the journal for members of the tax institute taxation

VOLUME 51(11) JUNE 2017

Taxationin Australia

THE JOURNAL FOR MEMBERS OF THE TAX INSTITUTE

Recent state taxes changes affecting foreign investors in land Gabrielle Déal

Hypothesising the future after ChevronElizabeth Bishop, ATI, and Scott Richardson

The duty of trustees to investRobin Speed, CTA

TAXING ISSUES

Taxation in Australia® ISSN 0494-8343

Publishing House The Tax Institute ABN 45 008 392 372

Level 10, 175 Pitt Street Sydney, NSW 2000, Australia

Publisher Renée McDonald

General Manager, Information Products Alex Munroe

Managing Editor Deborah Powell

Advertising Anil Fernandez 02 8223 0069

Production Manager Louella Brown

Graphic Designers Barry Crump Mei Lam

Typesetter Midland Typesetters, Australia

Tax Consultant Cheryl Goh

© 2017 The Tax Institute This journal is copyright. Apart from any fair dealing for the purpose of private study, research, criticism or review, as permitted under the Copyright Act, no part may be reproduced by any process without written permission.

Disclaimer Unless otherwise stated, the opinions published in this journal do not express the official opinion of The Tax Institute. The Tax Institute accepts no responsibility for accuracy of information contained herein. Readers should rely on their own inquiries before making decisions that touch on their own interests.

PublishersAustralia member

CAB Audited Title

Invitation to writeWe welcome original contributions that are of interest to tax professionals, lawyers, academics and students. For details about submitting articles, please see Guidelines for Publication on our website taxinstitute.com.au, or contact [email protected].

The following points highlight important federal tax developments that occurred during May 2017. A selection of the developments is considered in more detail on page 592 of this Taxing Issues column at the item number indicated.

by TaxCounsel Pty Ltd

May – what happened in tax?

2017-18 BudgetThe 2017-18 federal Budget was handed down by the Treasurer on 9 May 2017. A range of income tax, CGT and GST measures were announced that primarily affect small businesses, superannuation, foreign investors, vendors, purchasers and owners of residential property, and tax avoidance and evasion. See item 1.

Real property announcementsThere were several measures announced by the Treasurer in the 2017-18 Budget that relate particularly to real property transactions. These measures include:

� the remission of GST by purchasers of newly constructed residential properties or new subdivisions;

� several changes to the foreign resident CGT regime, for example, the reduction of the CGT withholding threshold for foreign tax residents from $2m to $750,000; and

� denying deductions for certain travel expenses relating to residential rental properties and limiting depreciation deductions for plant and equipment in residential rental properties. See item 2.

Small business announcementsTwo measures were announced by the Treasurer in the 2017-18 Budget that relate particularly to small businesses. These measures relate to:

� the extension to 30 June 2018 of the 2015-16 Budget measure that introduced accelerated depreciation for small businesses. This extension will apply for businesses with an aggregated annual turnover of less than $10m; and

� the tightening of the CGT small business reliefs to prevent inappropriate accessing of the reliefs. See item 3.

Interest on bank accountsThe Commissioner has released a final determination which states that, for income tax purposes, interest income on a bank account is assessable to the person or persons who beneficially own the money in the account (TD 2017/11). See item 4.

Large bank depositThe Federal Court (Perram J) has held that a taxpayer failed to discharge the onus of establishing that a default assessment issued to her for the 2010 income year, and which included in her assessable income an amount of $2m that had been deposited to her bank account on 30 June 2010, was excessive (Zappia v FCT [2017] FCA 390). See item 5.

“Streaming” of franking creditsThe Full Federal Court (Dowsett, Perram and Pagone JJ) has unanimously upheld an appeal by beneficiaries of a discretionary trust and held that resolutions of the trustee of the trust which sought to stream franking credits separately from the dividends to which they were attached, were effective (Thomas v FCT [2017] FCAFC 57). See item 6.

Transfer pricing: Chevron caseThe Full Federal Court (Allsop CJ, Peram and Pagone JJ) has unanimously dismissed the taxpayer’s appeal from the decision of Robertson J in the Chevron transfer pricing litigation (Chevron Australia Holdings Pty Ltd v FCT [2017] FCAFC 62). See item 7.

Taxation in Australia® ISSN 0494-8343

Publishing House The Tax Institute ABN 45 008 392 372

Level 10, 175 Pitt Street Sydney, NSW 2000, Australia

Publisher Renée McDonald

General Manager, Information Products Alex Munroe

Managing Editor Deborah Powell

Advertising Wayne Flekser 02 8223 0071

Production Manager Louella Brown

Graphic Designer Mei Lam

Typesetter Midland Typesetters, Australia

Tax Consultant Cheryl Goh

© 2017 The Tax Institute This journal is copyright. Apart from any fair dealing for the purpose of private study, research, criticism or review, as permitted under the Copyright Act, no part may be reproduced by any process without written permission.

Disclaimer Unless otherwise stated, the opinions published in this journal do not express the official opinion of The Tax Institute. The Tax Institute accepts no responsibility for accuracy of information contained herein. Readers should rely on their own inquiries before making decisions that touch on their own interests.

PublishersAustralia member

CAB Audited Title

Invitation to writeWe welcome original contributions that are of interest to tax professionals, lawyers, academics and students. For details about submitting articles, please see Guidelines for Publication on our website taxinstitute.com.au, or contact [email protected].

Contents

Feature articles

Regulars588 President’s Report

589 CEO’s Report

591 Senior Tax Counsel’s Report

592 Taxing Issues

596 Tax Tips

600 Mid Market Focus

602 Tax Education

603 Obituary

604 Member Profile

624 A Matter of Trusts

626 Superannuation

631 Tax Cases

635 Alternative Assets Insights

638 Successful Succession

640 Calendar

642 Cumulative Index

618 The duty of trustees to investRobin Speed, CTA, Solicitor, Speed and Stracey Lawyers

612 Recent state taxes changes affecting foreign investors in land Gabrielle Déal, Manager, State Taxes, Deloitte

Cover article

606 Hypothesising the future after Chevron Elizabeth Bishop, ATI, Barrister, and Scott Richardson, Barrister, Ground Floor

Wentworth Chambers

PRESIDENT’S REPORT

Although it will be the best part of a month until this report goes to publication, I am writing after just completing the 2017-18 federal Budget lock-up in Canberra with senior tax counsel, Professor Bob Deutsch, and tax counsel, Stephanie Caredes. It was my first Budget lock-up event and very possibly my last, so it has been a unique and enlightening experience.

After signing in and surrendering my phone under the shadow of the official secrets section of the Crimes Act 1914 (Cth), the anticipation of the lock-up event took me back the best part of 20 years. It was much akin to that all-important university exam, with 300 or 400 other anxious stakeholders waiting for the magic moment of the doors opening. However, unlike the exam scenario, the reading time allotted was four hours, not a mere 15 minutes!

In a new venue for 2017 (it was later reported to me that the set-up at the Hyatt Hotel was much more conducive to the lock-up process), we strategically placed ourselves by the exit door to facilitate Bob’s later departure to Parliament House, then settled in to read a prolific quantity of Budget papers and supporting materials.

Even though we were all there for the same purpose, it appeared as though many stakeholders present approached the task quite differently to us. Unlike the exam environment, there was a surprising amount of interaction between stakeholders — both Budget-related and otherwise. I noticed that some people didn’t really knuckle down to the task for the best part of an hour!

By 6:00 pm, we were well into the process of preparing our media release about the Budget and helping Bob, in whatever way we could, to prepare for the subsequent media scrum that he had so gallantly signed up for.

I have worked closely with our tax policy team for a number of months now, but it was here in the lock-up that it demonstrated its real value to me. I can confidently report that, between the three of us at the event, we carefully reviewed, robustly considered and actively agitated all of the Budget material. Subsequently, we applied the same level of rigour to strategically craft the Institute’s media statement, which was published within half an hour of our liberation from the lock-up venue, and our special Budget-edition TaxVine statement.

I do not need to provide any substantive commentary on the positions the Institute has taken on the various Budget announcements. Members can easily access all of that on our website. What I should comment on is the perseverance of our senior tax council, Bob Deutsch, in his efforts to provide positive and productive media exposure for the Institute in his professional yet tenacious manner, much preferring the interests of the Institute ahead of his own on the night.

I ought not omit to mention our CEO, Noel Rowland, who also made an important contribution to the Institute’s presence in Canberra on Budget night, flying the flag for us at the Budget dinner and again, with Bob and I, at the Budget breakfast the following morning, followed by the Treasurer’s National Press Club lunch.

I strongly commend the thorough preparations of Bob, Stephanie and the entire tax policy team for the 2017-18 Budget lock-up event, including Angie Ananda, Bruce Quigley and Stephanie Conway, ably assisted on the night by Cheryl Goh, Alex Munroe and my colleague on National Council, Tim Neilson. They all undertook great work to execute the

Institute’s Budget response. In this forum, we have seen the great value provided to our members by the work done, connections made and opportunities taken by the tax policy team members for and on behalf the Institute. Their efforts enable us to maintain a strong, credible and authoritative voice in the halls of power that determine tax policy, tax law and tax administration in this country, and they cannot be overstated.

For me, being afforded the privilege of representing our diverse member interests by participating in this process and watching the team in action has been a unique, gratifying experience. I can attest that we can all be proud of the work that our tax policy team is doing and I have every personal assurance that this important work is set to continue for the balance of this year and into the future. Consequently, I encourage every member to continue to support our tax policy team by engaging with TaxVine, participating in policy consultation matters, and raising issues of importance to you, our members.

This year’s Budget lock-up process has revealed the strengths and talents of the Institute’s tax policy and advocacy professionals.

by Matthew Pawson, CTA

Reflections on the valuable work of our tax policy team

TAXATION IN AUSTRALIA | JUNE 2017588

CEO’S REPORT

I recently saw the initial findings of The Tax Institute’s latest in-depth survey of member satisfaction. They make for interesting reading.

We will provide a summary of the 2017 survey insights in a future issue of Taxation in Australia. In the meantime, I’d like to offer a few early reflections.

Background of the surveyThe latest survey represents the most recent stage in our ongoing process of evaluating everything we do at the Institute.

At each CPD event we host, we ask for attendee evaluations. We ask candidates in our education programs for feedback on the quality of their learning experience. Likewise, our membership survey asks members about what they value most about the Institute, whether we’re providing the right kinds of services for them, and what we can do better.

Specifically, the survey asked questions such as:

� What do you want from your membership?

� How satisfied are you, and how engaged are you, with your membership experience?

� How satisfied are you with the Institute’s core process areas, eg advocacy, education, events, member services and communications?

� What would you like the Institute to do more of? What do you want less of?

� Which new product and service ideas resonate with you?

The answers to these questions enable us to measure and understand our members’ experience with the Institute and to identify paths for greater engagement and satisfaction across all touchpoints.

Member satisfaction levelsThe survey results reveal that the majority of our members (65%) are either extremely or very satisfied with their membership experience. Another 28% are at least somewhat satisfied.

This level maintains the member satisfaction levels achieved last year and is a tribute to what we have delivered to members so far.

However, while it’s a positive result, it’s not one we take for granted, and it doesn’t mean we can rest. In our quest for perfection, we continue to strive towards the perhaps unrealistic expectation of 100% member satisfaction.

Meeting different generational needsThe Institute’s average member is in their 40s or 50s and has been in practice for 20 to 25 years. They have engaged with The Tax Institute’s existing services and products for an extended period and their satisfaction levels are high.

At the same time, the research reflects alternative expectations from a younger generation of tax practitioners. Many in this generation prefer to access and consume information, services and products in a different way, with a focus on digital engagement, online learning, active networking and career support.

The Institute needs to continue balancing the competing needs of these two constituencies by delivering an increasingly comprehensive suite of services, products and delivery modes.

Key sources of tax knowledgeThe survey indicates that 26% of members identify The Tax Institute as their main source of tax knowledge, second only

to the ATO (at 31%), and ahead of all specialist commercial publishers of tax information.

Over the past year, the Institute has supported the ATO’s considerable efforts to improve its timely, efficient provision of public advice and guidance. However, astute professionals will always seek out independent, objective information, commentary, interpretation and analysis — by tax practitioners, for practitioners — from an entity such as The Tax Institute.

