCA 1454

Allowance paid in respect of an employee not a LAFHA – The Compass Group (Vic) Pty Ltd as Trustee for White Roche and Associates Hybrid Trust and Commissioner of Taxation [2008] AATA 845

Trust arrangement not proved, taxpayer assessable on the rent received – Eao and Commissioner of Taxation [2008] AATA 804

Tax on the Couch

© Tax on the Couch

Trust arrangement not proved, taxpayer assessable on capital gain and penalties applied – Bottazzi and Commissioner of Taxation [2008] AATA 890

No input tax credit on acquisition of property, because property used to provide input-taxed supplies – Sunchen Pty Limited as Trustee of the Sunchen Family Trust and Commissioner of Taxation [2008] AATA 838

Commissioner does not have unlimited time to issue amended assessments in relation to capital gains – Metlife Insurance Ltd v Commissioner of Taxation [2008] FCAFC 167

Other Developments

Legal responsibilities for self-managed super funds Partnership and trust distribution reviews

Hot Topic

Salary packaging after the 2008 Budget changes ATO Hot Topic

Work Related Expenses PLUS: A comprehensive list of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked. OCTOBER 2008 Monthly Legislative Update

General update of legislative developments, including the situation with Tax Laws Amendment (2008 Measures No 4) Bill 2008 and the Luxury car tax Bills

Taxation Administration Amendment Regulations 2008 (No 3) – Valuations and private rulings Monthly Rulings Update

TD 2008/D12 – Deductibility of compound interest SGR 2008/D1 – Superannuation guarantee: payments made to sportspersons ATO ID 2008/114 – GST and change in extent of creditable purpose where new residential premises are

constructed for sale but subsequently rented TR 2008/D6 – Genuine redundancy payments

Monthly Case Update

Management fees paid by sportspersons not deductible – Commissioner of Taxation v Spriggs [2008] FCAFC 150

Non-commercial loss rules: Income protection insurance payments not business income – Watson v Deputy Commissioner of Taxation [2008] FCA 1173

Superannuation guarantee: Bonus payments were ordinary time earnings – Prushka Fast Debt Recovery Pty Ltd and Commissioner of Taxation [2008] AATA 762

Taxpayer derived personal exertion income despite attempt to assign it to related entities – Ho and Commissioner of Taxation [2008] AATA 783

Other Developments

ASIC issues alert to accountants who provide ‘capacity to repay’ certificates (and NTAA’s legal advice) Deputy Commissioner’s speech: “Current and future challenges in superannuation administration” Market valuation for tax purposes

Hot Topic

First Home Saver Accounts ATO Hot Topic

Business Real Property PLUS: A comprehensive list of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked. SEPTEMBER 2008 Monthly Legislative Update

Tax on the Couch

© Tax on the Couch

General update of legislative developments Australia's Future Tax System Discussion Paper


SMSFR 2008/1 – SMSFs giving financial assistance to a member or relative of a member SMSFR 2008/2 – SMSFs: the application of the sole purpose test in S.62 of the SIS Act

Monthly Case Update

Contract for sale of land rectified to include GST – Moobi v Les Gunn Properties [2008] NSWSC 719 Commissioner entitled to effectively "double count" amounts of assessable income in two separate

assessments – Commissioner of Taxation v Futuris Corporation Limited [2008] HCA 32 Taxpayer’s log book, and business expense claims, unreliable – Latif and Commissioner of Taxation [2008]

AATA 675 Flashback: Fletcher & Ors v FC of T 91 ATC 4950

Other Developments

Tax Reviews, including: o Government Seeks Views on Non-Forestry Managed Investment Schemes o Review of the Legal Framework for the Administration of the GST o Green Paper on Carbon Pollution Reduction Scheme Released

Consultation on Fringe Benefits Tax (FBT) – Jointly Held Assets Tax Office Compliance Program for 2008/09

Hot Topic

Instalment warrants: New ability of SMSFs to borrow ATO Hot Topic

Employee Share Schemes PLUS: A comprehensive list of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked. AUGUST 2008 Monthly Legislative Update

General update of legislative developments Tax Laws Amendment (2008 Measures No 4) Bill 2008 (including CGT relief for policy holders of health funds

that demutualise, and the family trust election changes) Low income tax offset: new regulations


GSTR 2008/D2 – The margin scheme and general law partnerships GSTR 2008/D3 – GST and Partitioning land GSTD 2008/D2 – Distributing assets “in specie” to beneficiaries TD 2008/D8 – Is income tax a 'present legal obligation' for the purposes of Div.7A? Other rulings developments

Monthly Case Update

Taxpayer could use margin scheme valuation method for property legally acquired after 1 July 2000: Brady King Pty Ltd v Commissioner of Taxation [2008] FCAFC 118

Deduction of $2.3 million available where share moneys misappropriated by agent: Lean and Commissioner of Taxation [2008] AATA 519

Penalty upheld for cash basis taxpayer claiming input tax credits too early: Australian Pasture Seeds Pty Ltd and Commissioner of Taxation [2008] AATA 520

Not reasonable to claim deduction in later year when similar expense denied in a previous year: Cachia and Commissioner of Taxation [2008] AATA 569

Other Developments

Deductibility of legal expenses at risk? Administrative treatment: Luxury car tax

Tax on the Couch

© Tax on the Couch

Hot Topic Tax Time 2008: Work related expenses

ATO Hot Topic

SMSFs - Auditor competency requirements PLUS: A comprehensive list of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked. JULY 2008 Monthly Legislative Update

Tax Laws Amendment (2008 Measures No 3) Bill 2008 Tax agent services legislation: Revised exposure draft released


TR 2008/D5 – Meaning of ‘Australian superannuation fund’ GSTD 2008/1 – GST groups and members leaving/joining Other rulings developments

Monthly Case Update

Forfeited deposit liable to GST: Commissioner of Taxation v Reliance Carpet Co Pty Limited [2008] HCA 22 Mere intention to move in not sufficient for main residence exemption: Chapman and Commissioner of

Taxation [2008] AATA 421 Lump sum payment from trust not ordinary income (and tax-free): Murdoch v Commissioner of Taxation [2008]

FCAFC 86 Collecting antiques and artworks an ‘enterprise’ for GST purposes: "The Taxpayer" and Commissioner of

Taxation [2008] AATA 461 Other Developments

ATO Compliance Hit-list Employers required to use ‘ordinary time earnings’ to calculate employees’ super guarantee contributions from

1 July 2008 Hot Topic

Taxation of trusts: Trust income vs Net income ATO Hot Topic

Tax governance for wealthy Australians PLUS: A comprehensive list of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked. JUNE 2008 Monthly Legislative Update

• General legislative update • Announcement: Employee share schemes "loophole" to be closed


• TD 2008/8 – Division 7A: Written loan requirements • SMSFR 2008/D3 – Business real property • PS LA 2008/7 and 8 – Application of the promoter penalty laws to promotion of tax exploitation schemes, and

to schemes involving product rulings • TA 2008/7 – Application of Part IVA to 'wash sale' arrangements • TA 2008/8 – False deductions and/or concealing income through arrangements with promoters based in

Vanuatu • Other rulings developments

Monthly Case Update

• Interest expenses capital and not deductible – St George Bank Limited v Commissioner of Taxation [2008] FCA 453

Tax on the Couch

© Tax on the Couch

• No interest deductions for loan to buy units in hybrid trust; payment to charity on termination of employment an ETP – The Taxpayer and Commissioner of Taxation [2008] AATA 325