The core messageOverall, the main learning I derive from the 2017 membership survey is that the Institute continues to be on the same page as its members.

The dominant theme across the feedback on areas such as advocacy, education, events and member services is that the base level of member satisfaction has been high in the past and continues to be so in the present. While we seek to maintain a clear understanding of member needs at all times, this survey provides even more nuanced insights.

My sincere appreciation goes out to all members who took the time to complete the survey questionnaire. Your contribution helps us to frame the future initiatives that will further improve your member experience.

The Institute has also donated $5 to Lifeline for each completed questionnaire, culminating in a total donation of $2,745.

If you didn’t participate in the survey, please be assured that we are always eager to receive your feedback at any time throughout the year.

Insights from the Institute’s 2017 membership survey will help us frame future initiatives to further enhance the member experience.

by Noel Rowland

Member satisfaction – the Institute’s first priority

TAXATION IN AUSTRALIA | VOL 51(11) 589

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CONFIDENT PRACTICAL RESPECTED

SENIOR TAX COUNSEL’S REPORT

The Australian Taxation Office recently released a draft practical compliance guideline, PCG 2017/D4 dealing with taxation issues arising from cross-border related-party financing arrangements. This is a timely document, particularly in light of the recent decision of the Federal Court in Chevron where the ATO prevailed arguing that an interest rate of 9% charged by a US subsidiary to its Australian parent was excessive and should have been calculated on the basis of a 5% interest rate giving rise to a more modest deduction.

The guideline is essentially intended for internal use by the ATO but gives taxpayers the opportunity to effectively self-assess their level of risk.

The guideline will establish a risk framework made up of six risk zones. The risk zone depends on the score allocated to the particular financing arrangement in question. The relevant zones, ratings and scores are set out in Table 1.

Which zone a taxpayer sits in depends on the type and nature of financing arrangements which they have entered into during the course of the year.

Taxpayers will be required to disclose whether they have self-assessed the

risk rating relating to their related-party financing arrangements. Thus, if they are asked by the ATO to complete a reportable tax position schedule, one question asked is whether they have tested the risk present in the conditions of their related-party financing arrangements under the guideline. If the taxpayer has not done so, they will be required to disclose that fact. If they have done so, they will be required to disclose the rating given to itself.

If a taxpayer is in the white zone, there will be no need to risk assess at all. This will only apply to taxpayers who have a related-party financing arrangement for the current year in respect of which there is an advance pricing agreement, a settlement agreement between the taxpayer and the ATO, a court decision, or the ATO has conducted a review of the entity’s related-party financing arrangement in the last three years and already provided the taxpayer with the risk rating. Additionally, there must not have been a material change to the conditions of the related-party financing arrangement.

If the taxpayer is in the green zone and classified as low risk, the ATO will generally not apply any compliance resources other than to confirm certain facts and check the taxpayer’s eligibility. This will minimise the taxpayer’s compliance costs and provide some practical certainty in respect of the arrangement.

It is important to understand that being classified in the green zone does not waive the operation of the statutory test and does not constitute a safe harbour. Nonetheless, it does give some measure of security and the ATO is only likely to dedicate compliance resources beyond the factual checks referred to above in exceptional circumstances.

If a taxpayer is in the blue or yellow zone, the ATO will actively monitor the arrangements. Alternative dispute resolution (ADR) mechanisms might be effective in resolving areas of difference.

If the taxpayer is in the amber zone, reviews are likely to be commenced as a matter of priority and, again, ADR might be effective in resolving such areas of difference.

If the taxpayer is in the red zone, reviews are likely to be commenced as a matter of priority, with cases often proceeding to audit. In such cases, eligibility for access to the advance pricing agreement program will be denied and the ATO is likely at this stage to use formal powers of information-gathering.

Certain indicators are expressed as a closed yes/no question, and the score allocated for that indicator will then be determined by reference to the answer to the question. For other indicators, there is a range provided and a score will be determined by reference to where the taxpayer sits in that range.

Examples of yes/no questions are:

� Was appropriate collateral provided?

� Was there subordinated or mezzanine debt?

� Was the currency of the debt different to the operating currency?

� Did the arrangement involve a taxpayer alert?

� Was one party to the transaction at least a hybrid entity?

� Did the loan contain any exotic features?

The guidance is extremely helpful and gives taxpayers a clear understanding of the issues that will be considered as a critical component when evaluating related-party borrowings.

The ATO’s draft PCG on cross-border debt is a timely document, particularly given the recent decision in Chevron.

by Robert Deutsch, CTA

Cross-border related-party financing arrangements

Table 1

Risk zone Rating

Aggregate score

White Not rated n/a

Green Low risk 0 to 4

Blue Low to moderate risk

5 to 10

Yellow Moderate risk 11 to 18

Amber High risk 19 to 24

Red Very high risk 25 or more


TMay – what happened in tax?by TaxCounsel Pty Ltd

The following points highlight important federal tax developments that have occurred during May 2017.

Government initiatives

1. 2017-18 BudgetThe 2017-18 federal Budget was handed down by the Treasurer on 9 May 2017. A range of income tax, CGT and GST measures were announced that primarily affect small businesses, superannuation, foreign investors, vendors, purchasers and owners of residential property, and tax avoidance and evasion.

The measures relating to real property are considered at item 2 below, and the measures relating to small businesses are considered at item 3 below. The other taxation measures that should be particularly noted are outlined below.

Medicare levyThe Medicare levy is to be increased by half a percentage point (to 2.5% of taxable income) from 1 July 2019 to ensure that the National Disability Insurance Scheme is fully funded. Other tax rates that are linked to the top personal tax rate (for example, the FBT rate) will also be increased.

Also, the Medicare levy low-income thresholds for singles, families and seniors and pensioners will be increased from the 2016-17 income year.

SuperannuationMerging superannuation funds. The current tax relief for merging superannuation funds is to be extended to 30 June 2020. Since December 2008, tax relief has been available for superannuation funds to transfer capital and revenue losses to a new merged fund, and to defer taxation consequences on gains and losses from revenue and capital assets. This tax relief was due to lapse on 1 July 2017.

Limited recourse borrowing arrangements. From 1 July 2017, the use of limited recourse borrowing

arrangements (LRBAs) will be included in a member’s total superannuation balance and transfer balance cap.

Limited recourse borrowing arrangements can be used to circumvent contribution caps and effectively transfer growth in assets from the accumulation phase to the retirement phase that is not captured by the transfer balance cap. The outstanding balance of an LRBA will now be included in a member’s annual total superannuation balance, and the repayment of the principal and interest of an LRBA from a member’s accumulation account will be a credit in the member’s transfer balance account.

Non-arm’s length arrangements. From 1 July 2018, the integrity of the superannuation system will be improved by reducing opportunities for members to use related-party transactions on non-commercial terms to increase superannuation savings.

The non-arm’s length income provisions will be amended to ensure expenses that would normally apply in a commercial transaction are included when considering whether the transaction is on a commercial basis.

Extension of TPRS to the courier and cleaning industriesWith effect from 1 July 2018, the taxable payments reporting system (TPRS) is to be extended to contractors in the courier and cleaning industries.

The TPRS is a transparency measure and already operates in the building and construction industry, where it has resulted in improved contractor compliance. Under the TPRS, businesses are required to report payments that they make to contractors (individual and total for the year) to the ATO. This measure brings payments to contractors in the courier and cleaning industries into line with wages,

which are reported to the ATO. Businesses in these industries will need to ensure that they collect information from 1 July 2018, with the first annual report required in August 2019.

Multinational anti-avoidance lawThe use of foreign trusts and partnerships in corporate structures to circumvent the multinational anti-avoidance law is to be negated.

From the date of its commencement on 1 January 2016, the multinational anti-avoidance law will be enhanced so that it applies to: corporate structures that involve the interposition of partnerships that have any foreign resident partners; trusts that have any foreign resident trustees; and foreign trusts that temporarily have their central management and control in Australia.

2. Real property announcementsThere were several measures announced by the Treasurer in the 2017-18 Budget that relate particularly to real property transactions. These are noted below.

GST on residential property transactionsFrom 1 July 2018, purchasers of newly constructed residential properties or new subdivisions will be required to remit the GST directly to the ATO as part of the settlement of the contract. Under the current law (where the GST is included in the purchase price and the developer remits the GST to the ATO), some developers are failing to remit the GST to the ATO despite having claimed GST credits on their construction costs.

CGT and foreign investorsAustralia’s foreign resident CGT regime will be amended by:


TAXING ISSUES

TAXING ISSUES

� denying foreign and temporary tax residents access to the CGT main residence exemption from 7:30 pm (AEST) on 9 May 2017. However, existing properties held before that date will be grandfathered until 30 June 2019;

� increasing the CGT withholding rate for foreign tax residents from 10% to 12.5% from 1 July 2017; and

� reducing the CGT withholding threshold for foreign tax residents from $2m to $750,000, from 1 July 2017.

The integrity of the foreign resident CGT regime will be improved by applying the principal asset test on an associate-inclusive basis from 7:30 pm (AEST) on 9 May 2017 for foreign tax residents with indirect interests in Australian real property.

Residential rental propertyTravel expenses. From 1 July 2017, deductions for travel expenses related to inspecting, maintaining or collecting rent for a residential rental property will not be allowable. This measure will not prevent investors from engaging third parties (such as real estate agents) for property management services.

Plant and equipment depreciation. From 1 July 2017, deductions for plant and equipment will be limited to outlays actually incurred by investors in residential real estate properties. Plant and equipment items are usually mechanical fixtures or those which can be “easily” removed from a property, such as dishwashers and ceiling fans.

This is an integrity measure to address concerns that some plant and equipment items are being depreciated by successive investors in excess of their actual value. Acquisitions of existing plant and equipment items will be reflected in the cost base for CGT purposes for subsequent investors.

These changes are to apply on a prospective basis, with existing investments grandfathered. Plant and equipment forming part of residential investment properties as of 9 May 2017 (including contracts already entered into at 7:30 pm (AEST) on 9 May 2017) will continue to give rise to deductions for depreciation until either the investor no longer owns the asset or the asset reaches the end of its effective life.

Investors who purchase plant and equipment for their residential investment

property after 9 May 2017 will be able to claim a deduction over the effective life of the asset. However, subsequent owners of a property will be unable to claim deductions for plant and equipment purchased by a previous owner of that property.

3. Small business announcementsTwo measures were announced by the Treasurer in the 2017-18 Budget that relate particularly to small businesses. These measures are explained below.

Immediate deductibility threshold The 2015-16 Budget measure that introduced accelerated depreciation for small businesses is to be extended by 12 months to 30 June 2018 for businesses with an aggregated annual turnover of less than $10m. Small businesses will be able to immediately deduct purchases of eligible assets costing less than $20,000 first used or installed ready for use by 30 June 2018. Only a few assets are not eligible (such as horticultural plants and in-house software).

Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool (the pool) and depreciated at 15% in the first income year and 30% each income year thereafter. The pool can also be immediately deducted if the balance is less than $20,000 over this period (including existing pools).

The current “lock out” laws for the simplified depreciation rules (these prevent small businesses from re-entering the simplified depreciation regime for five years if they opt out) will continue to be suspended until 30 June 2018.

CGT concessionsWith effect from 1 July 2017, the small business CGT concessions are to be amended to ensure that the concessions can only be accessed in relation to assets used in a small business or ownership interests in a small business.

The concessions assist owners of small businesses by providing relief from CGT on assets related to their business which helps them to re-invest and grow, as well as contribute to their retirement savings through the sale of the business. However, some taxpayers are able to access these concessions for assets which are unrelated to their small business, for instance, through arranging their affairs

so that their ownership interests in larger businesses do not count towards the tests for determining eligibility for the concessions.

The Commissioner’s perspective

4. Interest on bank accountsThe Commissioner has released a final determination which states that, for income tax purposes, interest income on a bank account is assessable to the person or persons who beneficially own the money in the account (TD 2017/11).

Unless there is evidence to the contrary, it is presumed that joint account holders beneficially own the money in the account in equal shares. Relevant contrary evidence can include information regarding who contributed to the account, in what proportions contributions were made, the nature of the contributions, who drew on the account and who used the money (and accrued interest) as their own property. Evidence may also be provided that joint account holders hold money in the account on trust for other persons.

Where a parent operates an account on behalf of a child, but the Commissioner is satisfied that the child beneficially owns the money in the account, the parent can nonetheless show the interest in a tax return lodged for a child. The lodgment of a trust tax return will not be necessary. Where interest income on a bank account is assessable to a child under 18, that income may, of course, be subject to the higher rates of tax that apply to the unearned income of a minor.

The fact that a person is a joint signatory to a bank account will not of itself mean that the person has a beneficial interest in the account. The determination gives the following example.

Example

Adrian’s elderly aunt has a bank account in her name and Adrian is a joint signatory to that account. Adrian will only operate the account if his aunt is unable to do so due to ill health. All the funds in the account are hers and Adrian is not entitled to personally receive any money from the account.

Adrian does not have any beneficial ownership of the money in the account and is therefore not assessable on the interest income.


TAXING ISSUES

Recent case decisions

5. Large bank depositThe Federal Court (Perram J) has held that a taxpayer failed to discharge the onus of establishing that a default assessment issued to her for the 2010 income year, and which included in her assessable income an amount of $2m that had been deposited to her bank account on 30 June 2010, was excessive (Zappia v FCT [2017] FCA 390).

The taxpayer’s husband was a property developer and the $2m came out of a unit trust account that was associated with the taxpayer’s husband. The factual scenario which was put up on behalf of the taxpayer was somewhat complex. The evidence was canvassed by Perram J in some detail and his Honour was sceptical of it. For example, Perram J made the following comments during his reasons for judgment:

� “I am bound to observe, however, that the evidence concerning it puzzles me”;

� “There are a number of aspects of Mr Zappia’s evidence of this conversation which are surprising”;

� “The draft deed of 22 March 2010 contains a number of riddles which are not readily answered”;

� “There is a continuing obscurity as to what was being borrowed”;

� “It is quite difficult to understand entirely what this transaction was going to be”;

� “In short, none of this makes any sense”; and

� “There are some unusual features of this invoice”.

Perram J said that one started with the proposition that $2m is a lot of money, and that $2m was received by the trust. It was clear that only limited books and records of the trust had been put before the court. One record was a trust resolution of 25 June 2010 and another was the trust’s 2010 accounts which singularly failed to refer to the $2m at all, an omission which contradicted the argument that the trust held the beneficial interest in the funds under a bare trust arrangement.

In short, his Honour concluded that there was no evidence in the documents before the court to support the idea that the $2m held by the taxpayer was a trust asset. Indeed, the trust resolution suggested to the contrary, that the $2m was not held by the taxpayer other than beneficially.

Perram J said that it might readily be accepted that it was possible that the resolution was invalid and that the taxpayer’s holding of the $2m was impressed with a resulting trust in favour of the trust. But so much of the picture was missing that his Honour did not think it would be safe, on the balance of probabilities, to go down that path.

Perram J said that he did not propose to draw the inference that the taxpayer received the $2m as a bare trustee or as any sort of trustee or, even if it is open, that it was a loan.

The taxpayer’s appeal against an amended assessment for the 2011 income year which included in the taxpayer’s assessable income interest on the amount of $2m was also dismissed.

6. “Streaming” of franking credits The Full Federal Court (Dowsett, Perram and Pagone JJ) has unanimously upheld an appeal by beneficiaries of a discretionary trust and held that resolutions of the trustee of the trust which sought to stream franking credits separately from the dividends to which they were attached, were effective (Thomas v FCT [2017] FCAFC 57).

It was clear that the resolutions made by the trustee were not by themselves, having regard to the terms of the relevant provisions of the Income Tax Assessment Act 1997 (Cth) (ITAA97), effective.

What made the difference was the fact that the taxpayers had, in judicial advice proceedings brought under s 96 of the Trusts Act 1973 (Qld), obtained from the Queensland Supreme Court a declaration to the effect that the resolutions were, on the basis of the proper construction of the provisions of the ITAA97 and of the trust deed, effective to confer on each of the taxpayers a vested and indefeasible interest in possession in a share of the distributable income that was represented by the franking credits.

Pagone J, who delivered the principal judgment of the court, stated that it was correct to say that the Commissioner was not bound by the construction of the relevant provisions of the ITAA97 adopted by the Queensland Supreme Court but for present purposes, the relevant question was whether the orders of the Supreme Court determined conclusively the rights of the beneficiaries as against the trustee in such a way that the ITAA97 would operate as the taxpayers contended.

Pagone J said that the rights of the beneficiaries flowing as against the Commissioner from the provisions of the ITAA97 depended wholly on the effect of the rights created as between the trustee and the beneficiaries by whatever the resolutions may have achieved. The rights to be created by the trustee as against the Commissioner were a matter wholly within the control of the trustee, and it was within the jurisdiction of the Supreme Court to make declarations concerning the proper construction of what the trustee had done pursuant to a domestic trust. The Commissioner was bound by the declaration concerning the effect of the resolutions if the declaration conclusively determined that a beneficiary had a share of the trust’s net income for an income year.

It is submitted, with respect, that the decision of the Full Federal Court is somewhat surprising and it must be likely that the Commissioner will seek to obtain special leave to appeal to the High Court.

7. Transfer pricing: Chevron caseThe Full Federal Court (Allsop CJ, Perram and Pagone JJ) has unanimously dismissed the taxpayer’s appeal from the decision of Robertson J in the Chevron transfer pricing litigation (Chevron Australia Holdings Pty Ltd v FCT [2017] FCAFC 62).

The case involved a challenge by the taxpayer, Chevron Australia Holdings Pty Ltd (CAHPL), to assessments made by the Commissioner pursuant to the transfer pricing provisions (Div 13 of the Income Tax Assessment Act 1936 (Cth) (ITAA36) and, for several income years, Div 815 ITAA97). The assessments related to interest paid by CAHPL to Chevron Texaco Funding Corporation (CFC) under an agreement between them made on 6 June 2003 styled “credit facility agreement”. Each of the assessments in question was in substance made on the basis that the interest paid by CAHPL, an Australian company, to its United States subsidiary, CFC, was greater than it would have been under an arm’s length dealing between independent parties.

The purpose of the credit facility agreement between parent and subsidiary was to effect an internal refinancing of an Australian currency debt of Chevron Australia Pty Ltd (Chevron Australia) and to fund CAHPL’s acquisition of Texaco Australia Pty Ltd (TAPL). CAHPL was established as the Australian holding


TAXING ISSUES

company of the Chevron Group of Companies following the merger between Chevron Corporation (CVX), its ultimate US parent company, and Texaco Inc.

CFC was established in the group as a US subsidiary of CAHPL for CFC to lend funds to its Australian parent at about 9% interest from money raised by CFC from the issue of commercial paper in the US at a rate of about 1.2%.

In June 2002, the shares in Chevron Australia and TAPL were transferred to CAHPL and were found by Robertson J to represent over 99.8% of the value of CAHPL. The TAPL shares were acquired by CAHPL for a consideration found by Robertson J to be at fair value of AU$1.529b from a temporary interest-free loan from the transferor, namely, Getty Mining International Inc (Getty). Chevron Australia had owed CAHPL AU$1.9b before the transfer of its shares by Getty to CAHPL on a loan from Chevron Capital Corporation (CCC) following a return of capital to its then shareholder. Robertson J accepted that, on 6 June 2003, CAHPL drew the Australian dollar equivalent of US$1.45b under the credit facility agreement and that, on 26 August 2003, CAHPL drew the Australian dollar equivalent of US$1b under the credit facility agreement.

In each of the income years in question, CAHPL claimed tax deductions in Australia for the interest it paid to CFC, and returned as income the dividends it received from CFC as non-assessable non-exempt income pursuant to s 23AJ ITAA36. The Commissioner described in written submissions the evidence accepted by Robertson J as being to the effect that the internal funding arrangements put in place resulted in CAHPL increasing its untaxed dividends from CFC as CAHPL’s interest payments to CFC increased, while CFC would make significant profits from borrowing at 1.2% and on-lending at 9% which would not be taxed either in the US or in Australia. The economic effects of the internal financing structure put in place, in other words, included CAHPL’s Australian taxable income being reduced by the deductions it claimed for the interest payments it made to its US subsidiary and by the receipt by CAHPL of non-taxable income from dividends CFC was able to declare to CAHPL from the interest CFC had derived from CAHPL.

The Commissioner’s assessments were made in reliance on the transfer

pricing provisions on the basis that the consideration paid by CAHPL to CFC for property acquired from CFC (namely, from the loan) exceeded the arm’s length consideration that might reasonably have been expected in an agreement between independent parties acting at arm’s length.

The decision of the Full Court dealt with a number of arguments ranging from constitutional issues to arguments relating to an alleged deficiency in the making of the determinations relied on by the Commissioner as the basis of the assessments.

But perhaps of most interest is the rejection by the court of the taxpayer’s contention that the prediction of what might reasonably be expected is not to be undertaken on the hypothesis that CAPHL was not a member of the Chevron group or, in the language sometimes used in this context, as if it were an orphan. To do so would distort the application of Div 13 and fundamentally undermine its purpose of substituting as a comparable a real world arm’s length consideration that consideration which could predictably have been agreed between them on the hypothesis that they had been independent and dealing at arm’s length.

The ultimate object of the task required by Div 13 is to ensure that what is deemed as the consideration is the reliably predicted amount which CAHPL might reasonably be expected to give or to have given by way of consideration, rather than a hypothetical consideration without reliable foundation in the facts or reality of the circumstances of the taxpayer in question.

It would appear that it could be expected that the taxpayer will seek special leave to appeal from the decision of the Full Federal Court to the High Court.

Tax Counsel Pty LtdACN 117 651 420


TWhat is land “used for”?by TaxCounsel Pty Ltd

A recent decision of the NSW Court of Appeal considered what was meant by “the dominant use of” land.

BackgroundThere are a number of revenue provisions, particularly relating to exemptions and concessions, which, for their operation, turn on what land is used for. Common instances where this is the case arise under the various land tax and local government rating regimes of the states and territories.

The recent decision of the NSW Court of Appeal in Chief Commissioner of State Revenue (NSW) v Metricon Qld Pty Ltd,1 which considered the construction and application of the definition of “land used for primary production” in s 10AA(3) of the Land Tax Management Act 1956 (NSW), is of considerable interest in this regard. The case was an appeal from a decision of White J.2

The legislation The issue in the Metricon case was whether a number of parcels of land which were not “rural land” were exempt from land tax under s 10AA(2) on the basis that the parcels were being used for primary production.

The expression “land used for primary production” was defined in s 10AA(3) as follows:

“(3) For the purposes of this section, “land used for primary production” means land the dominant use of which is for:

(a) cultivation, for the purpose of selling the produce of the cultivation, or

(b) the maintenance of animals (including birds), whether wild or domesticated, for the purpose of selling them or their natural increase or bodily produce, or

(c) commercial fishing (including preparation for that fishing and the storage or preparation of fish or fishing gear) or the commercial farming of fish,

molluscs, crustaceans or other aquatic animals, or

(d) the keeping of bees, for the purpose of selling their honey, or

(e) a commercial plant nursery, but not a nursery at which the principal cultivation is the maintenance of plants pending their sale to the general public, or

(f) the propagation for sale of mushrooms, orchids or flowers.”

The factsLand tax assessments were issued to the taxpayer company (Metricon) in respect of certain land at Terranora in the Tweed Valley for the 2009 to 2013 (inclusive) land tax years. Metricon acquired a substantial tract in that locality in 2008 and 2009 at a cost of some $60m. The parcels to which the proceedings initially related were described as 37 Fraser Drive (also called 22 Fraser Drive), 14 Mahers Lane, 126 Mahers Lane, 140 Mahers Lane, 153 Mahers Lane, 412 Terranora Road, 490 Terranora Road and 512 Terranora Road. Shortly before the hearing at first instance, Metricon abandoned its challenge to the assessments in respect of 14 Mahers Lane, 412 Terranora Road and 490 Terranora Road and its challenge in respect of 126 Mahers Lane for the 2010 land tax year.

From April 2009, cattle grazing operations were conducted on the lands by a partnership of Jeffrey and Merrin Gilliland and Tim and Anna Gilliland. The Gillilands had been farmers and graziers in the district for many years. They agisted cattle on the subject lands under an agreement with Metricon. Before April 2009, Jeffrey and Merrin Gilliland had agisted cattle on some of the land.