• Aggrieved taxpayer could not claim input tax credit until given valid tax invoice – Chalmers and The Lynton Chalmers Superannuation Fund and Commissioner of Taxation [2008] AATA 308

• Unexpected payment made to retired partner was "ordinary income” – Mews and Commissioner of Taxation [2008] AATA 357

• GST refunds – Decision Impact Statement: DIS NSD 2070 of 2006 - KAP Motors Pty Ltd v Commissioner of Taxation

Other Developments

• Division 7A: One-off opportunity to correct mistakes by 30 June 2008 Hot Topic

• Budget 2008 ATO Hot Topic

• Offshore Voluntary Disclosure Initiative PLUS: A comprehensive list of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked. MAY 2008 Monthly Legislative Update

• General legislative update • Tax Laws Amendment (2008 Measures No. 2) Bill 2008


• SMSFR 2008/D1 - Unpaid trust distributions payable to an SMSF • SMSFR 2008/D2 - Contributions of assets to an SMSF by a related party of that fund • Taxation determinations: 2008/09 FBT rates and thresholds • TA 2008/3: Uncommercial use of certain trusts and TA 2008/4: SMSFs deriving income from certain

uncommercial trusts Monthly Case Update

• Claim for self-education expenses denied: Cheung and Commissioner of Taxation [2008] AATA 220 • Commissioner’s appeal upheld – Part IVA applied to investment in sandalwood managed investment

scheme: Commissioner of Taxation v Lenzo [2008] FCAFC 50 • Fees related to franchise were capital expenses, not on revenue account: Player and Ors and Commissioner

of Taxation [2008] AATA 273 • Accountant not a fit and proper person – Problems not sufficient to amount to ‘special circumstances’:

Toohey and Tax Agents' Board [2008] AATA 262 Other Developments

• Taxation matters in relation to trusts: Trust cloning • ATO discussion paper: Division 129 of the GST Act

Hot Topic

• Deceased Estates ATO Hot Topic

• Fuel Tax Credits PLUS: A comprehensive list of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked. APRIL 2008 Monthly Legislative Update

Tax Laws Amendment (2008 Measures No. 1) Bill 2008 Monthly Rulings Update

TD 2008/D2 - Division 7A: Meaning of 'because' in the context of 'because the entity has been such a shareholder or associate at some time'

Tax on the Couch

© Tax on the Couch

SMSFD 2008/1 - SMSF investments no longer excluded as in-house assets PS LA 2008/3 - Provision of advice and guidance by the Tax Office PS LA 2008/4 - Publication of edited versions of written binding advice PS LA 2008/5 - Written binding advice (private) GSTR 2008/1 - When do you acquire anything or import goods solely or partly for a creditable purpose?

Monthly Case Update Shed on a vacant block could be a main residence: Summers and Commissioner of Taxation [2008] AATA 152 One holiday unit used for short term rental accommodation not an active asset: Carson and Commissioner of

Taxation [2008] AATA 156 Small business CGT concessions – partnership not a small business CGT affiliate of partner: Stephens and

Commissioner of Taxation [2008] AATA 176 GST valuation method not available for developer applying margin scheme: Brady King Pty Ltd v

Commissioner of Taxation [2008] FCA 81 Service company’s employees performing tax-related work may breach S.251N of the ITAA 1936: JSP

Partners Pty Ltd and Tax Agents' Board of Victoria [2008] AATA 131 Other Developments

Review of the taxation arrangements that apply to managed funds ATO Speeches: Compliance risks facing SMSFs ALRC recommendation: Extension of privilege to tax advice National Rental Affordability Scheme

Hot Topic Common audit traps and planning tips with car expense claims

ATO Hot Topic Fringe Benefits Tax (FBT)

PLUS: A comprehensive list of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked. MARCH 2008 Monthly Legislative Update

General legislative update, including Tax Laws Amendment (2008 Measures No. 1) Bill 2008 and Tax Laws Amendment (Personal Income Tax Reduction) Bill 2008

First home saver accounts update

Monthly Rulings Update PS LA 2008/1 - Discretion to disregard or reallocate concessional and non-concessional contributions for a

financial year TR 2008/1 - Application of Part IVA to 'wash sale' arrangements PS LA 2008/2 - Forestry managed investment schemes TD 2008/1 – Div.7A: Shareholder’s failure to repay trade debts on time

Monthly Case Update

Amounts paid to mortgage manager not loans but assessable income: National Mortgage Company Pty Ltd v FCT [2008] FCA 9

Redundancy payment not an “exempt non-resident foreign termination payment”: A Taxpayer and Commissioner of Taxation [2008] AATA 64

Part IVA applied to scheme despite lack of knowledge of participant: O'Brien and Commissioner of Taxation [2008] AATA 86

No FBT applied to loan repayments by company to employees: Slade Bloodstock v Commissioner of Taxation [2007] FCAFC 173

Other Developments

Review of Tax Office decisions on applications for release of tax debts (and explanation of the release process)

Hot Topic

Superannuation Co-contribution ATO Hot Topics

State of the Industry research results

Tax on the Couch

© Tax on the Couch

SMSF Transitional Provisions for In House Assets List of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked. JANUARY/FEBRUARY 2008 Monthly Legislative Update

New Government: Labor’s tax policy announcements Monthly Rulings Update

Income tax and FBT consequences of amounts mistakenly paid to employees, including: o Are amounts mistakenly paid as salary or wages to employees 'ordinary income'? – TD 2007/D21 o FBT: mistaken overpayment to an employee a 'loan benefit'? – TD 2007/D22 o FBT: mistaken overpayment to an employee a 'debt waiver benefit'? – TD 2007/D23

GST and bare trusts – GSTR 2007/D3 In-house assets rule: valuation of units held in a related unit trust – SMSFD 2007/D3 GST ‘revenue neutral’ corrections – PS LA 2332 (draft) Other Rulings developments

Monthly Case Update

Timing of acquisition and sale of vacant land for CGT purposes, and availability of small business concessions – Karapanagiotidis and Commissioner of Taxation [2007] AATA 1961

Deductibility of management fees for professional sportsmen: o Spriggs v Federal Commissioner of Taxation [2007] FCA 1817 o Riddell v Federal Commissioner of Taxation [2007] FCA 1818

Application of PSI results test to personal services entities – IRG Technical Services Pty Ltd v Deputy Commissioner of Taxation [2007] FCA 1867

Other Cases Developments Other Developments

ATO’s administrative treatment of SMSF investments in instalment warrants SMSFs: compliance, risks and new measures Survey results, including:

o ATO’s Community perceptions survey 2007 Reports, including:

o Inspector-General’s annual report for 2006/07 Hot Topic

FBT minor benefits exemption ATO Hot Topic

GST Division 129 & 135 Adjustments List of all releases during the past two months (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked. 2007 DECEMBER 2007 Monthly Rulings Update

ESAS: Benefit provided to employees generally: ATOID 2007/194 Super co-contributions: Do trust beneficiaries have business income?: ATOID 2007/195 Deductions: Cost of shares and short selling: ATOID 2007/197 Trading Stock: Short selling of shares: ATOID 2007/198 Div 7A: Loan agreement requirements: TD 2007/D19 Div 7A: Trade credit and S. 109M: TD 2007/D17 In-house assets and subreg 13.22D(1): SMSFD 2007/D2