In October 2007, that is, a year or more before each parcel was acquired by Metricon, parts of the land were rezoned as zone 2(c) Urban Expansion. That new zoning allowed for residential development subject to development consent. Parts of the areas were zoned 7(d) Environmental Protection. The lands were close to existing residential developments.

It was common ground before White J that the availability of the primary production exemption under s 10AA was to be determined in respect of the five areas of land separately.

It was also common ground that the land was, at all material times, used for the maintenance of cattle for the purpose of selling them or their natural increase or bodily produce, a use that was clearly within para (b) of s 10AA(3) (see above).

The issue What the Chief Commissioner disputed was the characterisation of that primary production use as the “dominant use” of the land on the footing that it was outweighed by a competing use, compendiously described as “land banking” or “land development” use. It was the Chief Commissioner’s contention that that form of “use” was manifested by steps taken by Metricon pursuant to a plan of a development and realisation by subdivision and subsequent sale in the course of its business as a property developer.

A secondary contention of the Chief Commissioner in relation to certain parcels of the land was that the primary production use was outweighed by residential use.

At first instance, White J upheld the company’s objections3 and the Court of Appeal (Macfarlan JA, Ward JA and Barrett AJA) unanimously affirmed that decision.


TAX TIPS

TAX TIPS

Decision of Court of Appeal The judgment of the Court of Appeal is contained in the reasons of Barrett AJA. Each of Macfarlan JA and Ward JA simply expressed agreement with those reasons.

The core meaning of “use” After referring to various decisions on the general issue of the so-called “intangible use of land”4 and to earlier decisions of the NSW Court of Appeal given in relation to s 10AA,5 Barrett AJA said that the decided cases are replete with statements that “use” is a word of variable meaning and that the construction of one statutory provision concerning “use” of land may well be an unreliable guide to the correct construction of another such provision. For that reason, approaches taken in cases about different statutory contexts in which the word “use” is employed with respect to land must be treated with caution.

It must, his Honour said, nevertheless be accepted that “use”, in relation to land, has a core meaning independent of statutory context. In this regard, Barrett AJA referred to the decision of the High Court in New South Wales Aboriginal Land Council v Minister Administering the Crown Lands Act6 and in particular to the following passage from the judgment of French CJ, Kiefel, Bell and Keane JJ:

“True it is that the words ‘used’ and ‘occupied’ might be said to take much of their meaning from context. But that is not to say that they are devoid of a commonly understood meaning in ordinary parlance. They require an examination of activities undertaken upon the land in question and, in the case of ‘occupied’, factors such as continuous physical possession must be taken into account.”

Barrett AJA went on to say that examination of “activities undertaken upon the land in question” is thus central to identification of “use”, according to the commonly understood meaning of the expression; and, as Allsop P pointed out in Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue (NSW),7 the inquiry is not limited to activities producing beneficial or commercial return. Furthermore, past activity may be indicative of present use, even if the activity is for the time being not continuing. This is because the absence of activity on the land at a given time may be part of a scheme of calculated and continuing utilisation that stems from past activity and remains in course of implementation without discernible activity at the time in question.

The particular statutory text In relation to the particular statutory text of s 10AA, Barrett AJA made the following points:

� s 10AA is concerned with “use” at large rather than “use” by any particular person. A substantial majority of the 23 categories of exempt land referred to in s 10(1) of the Land Tax Management Act 1956 refer to land “owned” by a named entity or an entity of a specified kind. In some of those cases, a particular kind of use or occupation is an additional condition of exemption. Only a few of the exemption categories in s 10(1) refer to land “used” for a particular purpose without regard or reference to its ownership. There is, in those few cases as well as in s 10AA, a manifested legislative intention that land is to be exempt from land tax (to the advantage of its owner) regardless of the identity and attributes of the owner and by reference solely to the “use” to which the land is put by the person — whether or not the owner — who has the ability to “use” it;

� the expression “dominant use” has regard to quantification of uses within paras (a) to (f) of s 10(3) as against uses that are not within those paragraphs. Where the evidence discloses that the land is used both “for” an activity within paras (a) to (f) and “for” an activity not within those paragraphs, it is necessary to weigh the respective uses against one another in order to ascertain which is the “dominant use”. The words “the dominant use of which is for” make it clear that the extent (measured in some appropriately rational way) of activities or purposes within paras (a) to (f) “for” which the land is used is to be compared with the extent to which the land is used “for” other activities or purposes; and

� it is significant that each of the six activities listed in paras (a) to (f) of s 10(3) involves deliberate physical acts in relation to the land. Nevertheless, the authorities support the abstract notion that land may be “used” without immediate physical activity.

Barrett AJA then posed a hypothetical scenario which involved the owner of the fee simple leasing a parcel of land to another who devotes it entirely and exclusively to agriculture by raising crops. Three possible characterisations would be available:

(1) first, it may be said that there are two uses of the land, with the lessee using it “for” agriculture and the lessor using it “for” leasing;

(2) the second possible view is that there is one use only, with the lessee using the land “for” agriculture and the lessor also using it “for” the agricultural purpose that the lessee’s activities entail; and

(3) the third possibility is again that there is one use only, with the lessee using the land “for” agriculture and the lessor not using it at all.

After considering the implications of the possible characterisations, Barrett AJA concluded that what is relevant to the interpretation of the notions of “use” and “dominant use” in s 10AA(3) is the physical concept of land as “the concrete physical mass, commencing at the surface of the earth and extending downwards to the centre of the earth, which is called ‘land’”.8 On that basis, the hypothetical case would be resolved by holding that there is, for s 10AA purposes, only one use, being the agricultural use by way of physical deployment undertaken by the tenant; and that it is not necessary to address any question of comparison with any use by the lessor (or any question of relative quantification).

Inactivity as “use”Barrett AJA went on to say that this was not to say that “use” in the s 10AA sense does not sometimes include inactivity. As explained in Rainn Pty Ltd v Commissioner of State Revenue,9 land which is, for the time being, left fallow as part of a crop rotation cycle is “used” for agriculture despite the current absence of activity on it. The deliberate maintenance of a state of inactivity is, of itself, the implementation of a purpose “for” which the land is used, that is, the purpose of agriculture including by allowing time for soil regeneration.

In the Royal Newcastle Hospital case,10 what was, on one view, inactivity on the hospital’s virgin bushland was, in the relevant sense, positive deployment of that land for the specific purpose of keeping it in a virgin state conducive to more advantageous operation of the hospital’s sanatorium. As noted in The Council of the Town of Gladstone v The Gladstone Harbour Board,11 the crucial factor in the Royal Newcastle Hospital case was that the owner “intentionally derived actual and present advantages by keeping the land in its virgin state”.


TAX TIPS

Further, Barrett AJA said that purpose was a concept necessarily at work in s 10AA(3). Each of the six activities in paras (a) to (f) had a purpose or objective of commercial gain. There was a distinction, however, between the purpose for which land is acquired, on the one hand, and the purpose for which it is currently being devoted to use, on the other. This point was particularly important when considering any competing use under s 10AA(3). The purpose of acquisition may or may not correspond with the purpose of current use. Land acquired specifically for the sowing of crops may be put to either that use or some other use, such as cattle grazing or residential subdivision development. The inquiry directed by s 10AA(3) is as to current tangible and physical deployment and its purpose, not the purpose of acquisition.

Barrett AJA then said:

“Little is likely to turn on subjective purpose or intention. The question is not what an owner, lessee or other person able to do so decides is to happen in relation to the land. The task is, rather, to determine whether, as an objective matter, the things that that person causes to happen — no doubt in pursuance of the person’s purpose or intention — constitute ‘use’ and, if so, whether (and to what extent) that ‘use’ is a use described in paras (a) to (f) of s 10AA(3) LTMA56.”

“Future use” and “land banking”In relation to the arguments of the Chief Commissioner based on the concepts of “future use” and “land banking”, Barrett AJA said that courts have been called on to determine the point at which land acquired with a view to its being made the subject of future commercial development is to be characterised as devoted to a current use. His Honour said that the issue was perhaps better framed by asking at which point in the development phase it can be said that the land is being used for the end purpose of subdivision and sale. The inquiry brings to the fore the critical distinction between a current use and an intended future use. In this regard, Barrett AJA said:

“If ‘land banking’ is understood as merely accumulating and holding a stock of land with a view to its future development, such ‘land banking’ cannot be regarded as being, of itself, use of the land. Inactivity in the form of mere holding, although accompanied by a present intention to subdivide and sell at some future point, is not the source of present benefit or advantage and therefore does not constitute a use for the purposes of s10AA(3). What is required is some physical activity that causes the land to be raised out of a state of non-use into one of actual

deployment in pursuance of the purpose of deriving advantage through subdivision and sale.”

Despite the substantial expenditure of money (some $2.2m was expended in consultancy fees in the relevant land tax years) and other resources by Metricon on planning residential development of the land, it did not follow that, by incurring that expenditure and acquiring the services of planners and other consultants retained to formulate and progress a scheme of residential subdivision, the company in any way made “use” of the land. There was no deployment of the land in pursuance of a purpose of obtaining present benefit and advantage from it. The land was not subjected to either activity or lack of activity deliberately adopted as a means of obtaining such actual and present advantage.

A purpose of obtaining benefit and advantage from the land by subdivision and sale obviously existed and caused Metricon to employ the consultants and to incur the expenditure in the relevant land tax years, but the actuating benefit and advantage were, at that point, projected or anticipated only; and pursuit of them at that point did not require or involve any deployment of the land as such.

Residential use issueThe Chief Commissioner also contended that the use of the land for cattle grazing was overshadowed by, or secondary to, residential use so that residential use was, in terms of s 10AA(3), the “dominant use”. This contention related to three of the properties.

The percentages of these properties occupied by tenanted houses and their curtilages were 6.2%, 2.4% and 8.3%, and the monthly rents generated were, at the relevant times, approximately $2,300, $880 and $2,500. White J (at first instance) found that the levels of income and expense in connection with the rental use exceeded the income and expenses allocated to the different areas of land, on a pro rata basis, in respect of the primary production use.

White J held that the respective rates of return were relevant to, but not determinative of, the assessment of which use was dominant. On balance, his Honour held that the primary production use was greater in scale and intensity and was the dominant use.

The Court of Appeal held that the conclusion of White J was a conclusion rationally and reasonably reached which was open on the evidence. Appellate intervention was, therefore, not warranted.

ObservationsThe decision in the Metricon case provides a useful starting point when considering a question relating to what the use of land is for. As emphasised by Barrett AJA, the legislative context will always be a crucial factor, but the approach adopted by his Honour provides guidance on how the issue of context should be approached.

Also, at a very general level, the reasoning of Barrett AJA is a good illustration of how a question of statutory construction should be solved.

PostscriptThe decision of the NSW Court of Appeal in the Metricon case has been considered in the context of the Land Tax Act 2005 (Vic) by the Victorian Court of Appeal in CDPV Pty Ltd v Commissioner of State Revenue (Vic).12 One point made by McLeish JA, who gave the judgment of the court, was that the decision in the Metricon case did not stand for the proposition that subjective intention is irrelevant to the determination of “purpose” in the definition of “primary production” in the Victorian Act. It did, however, afford guidance as to the person whose “use” of the land will be determinative in the case where the alleged primary production use is that of a tenant rather than an owner. It was only the agricultural use of the tenant that fell for consideration, and it was not necessary to weigh that use against any use of the owner (such as investment or leasing) in order to identify which of the two was the “dominant” use.

Tax Counsel Pty Ltd

References

1 [2017] NSWCA 11.

2 Metricon Qld Pty Ltd v Chief Commissioner of State Revenue (No. 2) (NSW) [2016] NSWSC 332.

3 [2016] NSWSC 332.

4 Council of the City of Newcastle v Royal Newcastle Hospital [1957] HCA 15 (Royal Newcastle Hospital case); Ryde Municipal Council v Macquarie University [1978] HCA 58 (Macquarie University case) and Minister Administering the Crown Lands Act v NSW Aboriginal Land Council [2008] HCA 48 (referred to, for convenience, as the Wagga Wagga land claim case).

5 Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue (NSW) [2011] NSWCA 366; Ferella v Chief Commissioner of State Revenue (NSW) [2014] NSWCA 378.

6 [2016] HCA 50.

7 [2011] NSWCA 366.

8 Commonwealth v New South Wales [1923] HCA 34 per Isaacs J.

9 [2016] VSCA 338.

10 Council of the City of Newcastle v Royal Newcastle Hospital [1957] HCA 15, affirmed by the Privy Council in Council of the City of Newcastle v Royal Newcastle Hospital [1959] UKPC 5.

11 [1964] Qd R 505.

12 [2017] VSCA 89.


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The small business CGT concessions in Div 152 of the Income Tax Assessment Act 1997 (Cth) (ITAA97) are among the most powerful and generous in the tax legislation, and can allow your client to exit the business that they have spent many years building up and pay little or no tax on the way out. This means that helping the client through this process, and getting it right, is one of the most important things you will ever do for them. On the flipside, getting this wrong carries enormous risks for both your client and you as their trusted adviser.

The special rules dealing with selling business premises can be either a trap or an opportunity.

The opportunity is that the business premises can, in the right circumstances, be treated as an “active asset” of the individual or trust under s 152-40 ITAA97, and therefore the CGT concessions can be applied to the capital gain on its sale.

The trap is that these rules can also cause two or more entities to be grouped when applying the $6m net asset value (NAV) test or the $2m aggregated turnover test.

For the remainder of this article, we will assume that the business premises are owned by a trust, and that the business is carried on by a company.

Issue 1. Property must be used by an “affiliate” or “connected entity”The first trap is ensuring that the property is used by a related entity (the company) to carry on a business, and that the company qualifies as an “affiliate” or “connected entity” of the trust.

For a company to be an affiliate of a trust under s 328-130 ITAA97, the company must “act in accordance with the directions or wishes” of the trust, or “in concert with” the

trust, in relation to the business affairs of the company. It is clear that the definition of affiliate is quite subjective and it is also worth noting that, unlike the connected entity test discussed below, affiliate is a one-way concept. For both these reasons, it can be a difficult and relatively risky test.

Turning to the alternative, and much more commonly used test, the company will be a connected entity of the trust under s 328-125 ITAA97 if either entity “controls” the other, or they are both controlled by another entity.

A useful situation for applying the CGT concessions is where the trust has the right to receive at least 40% of any dividends, capital distributions or voting power in the company, in which case it will be treated as controlling the company, unless another entity clearly has control (eg the trust holds 45% of the shares, but another unrelated party holds the remaining 55%).

Conversely, the company might be treated as controlling the trust if the trustee acts, or could reasonably be expected to act, in accordance with the wishes of the company and/or the company’s affiliates (which is no less subjective than the affiliate test discussed below), or if, for any of the four years prior to the capital gain, the company and/or its affiliates were entitled to income or capital distributions from the trust of at least 40%.

The control test also looks at indirect control, not by tracing through indirect ownership percentages, but on the basis that, if one entity controls another entity, the first entity is also treated as controlling any entities that the first entity controls.

In example 1, relying on the mechanical provisions that apply percentages of share ownership and income distributions is much easier, and carries considerably

less risk, than having to rely on the subjective affiliate definition, or the subjective test for control discussed above, or even worse, having to rely on both these tests together to establish the required connection.

Example 1. The Dark Tower Restaurant

Tower Holdings Pty Ltd owns 60% of the shares in Roland Pty Ltd, and Roland Pty Ltd receives 50% of the income distributions from the Jake Trust.

Under this test, Roland Pty Ltd would control the Jake Trust, and Tower Holdings Pty Ltd would control Roland Pty Ltd, so Tower Holdings would also be treated as controlling the Jake Trust, ie Tower Holdings and the Jake Trust are connected entities.

Jake Trust(businesspremises)

TowerHoldings(The Dark

TowerRestaurant)

60%share

RolandPty Ltd

Rent 50%income

distribution

Now assume that Tower Holdings is carrying on a business, The Dark Tower Restaurant, leasing the business premises from the Jake Trust.

This means that, when the Jake Trust sells the building, it may be possible for the trust to apply the small business CGT concessions to the capital gain from the sale, as long as the other relevant concessions have been met.

Special rules allow the small business CGT concessions to be used for a sale of business premises, typically by a related individual or a family trust.

by Peter Bembrick, CTA, HLB Mann Judd Sydney

CGT concessions when selling business premises


MID MARKET FOCUS

MID MARKET FOCUS

There is another useful rule in s 152-47 ITAA97 that in the right circumstances makes all the difference in cases where assets of one entity are used in the business of another entity, but the affiliate and connected entity tests would not otherwise be satisfied. The special rule deems an individual’s spouse or children under 18 to be their affiliates, which can be enough to create the required connections for the CGT concessions to be applied.

Example 2. Applying the special rule in s 152-47 to create deemed affiliates

As a variation on our example, assume that Roland Pty Ltd does not receive any distributions from the Jake Trust, but instead the trust for the year in which the building is sold distributes one-third of its income each to Eddie Dean, his wife Susannah, and their 20-year-old son Jake. At the same time, Eddie Dean owns 60% of the shares in Tower Holdings.

Eddie

TowerHoldings(The Dark

TowerRestaurant)

60%share

Rent

Susannah Jake

Jake Trust(businesspremises)

distribution1/3

distribution1/3

distribution1/3

In the absence of s 152-47, it would not be possible to show that Tower Holdings and the Jake Trust are connected entities. Under this rule, however, they will be connected entities because Tower Holdings is controlled by Roland, while the Jake Trust is controlled by Eddie together with his deemed affiliate Susannah, ie the two entities are treated as being under common control.

This means that the Jake Trust still has the ability to apply the CGT concessions to the sale of the building, potentially allowing Eddie and his family to side-step a huge tax bill.

Issue 2. The trust owning the property must correctly apply the $6m NAV test or the $2m aggregated turnover test to show whether the CGT concessions are availableIn examples 1 and 2, different rules were applied to show that Tower Holdings and

the Jake Trust are connected entities, allowing the Jake Trust to apply the small business CGT concessions when calculating the taxable capital gain (if any) to the sale of the business premises.

This implies, however, that all of the other basic conditions for applying the CGT concessions have been satisfied, including that either the total NAV is less than $6m, or the aggregated annual turnover is less than $2m. It is not uncommon for the grouping rules discussed above to apply in a way that causes these thresholds to be breached, so that access to the CGT concessions is lost.

Example 3. Total NAV for the group is pushed over $6m

Continuing example 2, suppose that the building (being the only asset of the Jake Trust) has a current market value of $4m, and that for simplicity, this is also the trust’s total net asset value.

Because none of the three individuals on their own have a controlling interest in the trust, no grouping would ordinarily apply under the NAV test, the trust would not exceed the maximum NAV limit of $6m, and it would be able to apply the CGT concessions to the sale of the building.

Further assume, however, that the business of Tower Holdings has a net market value of $3m. Even ignoring the value of any investment assets held by either Jake or Susannah, the effect of applying s 152-47 is that Tower Holdings is grouped with the Jake Trust for purposes of the $6m NAV test, and the total NAV for the group of $7m exceeds the maximum allowable threshold.

Similarly, while the trust’s annual turnover of $350,000 is well below the permitted threshold of $2m under the aggregated turnover test, the annual turnover of Tower Holdings is nearly $3.5m, so the grouping required by s 152-47 also causes this test to be failed.

The outcome, therefore, is that while the special rule in s 152-47 is essential for the building to pass the active asset test in s 152-40, the same rule also prevents the trust from satisfying all of the other basic conditions required by s 152-10 ITAA97, and the trust is unfortunately unable to rely on the small business CGT concessions in relation to the building sale.

ConclusionIt is very common for ownership of business premises to be kept separate from the related business operations, not the least of which is to protect one of the family’s most valuable assets from the many risks of carrying on a business.

A discretionary trust is often used for this purpose due to the high level of protection offered, the flexibility of distributions, the ease with which trust income and capital can be accessed as and when needed, and the ready access to the 50% CGT discount.

To this list may be added the ease with which the small business CGT concessions can be accessed to reduce or eliminate the CGT bill when selling the business premises by carefully planning the distributions made by the trust in the year of the sale, especially when making use of the special rule in s 152-47 to deem an individual’s spouse to be their affiliate.

It is also critical, however, to remember that s 152-47 is a double-edged sword, and if it looks like the additional grouping might cause a failure of both the $6m NAV test and the $2m annual turnover test, then even more careful planning may be needed. The client will need your advice on the best approach to take well and truly before they have found a buyer for the property.

Peter Bembrick, CTAPartner HLB Mann Judd Sydney


CTA2A Advanced Dux Award for study period 2, 2016

Name: Ann Tran

Position: Senior Manager

Company: PwC Australia

State: NSW

Could you tell us about your employment history?I am part of the Global Mobility team at PwC Australia. Over the last eight years, I have worked with businesses and globally mobile individuals to assist with their tax and human resource-related issues. Originally from Brisbane, I’ve moved to Sydney to experience new and exciting opportunities from both a personal and work perspective.

What is the most valuable aspect of CTA2A Advanced that you have taken away?The most valuable aspect of this subject was the broad range of topics covered without sacrificing the deep technical aspects.

Are there any areas in which you have gained new confidence?I often advise on the individual and corporate impacts of moving individuals globally. This subject has provided me with increased confidence to advise on entity structures that may affect these individuals

and how best to utilise these in order to satisfy the needs of my clients.

What was the main reason for undertaking CTA2A Advanced with The Tax Institute?Our firm places a significant importance on ensuring that we are always learning and to remain technical experts in our field. With our new “My Learning” initiative at work, coupled with my passion for learning and growing professionally, this subject appealed to me as I knew it could help me remain relevant in my role.

What is your next step in the study of tax?I thoroughly enjoyed this subject, being my first one with The Tax Institute, I am hoping to complete other modules made available by the Institute in the near future.

CTA2A Advanced Dux Award for study period 3, 2016

Name: Mariana Knight

Position: Senior

Company: HLB Mann Judd

State: NSW

Can you tell us about your background?I am a chartered accountant with experience both in chartered and

commerce, ranging from working with small to medium-sized businesses, working in corporate tax to working for a high net worth private group before taking a break to start a family.

What would you say is the most valuable aspect of CTA2A Advanced that you have taken away?CTA2A enables me to take a deeper dive into the core areas of tax and subsequently apply this knowledge in client scenarios.

Do you feel you have gained new confidence in some areas?My professional confidence has certainly been boosted by the fact that I have gained a deeper understanding of the subjects covered in CTA2A, and in turn, it has increased my capacity to assist clients with their needs in regards to tax compliance and/or advice.

What was the main reason for undertaking the course?Having taken a break from the chartered profession to start a family, CTA2A has been a great course to refresh my knowledge in the ever-evolving tax environment.

What is your next step with continuing tax education?My short-term goal is to complete the Chartered Tax Adviser program, while my long-term goal is to continually commit to “sharpen the saw” (Stephen Covey’s 7thhabit), whatever that may translate to when the time comes.

We have asked our 2016 CTA2A Advanced Dux award winners to share their learning experience with us.

by Revital Folan

Learning the core areas of tax


TAX EDUCATION

Vale Tom MagneyThe Tax Institute mourns the loss of one of its life members, Thomas Weymouth Magney, who passed away in Sydney on 10 April 2017, at the age of 86.

Tom Magney was widely regarded as one of Sydney’s, indeed Australia’s, leading tax lawyers of the late twentieth century. He graduated in law from Sydney University and was admitted as a solicitor in 1954. He worked in family firms, Magney & Magney and later TW Magney & Co, prior to joining Allen Allen & Hemsley, as a partner, in 1975 (a time at which lateral partner admission was not very common among the older and larger legal firms).

Tom had pursued an interest in company and international taxation; in 1974, he was admitted by the University of Sydney to the degree of Master of Laws with first class honours and was awarded the Sydney University Graduates’ Association Medal. In that degree course, he studied under Professor Ross W Parsons, who wrote the seminal and encyclopaedic text, Taxation in Australia. Tom later assisted Ross in teaching that Masters course and Ross later assisted Tom as a consultant at Allens.

After joining what was then known as The Taxation Institute of Australia in 1970, Tom became very active in its educational program. He was well known to members as a frequent speaker at Institute conferences and conventions from as early as 1972, and contributed numerous articles to its journals over a period of some 25 years, from the early 1970s to the late 1990s.