Tax on the Couch

© Tax on the Couch

Monthly Case Update Investment in R&D too soon and not deductible – Petersen v DFCT Loss on investment after restructure capital and not deductible – Klien v FC of T Contractual payments on behalf of employees diverted from superannuation still deductible – Trail Bros v FCT Other case developments – Decision Impact Statements

Other Developments

Change program Centrelink requests for information Pre-filling of tax returns Outsourcing of tax return preparation

Hot Topic – Superannuation issues

Employment Termination Payments Instalment warrants

ATO Hot Topic

Personal Services income List of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked. NOVEMBER 2007 Monthly Legislative Update

General update on legislative developments Tax Laws Amendment (2007 Measures No 6) Bill 2007 Double payment of SG charge finally addressed


SMSFs: giving financial assistance to members/relatives: Draft Self Managed Superannuation Funds Ruling SMSFR 2007/D2

Remission of penalty for failure to withhold: PS LA 2007/22 Property advice to non-resident not GST-free: Draft GST Determination GSTD 2007/D2

Monthly Case Update

Director’s fees derived: Wood v FC of T Foreign aid work not assessable: Grant v FC of T Breach of trust payment assessable: Case 7/2007 Investment in sandalwood plantation project deductible: Lenzo v FC of T Occupancy expenses correctly apportioned: Case 7/2007 and Property expenses correctly apportioned:

Fogarty v FC of T Other cases

Other Developments

Disposals of businesses: Tax Office to conduct audits Proposal to formalise accountants' concession re privilege Tax Agents’ Portal access for BAS preparers Inspector General of Taxation announces 3 new reviews of the ATO

Hot Topic Hot Topic - Salary packaging ATO Hot Topic Gifts of shares to non-profit organisations List of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked.

Tax on the Couch

© Tax on the Couch


General update on legislative developments Tax Laws Amendment (2007 Measures No 5) Bill introduced, including CGT marriage breakdown roll-over,

changes to the same business test, and CGT roll-over for statutory licences Monthly Rulings Update

SMSFR 2007/D1: The application of the sole purpose test to other benefits SMSFD 2007/D1: In-house assets rule exception – reinvestments PS LA 2007/21: Substituted accounting periods Other ruling developments

Monthly Case Update

Part IVA applied to a scheme to transfer shares in a family company: Walters v Commissioner of Taxation [2007] FCA 1270

Taxpayer fails 10% employment income rule for deductibility of personal super contributions: Falson and Commissioner of Taxation [2007] AATA 1668

PSI received by a company attributed to taxpayer under the PSI rules: Skiba and Commissioner of Taxation [2007] AATA 1705

Tax agent company could not prepare a superannuation fund deed for a client: Legal Practice Board v Computer Accounting and Tax Pty Ltd [2007] WASC 184

Other case developments Other Developments

Business Reporting Burden to be Slashed Review of Unlimited Amendment Periods in the Income Tax Laws Commissioner’s online update: A look at self-managed superannuation funds

Hot Topic

Issues relating to the horse industry ATO Hot Topic

Small Business Concessions Program List of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked. SEPTEMBER 2007 Monthly Legislative Update

General legislative update, including: o Bills that have passed through Parliament o Legislation Proposed for Introduction in the 2007 Spring Sittings o Senate committee reports

The structure and operation of the superannuation industry – Senate Committee Recommendations Monthly Rulings Update

Non-commercial business losses: Commissioner's discretion – TR 2007/6 Foreign tax credits and trusts – TR 2007/4 Opportunity to fix Div.7A problems by 30 June 2008 – PS LA 2007/20 ATO Litigation Practice Statements Addendum to Reasonable travel and meal allowance expense amounts determination for 2007/08 –

TD 2007/21A Monthly Case Update

Company director could not use the ‘honesty defence’ – Deputy Commissioner of Taxation v Dick [2007] NSWCA 190

Payments made by members of a lotto syndicate fully subject to GST – TSC 2000 Pty Ltd and Commissioner of Taxation [2007] AATA 1629

Taxpayer not entitled to claims for deductions for self education and travel expenses – Elder and Commissioner of Taxation [2007] AATA 1592

Tax on the Couch

© Tax on the Couch

Franchisees of Satcom Financial Services Pty Ltd not entitled to deductions – Leggett and Ors and Commissioner of Taxation [2007] AATA 1624

Penalties imposed for recklessness set aside, taxpayer acted reasonably – Barakat and Ors and Commissioner of Taxation [2007] AATA 1564

Penalties reinstated – AAT took into account an irrelevant consideration – Commissioner of Taxation v Dixon (Trustee) [2007] FCA 1079

Payments made to authorised dealers on revenue accountand deductible – Tyco Australia Pty Limited v Commissioner of Taxation [2007] FCA 1055

Appeals - Reliance Carpet Co Pty Ltd v Commissioner of Taxation [2007] FCAFC 99 Other Developments

ASIC and ATO warn consumers tempted by illegal early access super schemes ASIC acts against early release super scheme trustee APRA disqualifies former directors Speech by Deputy Commissioner of Taxation: Defining moments & industry impacts in the implementation of

Super Simplification ATO’s Compliance Program 2007/08

Hot Topic

Division 7A Update ATO Hot Topic

Superannuation List of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked. AUGUST 2007 Monthly Legislative Update

General update and recent Bills passed Tax Laws No 4 Bill introduced (including the new foreign income tax offset rules, investment in instalment

warrants by super funds, trustee beneficiary reporting rules, and FTEs and increasing flexibility) Simplified GST Accounting Bill


FBT and minor benefits - TR 2007/D6 Facts and figures (including luxury car limit, reasonable allowance amounts and benchmark interest rate): TD

2007/21, TD 2007/22 and LCTD 2007/1, and TD 2007/23 Part IVA and “wash sales” - TR 2007/D7 Atmospheric items of plant - TR 2007/D4

Monthly Case Update

No GST payable on forfeited deposit - no supply - Reliance Carpet Co Pty Ltd v FCT Fitness instructor’s work related expenses denied - Staker v FC of T Payments made by private company to unit trust caught by Div.7A - Di Lorenzo Ceramics Pty Ltd v FC of T Part IVA assessment issued in bad faith - Futuris Corporation Ltd v FC of T Other cases

Other Developments

ANAO audit reports – 1. Tax Office debt collection and 2. Regulation of SMSFs Tax Office’s SMSF compliance program for 2007/08

Hot Topic GST Going Concern Exemption ATO Hot Topic Division 7A

Tax on the Couch

© Tax on the Couch

List of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked. JULY 2007 Monthly Legislative Update

1 July 2007 Update New Bills before Parliament (including the Corporations Amendment (Insolvency) Bill 2007) Other legislative developments


TA 2007/4: Share options granted under an employee share scheme to a related trust TA 2007/5: Arrangements designed to avoid the operation of Division 7A through the use of a Corporate

Limited Partnership TD 2007/D8: What is a 'present legal obligation' of a private company for the purposes of Div.7A? TD 2007/D9: Is unpaid income tax a 'present legal obligation'? TD 2007/D10: FBT and whether a charitable institution is a rebatable employer PS LA 2007/11: Administrative treatment of taxpayers affected by announced but unenacted legislative

measures which will apply retrospectively when enacted. PS LA 2001/13 (revised): Franking credits and part payment of liabilities notified on activity statements

Monthly Case Update

Splitting jointly owned shares 50/50 convenience subject to CGT: Johnson and Commissioner of Taxation [2007] AATA 1322