Those articles often dealt with new legislative regimes and emerging issues, providing keen insights into the directions in which the taxation law was developing, as well as whence it had come. They gained him a well-deserved reputation as a leading authority in the field. He also served as Vice Chairman of the New South Wales State Council of the Institute and was a longstanding member of one of Sydney’s foremost tax discussion groups, the Gunn Club. He was made a life member of The Tax Institute in 1989.

Tom was a partner at Allen Allen & Hemsley until 1993, during which time he was in great demand as an adviser to, among others of that firm’s large corporate clients, the Bank of New South Wales, as Westpac Banking Corporation was known prior to 1982.

In 1993, he retired from the partnership to pursue his longstanding interest in teaching, joining the faculty of UNSW Law School, but he continued as a consultant to Allens, and also served as one of the first external members of the Commissioner of Taxation’s Public Rulings Panel, until he retired from tax altogether in 2000. That coincided with the commencement of the GST in Australia and Tom was heard to attribute his choice of retirement date to a reluctance to have to learn yet another taxing regime.

Those who worked most closely with Tom during his time at Allens regard themselves as very fortunate to have had that opportunity; he was widely known as

a kind and generous mentor who, despite his high professional achievements, had no pretensions, always made time to assist others in their endeavours, and always enjoyed a good laugh with his colleagues, no matter how junior to him they were in the firm. He was a genuinely nice person; a gentle man, as well as a gentleman.

Tom was deeply devoted to his wife, Di, their four children and their 10 grandchildren (and their various labrador retrievers over the years). Tom and Di were early patrons of the now well-known Australian architect, Glenn Murcutt. Their beach house, which he designed for them in the early 1980s, at Binge Point, near Moruya, is pictured in numerous books and magazines on Australian architecture and style. They later commissioned him to design the renovation of their Paddington terrace house in a style sympathetic to their beach house.

Tom’s personal life was celebrated and remembered with great fondness and the good humour for which he was himself well known, at a memorial service held at St Joseph’s at Edgecliff on 18 April 2017, with a number of prominent and longstanding members of The Tax Institute in attendance.

On behalf of its members, the Institute extends condolences to the family and friends of Tom Magney.

Larry Magid, CTAConsultant Allens


Member’s nameMichael Barbour, CTA

CompanyWestpac Banking Corporation

StateNew South Wales

Member since1987

What initially led you to a career in tax?My first job, from high school, was with the Australian Taxation Office. I was there for around 11 years, and it was a brilliant grounding for my subsequent career. I worked in the areas of debt recovery, assessing and appeals, as well as some policy and legislation work in Canberra.

I completed my tertiary education while working with the ATO.

From the ATO, I went to Touche Ross and Capita Finance, and joined Westpac in 1998. I’ve headed the group taxation function at Westpac since 2001.

How has Westpac changed over your time there?When I first began at Westpac, a new CEO, Bob Joss, was reinvigorating the bank by changing the culture and helping the organisation to focus more on customer service. Westpac had also acquired a number of smaller banks.

David Morgan then became CEO and continued that strategy while divesting AGC, the consumer finance business, and boosting the wealth management arm with the acquisition of BT.

Later, in 2008, we merged with St.George Bank. So it has been a busy period over the past two decades.

How has the field of corporate tax changed?Corporate tax has changed in terms of the breadth of the legislation that applies to companies like Westpac. Legislative changes are almost constant.

It has also changed in terms of how central tax offices, both here and in other countries, have managed their relationships. It’s fair to say that, in the 1990s and early 2000s, the relationship between corporations and the ATO was a bit frosty. This was the era of large case audits, which created some anxiety between the ATO and major companies.

We then entered a period in which our relationship with the ATO became more stable and more transparent. So the relationship is good at the moment.

What do you enjoy most about your work?I enjoy the complexity, and the fact that we can achieve tangible outcomes and get things done. In my role, while tax decisions are based on risk profiles agreed with senior management and the board, I’m effectively the ultimate decision-maker in terms of Westpac’s tax position.

Also, the interactions we have, not only with the ATO, but with the government, Treasury and the OECD, give the work a rich, broad context.

What are the biggest challenges in your work?The biggest challenges have involved the acquisitions and divestments that Westpac has made over the years. They have thrown up many different tax issues.

OECD changes around base erosion and profit shifting have been challenging, as have the government’s changes in terms of the taxation treatment of multinational corporations.

The transparency requirements of governments have also been significant. Banks are both a source of information in relation to their own tax position and a source of information in relation to clients’ tax affairs. So coping with continuing requests and obligations to provide this information can be a challenge.

What have been your biggest career achievements?My biggest achievement is building an effective tax team at Westpac. The team has been stable for a few years, and each member is an accomplished tax practitioner.

Another achievement is building productive relationships with the ATO, Treasury and other government entities.

What did it mean to you to win the Corporate Tax Adviser of the Year award?I see it as a very pleasing recognition of the Westpac tax group’s achievements over the years. It’s really an acknowledgment of the group’s collective effort.

Do you have any advice for entry-level tax practitioners?My main advice is to understand the commercial nature of the transactional issues that a tax practitioner addresses. Once you understand what’s really happening and how things work, in a business sense, it’s much easier to apply the tax rules and to communicate effectively with relevant stakeholders.

Outside of tax, what do you enjoy doing?I enjoy reading and swimming, but my main pastime is my family. I have a wife and four children, and enjoy spending time with them. The children are all reasonably young, so they keep me busy.

Michael Barbour is General Manager Group Taxation at Westpac and The Tax Institute’s 2017 Corporate Tax Adviser of the Year.

Westpac Banking Corporation

Michael Barbour

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MEMBER PROFILE

0171

ME

M_0

6/17

Our membership

Source: 2016 Annual member survey

Renew online today at taxinstitute.com.au/renew2017/18 Membership commences 1 July

Social media engagement

Members by gradeWhere our members work

0.5% Life11% Fellow

58% CTA

17.5% Affiliate

13% Associate

What members valued most *

* of members who used the service

94%

88%

85%

84%

79%

Volunteering opportunities

Taxation in Australia content

TaxVine content

TaxLine research service

Discussion groups

69%

of members engage with our Facebook

19%

of members engage with our Twitter

63%

of members engage with our LinkedIn

40% Suburbs

45% CBD

14% Rural or remote

1%

Overseas

COVER

On 21 April 2017, the Full Court of the Federal Court (Allsop CJ, Pagone and Perram JJ) dismissed the taxpayer’s appeal in Chevron Australia Holdings Pty Ltd v FCT1 (Chevron) concerning amended assessments arising from determinations made pursuant to the transfer pricing provisions in the Income Tax Assessment Act 1936 (Cth) (ITAA36) and the Income Tax Assessment Act 1997 (Cth) (ITAA97).2

Pagone J delivered reasons for judgment3 with which Perram J agreed.4 Allsop CJ delivered his own reasons, which were expressed not to be intended to be by way of qualification of Pagone J’s reasons.5

The substance of the appeal to the Full Court in Chevron principally concerned whether the trial judge erred when determining:

� that interest paid by an Australian parent company to its offshore subsidiary was greater than it would have been under an arm’s length dealing between independent parties;6 and

� that an Australian parent company had obtained a “transfer pricing benefit”.

Background On 6 June 2003, Chevron Australia Holdings Pty Ltd (CAHPL), the taxpayer, and Chevron Texaco Funding Corporation (CFC), a United States (US) subsidiary of CAHPL, entered into an agreement, styled “credit facility agreement” (agreement). Pursuant to this agreement, CAHPL borrowed the Australian dollar equivalent of approximately US$2.5b from CFC.7

Interest was paid by CAHPL to CFC.8 No security was provided by CAHPL.9 Similarly, there was no guarantee provided by “Chevron”.10

CAHPL was established as the Australian holding company of the Chevron Group of Companies following the merger between CVX and Texaco Inc.7 CFC was established in the group as a US subsidiary of CAHPL for CFC to lend funds to its Australian parent at about 9% interest from money raised by CFC from the issue of commercial paper in the US at a rate of about 1.2%.7

The funds lent pursuant to the agreement were to be used by CAHPL for an internal refinancing of an Australian currency debt of Chevron Australia Pty Ltd and to fund CAHPL’s acquisition of Texaco Australia Pty Ltd.7

Internal funding arrangements Pagone J summarised the consequence of the internal funding arrangements which arose because of the agreement, as follows:

� in the income tax years from 2004 to 2008, CAHPL claimed tax deductions in Australia for the interest it paid to CFC, and returned as income the dividends it received from CFC as non-assessable non-exempt income, pursuant to s 23AJ ITAA36; and

� this resulted in CAHPL increasing its untaxed dividends from CFC as CAHPL’s interest payments to CFC increased, while CFC would make

significant profits from borrowing at a rate of 1.2% and on-lending at a rate of 9%, which would not be taxed in either the US or Australia.11

When considering the internal funding arrangements, Pagone J stated:11

“The economic effects of the internal financing structure put in place, in other words, included CAHPL’s Australian taxable income being reduced by the deductions it claimed for the interest payments it made to its [US] subsidiary and the receipt by CAHPL of non-taxable income from dividends CFC was able to declare to CAHPL from the interest CFC had derived from CAHPL.”

Ultimately, the Commissioner issued amended assessments to preserve the domestic revenue base being eroded by a cross-border internal financing structure between related parties.

Amended assessments and determinations

Division 13 ITAA36On 20 May 2010, the Commissioner issued amended assessments to CAHPL for income tax years 2004 to 2008. These amended assessments were made on determinations dated 30 April 2010 under Div 13.

Specifically, the determination was focused on the taxpayer’s satisfaction of s 136AD(3) ITAA36. At the time of the determinations, s 136AD(3) provided:

“(3) Where:

(a) a taxpayer has acquired property under an international agreement;

Abstract: This article summarises the much-anticipated judgment of Chevron Australia Holdings Pty Ltd v FCT. In a landmark win for the ATO, the Full Federal Court unanimously dismissed Chevron’s appeal, making it one of Australia’s largest tax cases, with global implications for large companies and multinationals. With a tax bill totalling $340m, a special leave application has been filed by Chevron. This case provides the foundation for multinational entities to examine their own internal financing arrangements. However, with the changes to Australia’s transfer pricing rules in 2013, significant changes have been enacted to the way in which the transfer pricing regime is invoked and the operation of the arm’s length principle. The utility of Chevron must be considered in light of these legislative changes.

by Elizabeth Bishop, ATI, Barrister, and Scott Richardson, Barrister, Ground Floor Wentworth Chambers

Hypothesising the future after Chevron


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(b) the Commissioner, having regard to any connection between any 2 or more of the parties to the agreement or to any other relevant circumstances, is satisfied that the parties to the agreement, or any 2 or more of those parties, were not dealing at arm’s length with each other in relation to the acquisition;

(c) the taxpayer gave or agreed to give consideration in respect of the acquisition and the amount of that consideration exceeded the arm’s length consideration in respect of the acquisition; and

(d) the Commissioner determines that this subsection should apply in relation to the taxpayer in relation to the acquisition;

then, for all purposes of the application of this Act in relation to the taxpayer, consideration equal to the arm’s length consideration in respect of the acquisition shall be deemed to be the consideration given or agreed to be given by the taxpayer in respect of the acquisition.”

Section 136AA ITAA36 set out definitions applicable to s 136AD. Subsection (3) of s 136AA ITAA36 provided:

“(3) In this Division, unless the contrary intention appears:

(a) a reference to the supply or acquisition of property includes a reference to agreeing to supply or acquire property;

(b) a reference to consideration includes a reference to property supplied or acquired as consideration and a reference to the amount of any such consideration is a reference to the value of the property;

(c) a reference to the arm’s length consideration in respect of the supply of property is a reference to the consideration that might reasonably be expected to have been received or receivable as consideration in respect of the supply if the property had been supplied under an agreement between independent parties dealing at arm’s length with each other in relation to the supply;

(d) a reference to the arm’s length consideration in respect of the acquisition of property is a reference to the consideration that might reasonably be expected to have been given or agreed to be given in respect of the acquisition if the property had been acquired under an agreement between

independent parties dealing at arm’s length with each other in relation to the acquisition; and

(e) a reference to the supply or acquisition of property under an agreement includes a reference to the supply or acquisition of property in connection with an agreement.”

The determinations considered each paragraph of s 136AD(3) and, ultimately, concluded that “consideration equal to the arm’s length consideration in respect of the acquisition shall be deemed to be the consideration given or agreed to be given by [CAHPL] in respect of the acquisition”.12

Division 815 ITAA97On 26 October 2012, the Commissioner issued amended assessments to CAHPL for income tax years 2006 to 2008. These amended assessments were based on determinations dated 24 October 2012 under Subdiv 815-A ITAA97.

Section 815-10 ITAA97 permitted the Commissioner for tax income years 2006 to 2008 to make a determination pursuant to s 815-30(1) ITAA97 for the purpose of negating a “transfer pricing benefit” within the meaning of s 815-15 ITAA97. At the time of the determinations, s 815-15 provided:

“815-15 When an entity gets a transfer pricing benefit

Transfer pricing benefit — associated enterprises

(1) An entity gets a transfer pricing benefit if:

(a) the entity is an Australian resident; and

(b) the requirements in the associated enterprises article for the application of that article to the entity are met; and

(c) an amount of profits which, but for the conditions mentioned in the article, might have been expected to accrue to the entity, has, by reason of those conditions, not so accrued; and

(d) had that amount of profits so accrued to the entity:

(i) the amount of the taxable income of the entity for an income year would be greater than its actual amount; or

(ii) the amount of a tax loss of the entity for an income year would be less than its actual amount; or

(iii) the amount of a net capital loss of the entity for an income year would be less than its actual amount.

The amount of the transfer pricing benefit is the difference between the amounts mentioned

in subparagraph (d)(i), (ii) or (iii) (as the case requires).”

The Commssioner’s determinations were made under s 815-30(1)(a) and s 815-30(2)(b).

The taxpayer’s issues on appeal to the Full Court On appeal, the Div 13 assessments were challenged in substance as being excessive but also on the basis that the person who made the determinations lacked authority to do so.13

The Div 815 assessments were challenged in substance as well as on the basis that the material provisions were beyond parliament’s constitutional power. Further, CAHPL contended that the determinations under Div 815 could not be made given the existence of the Div 13 determinations.13

Two preliminary matters related to Div 13 ITAA36During the hearing of the appeal, a “significant issue … unexpectedly arose”.14 CAHPL was granted leave to reply on the absence of s 177(1) ITAA36 or s 350-10 of Sch 1 to the Taxation Administration Act 1953 (Cth) (TAA) at the time of the hearing of the appeal in order to challenge the assessments made in reliance on the Div 13 determinations. As the court did not determine the appeal before s 350-10 came into effect, s 350-10 was part of the law applied to decide the rights of the parties on appeal.14

Second, in 2010, an officer of the ATO, acting in the name of an Acting Deputy Commissioner of Taxation, made the Div 13 determinations. The person who made the determinations (not the Acting Deputy Commissioner of Taxation) lacked authority to make the determinations. Pagone J had regard to ss 175 and 177 ITAA36 and s 350-10 and considered that these provisions removed the Commissioner’s procedural irregularity from challenge in Pt IVC TAA proceedings.15

Thereafter, his Honour moved to consider “the substantive question concerning the application of Div 13 for the five years in dispute”.16

Division 13 ITAA36 There were two issues considered by the Full Court in the context of Div 13. First, whether CAHPL acquired property under an international agreement. Second, the


COVER

identification of the consideration that might reasonably be expected to have been given or agreed to be given in respect of the acquisition of a loan of US$2.5b if that loan had been acquired under an agreement between independent parties dealing at arm’s length with each other in relation to the acquisition.17

Pagone J stated:18

“In general terms it may be said that Division 13 applies to substitute an arm’s length price for the consideration given in respect of property acquired by a taxpayer in a non-arm’s length dealing under an international agreement.”

Despite this, his Honour considered “the construction of Division 13 is not without difficulty despite what might appear to be its deceptive simplicity”.19 Pagone J also considered the policy assumption in Div 13 being that “the actual taxpayer in question would have given less consideration for what it obtained but for the lack of independence and the lack of arm’s length dealing”.20

Allsop CJ, meanwhile, stated that:21

“Given the great variety of commercial circumstances to which [s 136AA(3)(d) ITAA36] may apply, it would be wrong either to approach the interpretation of the provisions pedantically or to dictate a rigid or fixed approach to the task of determining the arm’s length commercial consideration.”

CAHPL acquired property under an international agreementPagone J accepted the trial judge’s findings that the property acquired by CAHPL under the agreement “was the rights or benefits granted or conferred under that Credit Facility, including the sums lent”,22 and that his Honour was correct to identify the property as he did.23 Allsop CJ considered that terms of ss 136AD and 136AA made clear that the property should not be altered in the hypothesis.24 Nonetheless, his Honour raised the prospect of having regard to the fact that “the property may be such as to be of special particularity to the taxpayer or to the group in which the taxpayer is situated” where issues about replication of the agreement arise.25 The trial judge’s finding that the loan was in Australian dollars was accepted.26

Consideration between independent parties dealing at arm’s length with each otherPagone J stated that:27

“The comparison required to be undertaken by s 136AD(3) is of the consideration for the

property actually acquired with the arm’s length consideration (as defined) of a hypothetical agreement.”

The reference to “as defined” by Pagone J in this passage is a reference to the definition stated in s 136AA(3)(d).

His Honour confirmed that the primary judge, Robertson J, was correct to explain that this required the hypothetical agreement for acquisition to be depersonalised, but not to alter the property acquired.27 While Allsop CJ considered that terms of ss 136AD and 136AA made clear that the property should not be altered in the hypothesis,28 his Honour does not appear to have considered that the primary judge was correct to state that Div 13 did not require or authorise the creation of an agreement with terms different from those of the actual agreement, other than the consideration. Rather, his Honour considered it permissible that the actual agreement and the agreement used in the hypothesis could have differences “to the extent that they can be seen as part of the consideration”.29

Additionally, Pagone J stated that the “hypothetical agreement” contemplated by s 136AA(3)(d) did not compel one of the parties necessarily to be the taxpayer.27 His Honour referred to FCT v SNF (Australia) Pty Ltd30 to support this proposition.

CAHPL submitted that the definition of “independent parties dealing at arm’s

length” in s 136AA(3)(d) required a comparison between the agreement between CAHPL and CFC with a “hypothetical agreement between other independent parties”.31

Pagone J determined that the focus of inquiry called for by s 136AD(3)(a) and (b) was “… an alternative agreement from the one actually entered into where the alternative agreement was made by the parties upon the assumptions that they were independent and dealing at arm’s length”.32 His Honour elaborated as follows to discount the submission made by CAHPL:32

“The provisions do not require the construction of an abstract hypothetical agreement between abstract independent parties. The hypothesis in the definition of arm’s length dealing is of an agreement which was not affected by the lack of independence and the lack of arm’s length dealing.”

As a matter of statutory construction, on assessing the particles used in s 136AA(3)(d), Pagone J stated, “… the hypothetical in the comparison may be different from the actual agreement with which it is to be compared”.32

Accordingly, the following were central to applying s 136AD(3): (1) a factual ascertainment of an arm’s length transaction; (2) to undertake this inquiry by reference to a “standard of reasonable expectation”; and (3) to do so on “a hypothesis of an agreement made between them as independent parties dealing at arm’s length”.33 Pagone J stated that the “standard of reasonable expectation” found in the language of s 136AA(3)(d) called for a “prediction based upon evidence”. His Honour cited, inter alia, FCT v Peabody34 and FCT v Futuris Corporation Ltd35 to determine that:36

“The need to posit a hypothetical acquisition under an agreement for the purpose of evaluating it by reference to the standard of reasonable expectation requires a consideration of the evidence to determine a reliably comparable agreement to that which was actually entered into.”

Pagone J recited Robertson J’s assessment that this test required the hypothetical to remain close to the actual loan, that the purchaser need not be a hypothetical standalone company and was to be an oil and gas exploration and production subsidiary.36 His Honour stated that the “actual characteristics of

It appears abundantly clear that courts are willing to make the requisite hypotheticals work in favour of satisfying the transfer pricing provisions …


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the taxpayer must, therefore, ordinarily serve as the basis in the comparable agreement”.36

In resolving the “independence” of the “purchaser” or party acquiring the loan in the hypothetical agreement, Pagone J stated:37

“The purchaser (or in this case the borrower) may therefore, as his Honour considered at [79], be a company like CAHPL which is a member of a group …

The prediction of what might reasonably be expected is not to be undertaken upon the hypothesis submitted on behalf of CAHPL that it was not a member of the Chevron group or, in the language sometimes used in this context, as if it were an orphan …”

Allsop CJ similarly considered that there was no reason derived from the language of s 136AA(3)(d) why:38

“… the hypothesis based on independence should, of necessity, do other than assess what the taxpayer or a person in the position of the taxpayer would be expected to give by way of consideration in respect of the acquisition of the property to a party independent from it. The independence hypothesis does not necessarily require the detachment of the taxpayer, as one of the independent parties, form the group which it inhabits or the elimination of all the commercial and financial attributes of the taxpayer being part of the circumstances that gave the commercial shape to the property the subject of the acquisition and that may be relevant to the consideration for the property …”

Further, Allsop CJ considered Robertson J unnecessarily “thought himself to be constrained by the Full Court in SNF”.39 His Honour stated:40

“I do not take from SNF any requirement for a rigid or fixed approach to the place of the circumstances of the taxpayer or the party posited in the position of the taxpayer, in particular, here, its position in the group of which the other party to the actual transaction was a member also …”

Ultimately, “no reason to depart” from Robertson J’s conclusion “that an independent borrower like CAHPL dealing at arm’s length would have given security and operational and financial covenants to acquire the loan obtained by CAHPL”41 was identified. Allsop CJ similarly considered that the consideration in the hypothesis would be the interest rate charged by the lender, taking into account the guarantee given by the parent “in the position of Chevron”.42

While Pagone J conceded the alternative submission made by CAHPL that the

hypothetical acquisition would need to assume that CAHPL had paid a fee to its parent for the provision of security on the hypothetical loan did “have some force”, ultimately, his Honour resolved there was insufficient evidence to decide whether a fee would have been part of the consideration given “in respect of a hypothetical loan”.43

Two preliminary matters related to Div 815 ITAA97Subdivision 815-A was enacted in 2012, but was made to apply retrospectively to income years starting on or after 1 July 2004.44 CAHPL sought to challenge the Subdiv 815-A determinations on the basis that the enactment was beyond the constitutional power of the Commonwealth because it imposed an arbitrary and incontestable tax.45 CAHPL contended that it was not aware, and could not have been aware, of the criteria that would become those for liability under Div 815 in the earlier years.45 However, Pagone J did not consider Subdiv 815-A to impose an arbitrary or incontestable tax and the fact that CAHPL could not have been aware of the criteria of liability in respect of those years in which liability was later imposed was a circumstance inherent in the nature of retrospective legislation,46 which parliament was permitted to enact.47

CAHPL submitted that assessments could not be made under Subdiv 815-A where there existed determinations under Div 13. CAHPL relied on the deeming effect of s 136AD(3) to the effect that it operated to deem the consideration for the loan to CAHPL to be consideration given by the taxpayer “for all purposes of the application of this Act in relation to the taxpayer”.48 As summarised by Pagone J, CAHPL submitted that “the deeming effect of s 136AD(3) excluded the possibility of any amount being included by subsequent inclusion of a transfer pricing benefit under Division 815”.48 Pagone J considered that the Commissioner was able to defend the liability imposed by the assessment on alternative bases which may be inconsistent.49

Division 815 ITAA97 Subdivision 815-A was considered as an alternative to Div 13.

The following issues were determined on appeal.