Fact that Commissioner allowed deductions to other taxpayers not relevant to present case: Radge and Ors and Commissioner of Taxation [2007] AATA 1317

Evidence shows house not taxpayers’ main residence: Erdelyi and Commissioner of Taxation [2007] AATA 1388

Conviction for failing to lodge return upheld despite taxpayer of good character being owed a refund: Hamilton v Commission for Taxation (Cth) [2007] SASC 165

Penalty upheld for claiming input tax credits on margin scheme acquisition: JG and JA Williamson Holdings Pty Ltd as Trustee of John Williamson Family Trust and Commissioner of Taxation [2007] AATA 1344

Other Developments

Commissioner’s online update: Collecting taxpayer debt and outstanding employee superannuation entitlements

Review of Australia’s Foreign Source Income Anti-Tax-Deferral Regimes Expansion of Joint International Tax Shelter Information Centre (JITSIC) Inspector-General of Taxation’s updated work program for 2007/08 Further developments

Hot Topic

Tax consequences of a shareholder making payments under a guarantee for a company ATO Hot Topic

CGT concessions for small business List of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked. JUNE 2007 Monthly Legislative Update

New Bills before Parliament Tax Laws Amendment (2007 Measures No. 3) Bill 2007 Tax Laws Amendment (Small Business) Bill 2007 Draft Tax Laws Amendment (Tax Agent Services) Bill 2007 Other legislative developments


Tax on the Couch

© Tax on the Couch

TD 2007/11: Franked distributions and “qualified persons” PS LA 2007/9: Share Buy-Backs PS LA 2007/10: Default SGC assessments Fraud control and the prosecution process: Corporate Management Practice Statement TD 2007/14: Calculating the 'net value of the CGT assets' for the Small business CGT concessions Other rulings of interest

Monthly Case Update

Allowance paid to oil rig workers a LAFHA: "The Taxpayer" and FCT [2007] AATA 1185 Interest income paid to by trust to non-resident beneficiary only subject to interest withholding tax: GE Capital

Finance Pty Ltd v FCT [2007] FCA 558 Award of costs in a court action based on scale rates not reduced for GST component: Hennessey Glass and

Aluminium Pty Ltd v. Watpac Australia Pty Ltd [2007] QDC 57 Director could dismiss herself and pay herself a bona fide redundancy payment: Long and FCT [2007] AATA

1269 Notice of assessment not validly served, so third-party garnishee notices invalid: Shail v FCT [2007] FCA 655

Other Developments

Inspector-General’s Review of Tax Office Management of Complex Issues o Case Study on Service Entity Arrangements o Case Study on Living Away From Home Allowance

Registration of tax agents and trusts Hot Topic

Budget 2007 ATO Hot Topic

“Small business” alignment – focus on GST implications List of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked MAY 2007 Monthly Legislative Update

Tax Laws Amendment (2006 Measures No 7) Bill 2006 Tax Laws Amendment (2007 Measures No. 2) Bill 2007 New Regulations

Monthly Rulings Update Taxation Determinations setting out FBT rates and thresholds TD 2007/5: When does a tangible depreciating asset start to decline in value? TD 2007/3: Deductibility of temporary disability insurance premiums for super funds TD 2007/4: CGT exemption for life insurance (and related) policies

Monthly Case Update Loss incurred on sale of property was a capital loss and not a revenue loss: Price Street Professional Centre

Pty Ltd v FC of T [2007] FCA 345 No need for super fund to reimburse member whose wife had withdrawn his benefits without his knowledge:

Price v MLC Nominees Pty Ltd [2007] FCA 298 Company could not make a resolution apportioning compensation payment, though apportionment was

available: Gerard Cassegrain & Co Pty Ltd v FC of T [2007] FCA 415

Other Developments Forestry and Non-forestry managed investment schemes: Update The Tax Office and the Profession: Provision of Advice Survey 2006, and Speech by the Commissioner of

Taxation: “Working with the tax profession”

Hot Topic Changes to the CGT small business concessions

ATO Hot Topic Superannuation Guarantee and employer superannuation obligations

Tax on the Couch

© Tax on the Couch

List of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked

APRIL 2007

Monthly Legislative Update Tax Laws Amendment (2007 Measures No 1) Bill 2007: Wickenby project Tax Laws Amendment (2006 Measures No 7) Bill 2006: Various changes, including CGT small business

concession amendments Draft regulations for the "Simpler Super" system

Monthly Rulings Update TD 2007/2: Record retention requirements when there are CGT or revenue losses ATO ID 2007/43: Fuel tax registration and claiming credits PS LA 2007/3: Penalty remission guidelines for failure to issue a tax invoice PS LA 2007/4: Penalty remission guidelines for failure to register for GST or failure to cancel GST registration

Monthly Case Update Sell back rights were held to be revenue in nature: Commissioner of Taxation v McNeil ATO Decision Impact Statement on McNeil's case No FBT in employee share trust case: Commissioner of Taxation v Indooroopilly Children Services (Qld) Pty

Ltd Deduction for interest expense in relation to an agri-business investment: Guest v Commissioner of Taxation Loan repayments by company to shareholder/employees were held to be fringe benefits: FCT v Slade

Bloodstock Pty Limited Bud-plan investments continue to be denied deductions: Macpherson v FCT

Other Developments Australian National Audit Office review of the management by the Taxation Office of its relationship with tax

agents

ATO Hot Topic Common problems identified in rental property audits

Hot Topic Advanced issues in relation to rental properties.

List of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked

MARCH 2007

Monthly Legislative Update

Inquiry into the provisions of the Simplified Superannuation Bills Simplified Superannuation – consequential amendments and transitional arrangements Commissioner’s warning regarding withdrawing excess contributions before 30 June 2006 Tax secrecy and disclosure provisions to be standardised Forestry (and Non-Forestry) Managed Investment Schemes


TR 2007/D1 – Non-commercial business losses: Commissioner's discretion PS LA 2007/1 (GA) – Assessing SGC where the employers have done what they could reasonably be

expected to do to comply with the law by the due date

Monthly Case Update

Most payments made by a company to its director, and entities connected with the director, deemed to be dividends: Epov v Commissioner of Taxation [2007] FCA 34

De-registered company could be re-registered, assessed, and then wound up: Deputy Commissioner of Taxation v Dean Gallagher Developments Pty Ltd [2006] FCA 1822

Contribution made to an offshore employee superannuation scheme not deductible: Wensemius and Anor and Commissioner of Taxation [2007] AATA 1006

Tax on the Couch

© Tax on the Couch

Use of interposed trust not a sham, but S.100A applied to distributions made to it: Raftland Pty Ltd v Commissioner of Taxation [2007] FCAFC 4

Other Developments Speech by Commissioner of Taxation: Simplifying Tax Administration in a Complex World: The Challenge

of Infinite Variety The Inspector-General Acts!:

Reviews into the Tax Office’s Ability to Identify and Deal with Major, Complex Issues within Reasonable Timeframes

Review into the Underlying Causes and the Management of Objections to Tax Office Decisions

Hot Topic Managing an ATO audit

ATO Hot Topic

CGT issues (including Deceased Estates, Marriage Breakdown, and Compensation payments) List of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) – all hyperlinked

JANUARY/FEBRUARY 2007


Tax Laws Amendment (2006 Measures No. 4) Bill 2006 Tax Laws Amendment (2006 Measures No. 7) Bill 2006 Draft Legislation and Explanatory Materials: Taxation of Boat Hire Arrangements Bankruptcy Legislation Amendment (Superannuation Contributions) Bill 2006


MT 2006/1 – The meaning of entity carrying on an enterprise for the purposes of entitlement to an ABN GSTD 2006/6 – GST: does MT 2006/1 have equal application to the meaning of 'entity' and 'enterprise' for

the purposes of the GST Act? TD 2006/63 – Active asset test: Is a CGT asset that is leased by a taxpayer to a connected entity for use in

the connected entity's business an active asset? TD 2006/64 – Active asset test: Taxpayer who sold the business to another TD 2006/65 – Active asset test: Share in a company/interest in a trust where the company or trust owns

interests in another entity that satisfies the '80% test' TD 2006/70 – Active asset test: Bank account or cash on hand included in the '80% test'? TR 2006/14 – CGT consequences of creating life and remainder interests ATO’s Public Rulings Program

Monthly Case Update

Property deductions allowed despite lack of evidence: Dram Nominees Pty Ltd and Commissioner of Taxation [2006] AATA 957

Trustee can determine net distributable income: Cajkusic v Commissioner of Taxation [2006] FCAFC 164 Taxpayer carrying on a boat hire business: VCK and Commissioner of Taxation [2006] AATA 1073 Commissioner could issue amended assessments even though the dispute had been ‘settled’: The

Taxpayer and Commissioner of Taxation [2006] AATA 1057 Other cases

Other Developments

Amendments to the Tax Law to Reduce Compliance Costs for Small Business Encouraging Philanthropy through Improved Tax Deductions Australia's approach to GST administration

Hot Topic

Simplified Superannuation

ATO Hot Topic

Natural Disasters such as drought and bushfires (and their tax effects)

Tax on the Couch

© Tax on the Couch

List of all releases during the past two months (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) – all hyperlinked 2006 DECEMBER 2006


Tax Laws Amendment (2006 Measures No.6) Bill 2006 New legislative developments announced by the Treasurer and Assistant Treasurer, including the proposal

to standardise the treatment of small business concessions.


PS LA 2006/14: Superannuation guarantee compliance and contractors GSTR 2006/9: “Supplies” TR 2006/13: Sales and leasebacks TD 2006/D44: Record keeping and losses

Monthly Case Update

Sale of land also a going concern: Debonne Holdings Pty Ltd and Commissioner of Taxation [2006] AATA 886

Parents not “dependants” of deceased: Edwards v Postsuper Pty Ltd [2006] FCA 1380 Trustee obtains power to extend vesting date of discretionary trust: Stein v Sybmore Holdings [2006]

NSWSC 1004 Special circumstances for convicted tax agent allow re-registration: Stubbings and Tax Agents' Board of

New South Wales [2006] AATA 846 Directors still liable for unpaid tax despite company’s deed of arrangement: Eaton and Others v Deputy

Commissioner of Taxation [2006] NSWCA 283 No deduction for payment of management fee: The Taxpayer and Commissioner of Taxation [2006] AATA

941 Other cases

Other Developments

Commissioner’s annual report for 2005/06 Inspector-General’s annual report for 2005/06 Inspector-General’s Review of GST audits Other developments

Hot Topic

FBT and Christmas Parties

ATO Hot Topic

Promoter Penalty Law List of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) – all hyperlinked NOVEMBER 2006


Tax Laws Amendment (2006 Measures No.5) Bill 2006 New Bills introduced Waiver of Tax Invoice Requirement - Government Undercover Agents Determination (No. 1) 2006


TD 2006/61 – Travel expenses between workplaces ATO ID 2006/269 – Interest incurred on moneys borrowed by a sole trader to pay income tax ATO ID 2006/279 – Can a deceased estate be a “fixed trust”? GSTB 2006/1 – Claiming input tax credits for car expenses

Tax on the Couch

© Tax on the Couch

TR 2006/8 – Valuing trading stock in retail and wholesale industries

Monthly Case Update

Boat builder carrying on a business: Peerless Marine Pty Ltd v. Commissioner of Taxation [2006] AATA 765

GST scheme bringing forward ITCs caught by Division 165: VCE v. Commissioner of Taxation [2006] AATA 821

Non-commercial loss rules apply to taxpayer’s “business”: Delandro v. Commissioner of Taxation [2006] AATA 859

Directors’ liability for failing to remit PAYG: Deputy Commissioner of Taxation v. Dick [2006] NSWDC 17 and Deputy Commissioner of Taxation v Clark [2006] SADC 99

Tax agent registration decisions: McCoy v. Tax Agents' Board of New South Wales [2006] AATA 855 and Wilmot and Tax Agents' Board of NSW [2006] AATA 788

Other cases

Other Developments

WA stamp duty: Transfer of Property Pursuant to a Family Court Order or Binding Financial Agreement Tax agent registrations Other developments

Hot Topic

Family Trust Elections and Interposed Entity Elections

ATO Hot Topic

Identity Crime List of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) – all hyperlinked’


Progress of legislation through Parliament Tax Laws Amendment (2006 Measures No.5) Bill 2006 Simplified superannuation: Final decisions announced SMSFs: Assets acquired from related party on marriage breakdown


TD 2006/55: Value of goods taken from stock for private use for 2006/07 PS LA 2006/11: ATO Receivables Policy

Monthly Case Update

Unit trust (and superannuation fund) not entitled to land acquired in bankrupt’s own name: Thompson v Leigh [2006] NSWSC 540

Land mistakenly acquired by partner instead of partnership: rectification possible: Pryke & Ors v. Commissioner of State Revenue [2006] QSC 226

Same sex partners not entitled to CGT roll-over relief: The Roll-over Relief Claimant and Commissioner of Taxation [2006] AATA 728

No deduction for controlling interest super contribution: Confidential and Commissioner of Taxation [2006] AATA 733

Other cases

Other Developments

Compliance Program for 2006/07 Final response to the Report of the Taskforce on Reducing Regulatory Burdens on Business. GST and residential premises: ATO outlines admin treatment after Marana Holdings amendments Other developments

Tax on the Couch

© Tax on the Couch

Hot Topic

Margin scheme – Division 75 of the GST Act

ATO Hot Topic

Shortfall interest charge

List of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) – all hyperlinked

SEPTEMBER 2006


Legislation before Parliament and to be introduced Government to close contributions loophole for bankrupts


TR 2006/7: Special income derived by superannuation funds TD 2006/49: Calculation of balancing adjustments on cars PS LA 2006/7: Alternative assessments PS LA 2006/8: Remission of SIC and GIC for shortfall periods:

Monthly Case Update

No “review opportunity” in pre-GST lease: Westley Nominees Pty Ltd v Coles Supermarkets Australia Pty Ltd [2006] FCAFC 115

Present entitlement to income of unit trust: Pearson v Commissioner of Taxation [2006] FCAFC 111 Medicare levy surcharge – ETP untaxed element included in income: Kowalski and Commissioner of Taxation

[2006] AATA 669 Losses not available to offset income from revaluation of property as trading stock: R & D Holdings Pty Ltd v

Deputy Commissioner of Taxation [2006] FCA 981 Lawyers released from tax debts: Commissioner of Taxation v A Taxpayer [2006] FCA 888 and Commissioner

of Taxation v Milne [2006] FCA 1005 Other cases

Other Developments

Inspector-General’s submission to JCPAA Review of Tax Office’s management of tax litigation Alert over stolen tax file numbers Other developments

Hot Topic

Rental properties

ATO Hot Topic

Horse Racing List of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked AUGUST 2006

Monthly Legislative Update All Bills that have received Royal assent, including Tax Laws (2006 Measures No 2) Act 2006. New Bills introduced, including Tax Laws Amendment (Repeal of Inoperative Provisions) Bill 2006 Other legislative developments


TD 2006/D36 - “Policy of insurance on the life of an individual” TR 2004/6A - Addendum to the substantiation exception ruling TR 2006/4 - Beneficiaries and terms of two trusts the same? SGD 2006/2 - Contractors and effective “salary” sacrifice agreements

Tax on the Couch

© Tax on the Couch

Car limit for the 2007 income year (TD 2006/44 and LCTD 2006/1) Benchmark interest rate for the 2007 income year (TD 2006/45) TD 2006/43 - Reasonable allowances amounts for the 2007 income year Maximum contribution base for 2007 income year (SGD 2006/1)

Monthly Case Update

No FBT on employee share scheme - Indooroopilly Children Services (Qld) Pty Ltd v Commissioner of Taxation [2006] FCA 734

FBT payable on premium for employee shares - Experienced Tours Pty Ltd and Anor and Commissioner of Taxation [2006] AATA 517

Taxpayers held to have not declared income for 12 years - Ebner and Commissioner of Taxation [2006] AATA 525 Distributions from property development ordinary income, not capital gain - The Taxpayer and Commissioner of

Taxation [2006] AATA 508

Other Developments

2006 tax time is here Treasury: A plan to simplify and streamline superannuation: Fact Sheets APRA makes modification declarations regarding compulsory cashing Lodgment program 2006-07

August Hot Topic

Frequently Asked Questions: Main Residence Exemption

ATO Hot Topic

New Fuel Tax System List of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked JULY 2006 Monthly Legislative Update New Legislation, including Tax Laws Amendment (2006 Measures No 3) Bill 2006 and Families, Community

Services and Indigenous Affairs and Other Legislation (2006 Budget and Other Measures) Bill 2006 Other legislative developments


TD 2006/34 - Deductible amount of split superannuation pension TD 2006/35 - Entitlement to the superannuation pension 15% rebate TD 2006/40 - Luxury car limit, input tax credits and deprecation TD 2006/42 - Thresholds and limits for superannuation amounts in 2006-07 SGD 2006/1 - Maximum contribution base for each quarter in 2006-07 TD 2006/41 - CGT improvement threshold for the 2006-07 income year TD 2006/37 - Car parking threshold for 2006-07 FBT year

Monthly Case Update

Payment to an employee an ETP not for personal injury - McCunn and Commissioner of Taxation [2006] AATA 431

Interest on borrowings to acquire units not to derive income - Tabone and Commissioner of Taxation [2006] AATA 466

Employee's legal expenses partly deductible - Day v Commissioner of Taxation [2006] FCA 655 Employee's legal expenses not deductible - Museth and Commissioner of Taxation [2006] AATA 482 Vendor liable to GST on forfeited deposit - Reliance Carpet Company Pty Ltd and Commissioner of Taxation

[2006] AATA 486 Other cases

Other Developments Treasury denies super pension cashout rumours Tax Office signs MOU with Commonwealth DPP re prosecutions Two-year transition period announced for fuel tax credit claimants Other developments

Tax on the Couch

© Tax on the Couch

July Hot Topic

Trust distributions to bucket companies

ATO Hot Topic Service Arrangements List of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) - all hyperlinked JUNE 2006


Legislation passed/received assent New Legislation Other Bills


Deductibility of service fees paid to associated service entities: Phillips arrangements – TR 2006/2 Deductible amount of a super pension should be pro-rated where it commences or finishes part-way through an

income year – TD 2006/17 Determining the extent of creditable purpose for claiming input tax credits and for making adjustments – GSTR

2006/4 Are settlement adjustments taken into account to determine the consideration for the supply or acquisition of real

property? – GSTD 2006/3 Other rulings of interest

Monthly Case Update

Default tax judgment against director of company stands: DCT v. Johnston [2006] QSC 61 Convictions and sentences for tax fraud upheld: R v Ida Ronen, Nitzan Ronen, Izhar Ronen [2006] NSWCCA 123 Later declaration of trust not retrospective – land tax and stamp duty payable: Shergold v Commissioner of State

Revenue (Taxation) [2006] VCAT 694 Transfer between trusts not liable to duty – Serana Pty Ltd and Commissioner of State Revenue [2006] WASAT 78

Other Developments

SHA special account closes 30 June 2006 Release of Tax System Comparison Study Report Release of Tax System Comparison Study Report Further reductions in red tape ASIC cracking down on super switching advice

June Hot Topic:

2006 Budget List of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) – all hyperlinked MAY 2006


Legislation passed o Bankruptcy Legislation Amendment (Anti-Avoidance) Bill 2005

Legislation introduced Other legislative developments

o Treasurer releases Exposure Draft legislation to cut tax legislation o Assistant Treasurer announces changes to choice of super regulations o Franking credits to be made available to life tenants

Tax on the Couch

© Tax on the Couch


FBT Rates and thresholds GST: guarantees and indemnities – GSTR 2006/1 GST: deposits held as security for the performance of an obligation – GSTR 2006/2 Superannuation guarantee: Contractors and effective 'salary' sacrifice arrangements – SGD 2006/D1 Other developments with ATO rulings, etc

Monthly Case Update

Payment of management fees to related entity deductible: BCD Technologies Pty Ltd v FCT [2006] AATA 241 ‘Sporting’ club not tax exempt: South Sydney Junior Rugby League Club Limited v FCT [2006] AATA 265 Negligent accountant not liable for losses: Leda Pty Ltd & Anor v Weerden (No 2) [2006] NSWSC 125 No special circumstances, so non-commercial loss rules still apply: Delacy and Commissioner of Taxation [2006]

AATA 198 No double-dipping with margin scheme calculation: Sterling Guardian Pty Limited v FC of T [2006] FCAFC 1

Other Developments

ATO compliance activities Self managed superannuation funds - barter credits Audit of ATO’s of administration of Activity Statement High Risk Refunds Claiming compensation from the ATO

May Hot Topic:

The ins-and-outs of superannuation pensions List of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) – all hyperlinked

APRIL 2006


Tax Laws Amendment (2005 Measures No 6) Bill 2005 o amends the consolidation provisions in the ITAA 1997; o restores the mutuality principle to non-profit entities; o ensures eligibility for the child care tax offset is consistent with the work/training/study requirements; o excludes procedures that are solely cosmetic from the medical expenses offset; and o updates the lists of deductible gift recipients (DGRs) and extends the period for which deductions are

allowed for gifts to a certain fund that has time-limited DGR status. Tax Laws Amendment (2006 Measures No. 1) Bill 2006

o Deters the promotion of tax avoidance and evasion schemes o From 1 July 2005, provides a systematic treatment for business ‘blackhole’ expenditures comprising: o GST and phone vouchers: o Enhances the foreign income tax exemption for temporary residents

Other legislative developments


Cost base concession where Division 43 deductions (building write-off) not claimed – PS LA 2006/1 (GA) Division 7A and statute barred loans – PS LA 2006/2 (GA) Guidelines for remittance of additional super guarantee charge – PS LA 2006/1 Administration of shortfall penalty for false or misleading statement – PS LA 2006/2

Monthly Case Update

Transfer of assets was to defeat creditors and void: The Trustees of the Property of John Daniel Cummins, A Bankrupt v Cummins [2006] HCA 6

Distributions to a trust with tax losses held to be a "sham": Raftland Pty Ltd as Trustee of the Raftland Trust v Commissioner of Taxation [2006] FCA 109

Attribution of family trust assets for social security purposes: AAT Case [2006] AATA 98, Re Secretary, Department of Family and Community Services and Linton

PSI business premises test passed: Dixon Consulting Pty Ltd and Commissioner of Taxation [2006] AATA 186 Other cases of interest

Tax on the Couch

© Tax on the Couch

Other Developments

Treasurer announces comparison study of taxation system GST and real property: Proposed amendment to the law ATO and FBT and non-profits - The ATO has released information to clarify which organizations are entitled to the

FBT exemption and to explain how the capping thresholds work Reasonable benefit limits – new benefit list for individuals available from February 2006 ATO fact sheet regarding FBT and employee benefit trust arrangements

April Hot Topic:

Living Away From Home Allowance fringe benefits List of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) – all hyperlinked MARCH 2006


Tax-related Legislation Proposed for Introduction in the 2006 Autumn Sittings Legislation introduced late 2005 to be debated this sitting Other Legislative Developments


The deductible amount of superannuation that has been split – TD 2006/D3 Entitlement of a taxpayer under the age of 55 to receive the pension rebate when receiving superannuation that has

been split – TD 2006/D4 Special income derived by superannuation fund, etc – TR 2006/D1

Monthly Case Update

PAYG payable on unfair dismissal payment: Paul Andrew Bennett and Craig Bradley Dix T/A Fitness Painting & Property Maintenance -V- Higgins [2005] WASCA 197

CGT calculated on contract price including later adjustments: The Taxpayer and Commissioner of Taxation [2006] AATA 14 (Case 2/2006)

A lucky break? Penalties remitted despite not asking for it: Commissioner of Taxation v Hornibrook [2006] FCA 9 ‘Abnormal’ clothing deductions denied: The Taxpayer and Commissioner of Taxation [2006] AATA 100 (Case

3/2006) Super fund ordered to refund superannuation contributions: Personalised Transport Services Pty Ltd v AMP

Superannuation Ltd & Anor [2006] NSWSC 5 Convictions for defrauding the Commonwealth quashed: R v Rigoli & Rigoli [2006] VSCA 1 Transfer of land to a beneficiary liable to duty: Shop, Distributive and Allied Employees Association v Commissioner

of State Revenue [2005] VSC 484

Other Developments

First speech by the New Tax Commissioner – Michael D’Ascenzo (to the Australasian Tax Teachers’ Association) OECD Report to Australia on Combating International Bribery ASIC provides guidance on compliance with FSR Refinements regulations Government Provides Extra Funds to Combat Tax Scams

March Hot Topic: Tips and Traps with the CGT small business concessions

How do I calculate my net assets for the purposes of the $5m maximum net asset value test? Who are entities connected with the taxpayer? Who are the small business CGT affiliates of a taxpayer? Active asset test: What if the entity that owns the asset does not own the business? Active asset test: What if the asset is only partly used in the business? What if the business moves premises and then sells the old premises? Do I need to retire to get the small business 15 year exemption? Do I need to retire to get the retirement exemption? List of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) – all hyperlinked

Tax on the Couch

© Tax on the Couch

JANUARY/FEBRUARY 2006


New legislation that has received royal assent, including: o Corporations Amendment Act (No. 1) 2005 o Tax Laws Amendment (Loss Recoupment Rules and Other Measures) Act 2005 o Taxation Laws Amendment (Superannuation Contributions Splitting) Act 2005 o Tax Laws Amendment (2005 Measures No. 4) Bill 2005 (including a focus on the Child care tax

offset/rebate) o Tax Laws Amendment (2005 Measures No 5) Bill 2005 o Tax Laws Amendment (Improvements to Self Assessment) Bill (No 2) 2005

New legislation introduced Regulations made including:

o Superannuation Industry (Supervision) Amendment Regulations 2005 (No 5), Retirement Savings Accounts Regulations 2005 (No 3), and Income Tax Amendment Regulations 2005 (No 7)

o The Superannuation Industry (Supervision) Amendment Regulations 2005 (No.7) and the Retirement Savings Accounts Amendment Regulations 2005 (No.4)

o Superannuation Industry (Supervision) Amendment Regulations 2005 (No. 8) Other regulations made and other legislative developments


Meaning of "can deduct" for cost base purposes – Taxation Determination TD 2005/47 The disclosure of information respecting the affairs of a taxpayer by the Commissioner to the Treasury – PS LA

2005/23 Superannuation guarantee: work arranged by intermediaries – SGR 2005/2 Application of General Anti-Avoidance Rules – PS LA 2005/24 TR 2005/24 – Income tax: deductibility of personal superannuation contributions

Monthly Case Update

Applications for the Tax Office to provide more information dismissed – Syngenta Crop Protection Pty Ltd (ACN 002 933 717) & Anor v Commissioner of Taxation [2005] FCA 1646

Appointment of new superannuation trustee upheld: Katz v Grossman [2005] NSWSC 934 Loss a capital loss, not a revenue loss: The Taxpayer and Commissioner of Taxation [2005] AATA 1156 GST: Appeal for GST rectification on land contract rejected: Igloo Homes Pty Ltd v Sammut Constructions Pty Ltd

[2005] NSWCA 280 GST assessments upheld – onus on taxpayer to prove excessive: AAT Case [2005] AATA 1180, Re Graham

Docker & Associates Pty Ltd and FCT Income tax assessment upheld – taxpayer could not prove bad faith: Gluck v FCT [2005] FCA 1634 Duty payable as constructive trust triggers change in beneficial ownership: Woodfield Constructions Pty Ltd v

Commissioner of State Revenue [2005] VCAT 2518 Section 264 notice, requiring names of clients, valid: Hart v DCT [2005] FCA 1748 Tax agent receives conviction for failing to lodge a tax return: FCT v Doudle [2005]

Other developments

Income Tax Act reduced by around 30%...but not really… Guidance on transition to retirement pensions ASIC announces simpler warnings for oral general advice Tax and recent bushfires Tax agents trading through trusts and digital certificates Tax Office to refund overcharged interest

January/February Hot Topic

Taxation issues involving Partnerships of Discretionary Trusts List of all releases during the past two months (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) – all hyperlinked

Tax on the Couch

© Tax on the Couch

2005 DECEMBER 2005


Tax Laws Amendment (Superannuation Contributions Splitting) Bill 2005


Consequences of creating, and dealing in, life and remainder interests in property - Draft ruling TR 2005/D14 Superannuation surcharge reporting for unallocated contributions – Superannuation Contributions Determination

SCD 2005/6 Determining the extent of creditable purpose for claiming input tax credits and for making adjustments for changes

in extent of creditable purpose – Draft GST Ruling 2005/D7 Division 7A: Extended timeframe for repayment of a loan or execution of a written loan agreement for the 2003/04 income year – PS LA 2005/3 (GA)

Monthly Case Update

Deductions allowed for rental expenses even though property never rented: Re Ormiston and FCT [2005] AATA 978

Employer’s contributions to a redundancy fund on behalf of employees subject to FBT: Caelli Constructions (Vic) Pty Ltd v FCT [2005] FCA 1467

Deduction for boat expenses denied: Phippen v FCT [2005] AATA 952 Tribunal's decision to pay super death benefit to de facto affirmed: Health Employees Superannuation Fund Australia Ltd v Sykley [2005] FCA 1381 Incorrectly claiming input tax credits – Penalty for recklessness reduced: VT 2004/246 and Commissioner of

Taxation [2005] AATA 1028

Other developments

ATO updates new private ruling and objection forms for tax agents Board of Taxation to Undertake Scoping Study of Small Business Tax Compliance Costs Debt/Equity: Tax treatment of certain term subordinated notes The Commissioner of Taxation Annual Report 2004-05 December DVD to replace November satellite seminar "Low doc loan" insurance data matching program Post-implementation review of the quality and effectiveness of the small business capital gains tax concessions Tax Office crackdown on lodgment of tax agents' personal returns

December Hot Topic

Rules for SMSFs investing in unit trusts List of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) – all hyperlinked NOVEMBER 2005


Tax Laws Amendment (Loss Recoupment Rules and other Measures) Bill 2005


Meaning of the words ‘the beneficiaries and terms of both trusts are the same’ for purposes of applying an exception to CGT Events E1 and E2 – Draft ruling TR 2005/D15

Meaning of “can deduct” for cost base purposes – Draft determination TD 2005/D28 Will Part IVA of the ITAA 1936 always apply if a taxpayer who carries on a business (including a personal services

business) pays superannuation contributions that do not exceed the age-based limits but are considerably in excess of the value of the services provided by the employee – TD 2005/29

GST and time of choice to apply the margin scheme – PS LA 2005/2 (GA) Value of goods taken from stock for private use for the 2006 income Year – TD 2005/36

Tax on the Couch

© Tax on the Couch

Monthly Case Update

Deductions for defamation costs disallowed: Davies v FC of T [2005] AATA 767 SMSF denied deduction for fund expenses: The Trustees for Bontoc Superanuation Fund v FC of T [2005] AATA

900 PSI attributed to consultant because entity fails results test: Nguyen and Anor v Commissioner of Taxation [2005]

AATA 876

Other Developments

Tax Office’s new client relationship management system Compliance Toolkit Automatic GST instalment rollover – Tax Office reminder Review of self assessment (ROSA) – What are the current changes? Update of Commissioner’s data-matching activities

November Hot Topic

S.23AG and Foreign Earnings List of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) – all hyperlinked OCTOBER 2005 Monthly Legislative Update

Customs Tariff Amendment Bill (No. 2) 2005 Tax Laws Amendment (Measures No. 5) Bill 2005 Other legislative developments


Who is an ‘employee’ for PAYG withholding? – TR 2005/16 Valuing trading stock for retail and wholesale taxpayers – TR 2005/D11 Taxation of capital gains of a trust – PS LA 2005/1 (GA)

Monthly Case Update

Superannuation fund set-up fee not deductible: Drummond v FCT [2005] FCA 1129 $100,000 penalty for serious breaches of superannuation investment rules: APRA v Derstepanian [2005] FCA 1121 Lump sum redemption of weekly compensation payment an ETP: FCT v Pitcher [2005] FCA 1154 Golf caddy not entitled to income averaging: Davidson v FCT [2005] AATA 835 Bankrupt has no standing to appeal assessment: Spirakos v Deputy FCT [2005] FCA 1068 Other cases of interest

Other Developments

New simplified GST Accounting Method for food retailers Securitisation vehicles and Foreign Currency Rules Donations to certain Hurricane charities to be deductible Fringe Benefits Tax Reporting Exclusion Bankruptcy Reform Margin Scheme Valuations for supplies made after 1 December 2005

October Hot Topic

Commercial Debt Forgiveness – The Basics! List of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) – all hyperlinked SEPTEMBER 2005


Superannuation Laws Amendment (Abolition of Surcharge) Bill 2005 Tax Laws Amendment (Personal Income Tax Reduction) Bill 2005 Other legislative developments

Tax on the Couch

© Tax on the Couch


What is a gift? – TR 2005/13 Expenditure not included in cost base if Part IVA applies – TD 2005/33 Joint loans and the otherwise deductible rule – ATO ID 2005/219 Treatment of deposits for GST purposes: GSTR 2005/D1

Monthly Case Update

Company not carrying on a PSB: Metaskills Pty Limited and FCT [2005] AATA 647 Psychology expenses not deductible: VBI and FCT [2005] AATA 683 Management fees not derived until quantified and charged: Lee and McKeand and Son Pty Ltd and FCT [2005]

AATA 650 Part IVA applies to tax effective investment scheme: Calder v FCT [2005] 911 No deduction for motor vehicle expenses: Jones v FCT [2005] AATA 691 In Brief

Other Developments

‘At call’ loans to small business to be treated as debt Compliance Program ‘Low doc’ loans – Continued ATO focus ASIC: Super switching surveillance and shadow shopping

September Hot Topic

Rental Properties in the ATO’s sights! List of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) – all hyperlinked AUGUST 2005


Deductibility of interest incurred by trustees in relation to distributions to beneficiaries – TR 2005/16 Effective life changes – TR 2000/18A10 Donations to Tsunami charities – PS LA 2005/12 Introducing the ‘GST Advice’


Tax Laws Amendment (Medicare levy and Medicare levy surcharge) Bill 2005 (as Act No 62 of 2005) Tax Laws Amendment (2005 Measures No 3) Bill 2005 (as Act No 63 of 2005) New International Tax Arrangements (Foreign-owned Branches and Other Measures) Bill 2005 (as Act No 64 of

2005) Tax Laws Amendment (2005 Measures No 1) Bill 2005 (as Act No 77 of 2005) Tax Laws Amendment (2005 Measures No 2) Bill 2005 (as Act No 78 of 2005) Tax Laws Amendment (Improvements to Self Assessment) Bill (No 1) 2005 (as Act No 75 of 2005) and Shortfall

Interest Charge (Imposition) Bill 2005 (as Act No 76 of 2005) Superannuation Legislation Amendment (Choice of Superannuation Funds) Bill 2005 (AS Act No 82 of 2005) Other legislative developments Other proposed amendments

Monthly Case Update

Allowance not a LAFHA: Best v FCT [2005] AATA 560 No extension regarding employee share scheme: Isaacs v FCT [2005] FCA 832 Termination payment an ETP: Applicant and Commissioner of Taxation [2005] AATA 583 (Case 7/2005) Pre-GST lease had a “review opportunity” and subject to GST: Coles Supermarkets Pty Ltd v Westley Nominees

Pty Ltd [2005] FCA 839 Taxpayer received money from lottery, loans from mother and Russian nobility – not assessable: Henderson v FCT

[2005] AATA 606

August Hot Topic

Service Trusts under attack!

Tax on the Couch

© Tax on the Couch

List of all releases during the past month (cases, bills, legislation given assent, rulings, determinations, etc, Treasury media releases, ATO media releases) – all hyperlinked

JULY 2005

Personal liability of directors of corporate trustees 'Partnership salary' agreements – TR 2005/7 Market valuations – Practice statement PS LA 2005/8 The principle of mutuality to be restored ASIC crackdown on accountants for SMSF advice Providing tax advice for a fee – TD 2005/16 Choice of super fund measures – from 1 July 2005

JUNE 2005

Budget 2005 Draft ruling on service trusts Stone’s case – Sportsperson carrying on a business Income tax deductions to be denied for illegal activities New Practice Statement: Substantiation of expenses for work and car expenses Employers paying super fund’s expenses Year-end tax planning PROMOTIONAL CD ROM – MAY 2005 The ATO and Part IVA

tax on the couch topics - ntaa€¦ · setting up a tax-effective pension under the...

Documents