First, whether the “second requirement” of s 815-15(1) depended on satisfaction

of the requirements in the “associated enterprises article” for the application of that article to CAHPL.50 CAHPL submitted that the primary judge “erred in the identification of the conditions operating between CAHPL and CFC in their commercial or financial relations”, which were matters arising from art 9. Specifically, CAHPL submitted that Robertson J “erred by not excluding common ownership as a condition operating between CAHPL and CFC in their commercial and financial relations”.51 Pagone J determined that Robertson J was “permitted to take into consideration, as conditions, the relationship between CAHPL and CFC, and other members of the Chevron group, notwithstanding that they were also identified as preconditions in (a) and (b) in Article 9(1)”.52

Second, in respect of the “third requirement” of s 815-15(1), Pagone J rejected CAHPL’s contention that an “independent” company within art 9 was a company which stood alone with no corporate affiliations.53 Pagone J stated that his Honour was “correct to assume on the evidence that what might be expected to operate between independent enterprises dealing wholly independently with each other was a loan by CAHPL with security provided by its parent at a lower interest rate”.54

Third, Pagone J considered Robertson J was correct to reject CAHPL’s submission that “there had been no profits which had not accrued within the meaning of s 815-15(1)(c) or Article 9”.55 His Honour stated that:55

“There is no basis in the text of the provisions or in the policy they express to equate the profits referred to with the taxable income of the taxpayer.”

Preliminary observations This case provides the foundation for multinational entities to examine their own internal financing arrangements cognisant of the indicia of: payment of interest pursuant to a loan at a rate which exceeds the costs for the non-arm’s length lender to obtain the funds; where it is expected that consideration for a loan, at arm’s length, might include the giving of security, a guarantee or covenants in light of the borrower’s credit worthiness to satisfy a commercial lender; and, also, that membership of a group of companies serve as important factors in determining the hypothetical comparator.


COVER

Nonetheless, the critical limitation for Chevron’s future application is that Div 13 was repealed on 29 June 2013.56 Further, Subdiv 815-A no longer has effect because of the enactment of Subdivs 815-B and 185-C ITAA97.57 Changes to Australia’s transfer pricing rules in 2013, have altered the way in which the transfer pricing regime is invoked. Subdivisions 815-B and 815-C apply on a self-assessment basis.58 With the demise of Div 13, Subdivs 815-B and 815-C, like Subdiv 815-A, “apply the internationally accepted arm’s length principle which is to be determined consistently with the relevant OECD Guidance material”.59 The utility of Chevron must be considered in light of these legislative changes.

To the extent that an analysis of Subdiv 815-A may have assisted taxpayers in the interpretation of Subdivs 815-B and 815-C, the Full Court in Chevron has given very little guidance. However, it appears abundantly clear that courts are willing to make the requisite hypotheticals work in favour of satisfying the transfer pricing provisions, no matter how far removed from the reality of cross-border internal financing arrangements.

PostscriptThe authors note that CAHPL has now filed a special leave application to the High Court. The Commissioner has also released a draft practical compliance guideline60 to take effect from 1 July 2017. The guideline sets out how the ATO intends to administer the provisions as they relate to existing and future related-party financial arrangements. Multinationals with Australian subsidiaries have an opportunity to assess their compliance risk and to take whatever steps necessary to mitigate risk of non-compliance.

Elizabeth Bishop, ATIBarrister Ground Floor Wentworth Chambers

Scott RichardsonBarrister Ground Floor Wentworth Chambers

References

1 Chevron Australia Holdings Pty Ltd v FCT [2017] FCAFC 62 (Chevron).

2 Pagone J contrasted the transfer pricing provisions in Australia’s income tax laws with the anti-avoidance provisions in Pt IVA ITAA36, although the case did not engage the anti-avoidance provisions at [102].

3 Chevron at [99]-[159].

4 Chevron at [98].

5 As stated by Allsop CJ at [1].

6 See Chevron Australia Holdings v FCT (No. 4) [2015] FCA 1092 per Robertson J.

7 Chevron at [100] per Pagone J.


9 Chevron at [34] per Allsop CJ.

10 Ibid. This appears to be a reference to CAHPL’s “ultimate [US] parent company”, Chevron Corporation (CVX).

11 Chevron at [101].




15 Chevron at [109]-[111] per Pagone J.


17 Chevron at [2]-[66] per Allsop CJ, and at [111]-[135] per Pagone J.




21 Chevron at [42].



24 Chevron at [46].

25 Chevron at [48].

26 Chevron at [134]; see also Allsop CJ at [34].


28 Chevron at [46].

29 See Allsop CJ’s discussion at [46].

30 (2011) 193 FCR 149 at [9] and [97]-[102].




34 [1994] HCA 43 at [31].

35 [2012] FCAFC 32 at [79]-[81].


37 Chevron at [129]-[130].

38 Chevron at [43].

39 Chevron at [60].

40 Chevron at [44].


42 Chevron at [64].








50 In this appeal, it meant art 9 of the Convention between the Government of Australia and the Government of the United States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income.




54 Ibid; see also Allsop CJ at [92]-[95].


56 Cl 1, Pt 1, Sch 1 of the Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Act 2013 (Cth).

57 Para 2.13 of the explanatory memorandum to the Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013.

58 Comparison table (p 37) of the explanatory memorandum to the Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013.

59 Comparison table (p 38) of the explanatory memorandum to the Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013.

60 PCG 2017/D4.


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FEATURE

Introduction As part of the Victorian Budget 2016-17, on 27 April 2016, Treasurer Tim Pallas announced that the stamp duty surcharge on foreign purchasers of residential land would apply at a rate of 3% and the land tax surcharge on foreign owners of land would apply at a rate of 0.5%. The stamp duty surcharge commenced 1 July 2015 and the land tax surcharge in the 2016 land tax year. These measures were a Victorian innovation intended to address distortions created in the housing market caused by increasing non-resident ownership of Victorian real estate:1

“The Victorian government recognises that housing affordability is an increasing problem for homebuyers, including first home buyers. For some segments of the market, prices have moved out of reasonable reach. That is why the Victorian government is committed to improving housing affordability for Victorian families and through the measures contained in this bill, will place Victorians in a more competitive position in the housing market.

Recent data suggest that between 10 to 20 per cent of new properties are bought by foreign buyers, putting pressure on supply and keeping many Victorian families out of the market. At the same time, Victoria has experienced an increase in non-resident ownership of Victorian real estate, which equally results in distortions to the housing market.”

Less than a year later, on the basis of strong receipts from the surcharge and “no signs of slowing foreign demand for Victorian property”,2 the Victorian

Government increased the 3% stamp duty surcharge to 7% and the 0.5% land tax surcharge to 1.5%, commencing from 1 July 2016 and the 2017 land tax year, respectively.

Not long after the Victorian changes were announced, on 14 June 2016, Treasurer Curtis Pitt announced the introduction of a similar stamp duty surcharge on foreign buyers of residential land at a rate of 3% as part of the Queensland 2016-17 Budget. The stamp duty surcharge commenced 1 October 2016. No land tax changes were announced.3

On 21 June 2016, as part of the New South Wales 2016-17 Budget, Treasurer Gladys Berejiklian announced the introduction of a 4% stamp duty surcharge on foreign purchasers of residential land and a 0.75% land tax surcharge on foreign owners of residential land. The stamp duty surcharge commenced on 21 June 2016 and the land tax surcharge commenced in the 2017 land tax year. These measures brought New South Wales into line with Victoria and Queensland.

At the time of writing this article, the Victorian Government had announced the introduction of a 1% surcharge for residential properties not occupied for at least six months in the year. The Commonwealth Government had also just announced the introduction of a similar annual vacancy charge on foreign-owned residential property. No other state or territory has announced the introduction

of a similar surcharge to date. However, given the introduction of the foreign purchaser stamp duty and foreign owner land tax surcharges in other states, following introduction in Victoria, it may just be a matter of time.

Transfer and landholder dutyIn all three states, the surcharge rate of duty applying to foreign purchasers of residential land may also apply to the indirect purchase of residential land through the acquisition of shares or units in an entity with significant land holdings (under the landholder duty provisions).

What is residential land?In all three states, the stamp duty surcharge only applies to residential land, however, the definition of “residential land” differs.

VictoriaWhen the stamp duty surcharge was first introduced in Victoria, “residential property” was broadly defined as land with a building affixed or intended to be affixed, that was or would be designed or constructed solely or primarily to be used for residential purposes and was capable of being lawfully used for that purpose.4 It was unclear whether commercial property such as hotels, motels and student accommodation were included.

A subsequent attempt to specifically include short-term accommodation, such as hotels, was later abandoned and these types of properties were specifically excluded.5

Abstract: The increases across Australian states in stamp duty and land tax have meant that foreign purchasers of land will now be subject to a surcharge. The changes make it more complex for foreign investors but are intended to improve housing affordability for Australians. The measures were kick-started by the Victorian Government, based on recent data findings suggesting that between 10 and 20% of new properties are bought by foreign buyers, putting pressure on supply and keeping many Victorian families out of the market. In subsequent years, other jurisdictions have also followed suit to impose a surcharge on foreign purchasers. It is important to note that the rules in each state vary and investors will need to be aware of these differences when responding to the changes. This article provides an overview of the changes in each jurisdiction and addresses the different rates, rules, commencement dates and definitions of who is “foreign” and what land is affected.

by Gabrielle Déal, Manager, State Taxes, Deloitte

Recent state taxes changes affecting foreign investors in land


FEATURE

Since 1 July 2016, residential property in Victoria has been broadly defined as land that is used, capable of being used, or intended to be used solely or primarily for residential purposes and that may lawfully be used in that way.6 The legislation captures situations where, for example, a person refurbishes or extends an existing building, develops the land constructing a building on the land or enables another to construct a building on the land for the requisite residential use.

Commencing 1 July 2016, residential property also specifically excludes land capable of being used or intended to be used solely or primarily as commercial residential premises (within the meaning of the A New Tax System (Goods and Services Tax) Act 1999 (Cth)), a residential care facility, a supported residential service or for the purposes of a retirement village and that may lawfully be used in that way.7 The exclusion extends to a building or part of a building which a person intends to refurbish or extend for the requisite excluded use. Therefore, among others, hotels, motels, inns and boarding houses should be excluded from the surcharge.8

Queensland The definition of “residential land” in Queensland is similar to that in Victoria. Unlike in Victoria, however, there is no blanket exemption for retirement villages.

Residential land is broadly defined in Queensland as land that is, or will be, solely or primarily used for residential purposes and which, broadly, either has a building constructed on it or will have a building constructed on it, which (or a part of which) is, or will be, approved by a local government for habitation by a single family unit.9 The definition specifically extends to unregistered plans of subdivision, future developments and properties to be refurbished, renovated or extended for the requisite residential use.

A public ruling10 issued by the Queensland Commissioner lists the following examples of properties that would fall within the definition of residential land:

� established homes and apartments (including self-contained studio apartments);

� vacant land on which one or more homes or apartments will be built;

� land for development for residential use (such as smaller unit block

developments, housing subdivisions, and major developments with a residential component); and

� land with buildings to be refurbished, renovated or extended for residential use, such as a disused warehouse that the developer intends to refurbish to create residential apartments or a commercial block that is to be demolished for residential development.

Short-term accommodation (such as hotels, motels and dormitory-style student accommodation) is excluded.11

Whether other types of accommodation, such as retirement villages, fall within the definition of residential land will depend on whether, among other things, the use is self-contained (for example, whether it contains a bathroom and kitchen).12

New South Wales Residential land in New South Wales is broadly defined as land that is zoned residential or otherwise designated for use for residential or principally residential purposes,13 or land on which a building or part of a building, constructed or to be constructed, is used, or will be used, as a separate dwelling.14 The definition includes strata lots, certain utility lots (for example, a car parking space reserved for a particular apartment) and land use entitlements used or capable of being used as separate dwellings.

While there are currently no public rulings providing guidance (some guidance is provided on the New South Wales Office of State Revenue’s website), residential land is broadly defined as land that is capable of being used or occupied as a separate dwelling and would therefore need to be

self-contained; on this basis, hotels, motels and most nursing homes are unlikely to be subject to the surcharge.

Who does it apply to?While a foreign person in all three states can be a foreign natural person, foreign trust or foreign corporation, the definitions vary.

Victoria and Queensland In Victoria and Queensland, a foreign corporation is a corporation incorporated outside Australia or a corporation in which a foreign person holds, broadly, a 50% or more interest.15 Although, in Victoria, the test is more than 50%, while in Queensland, the test is 50% or more. In Victoria, the Commissioner may also deem a foreign person to have the requisite interest in a corporation regardless of whether that interest is held.16 In Queensland, the surcharge can also apply where a corporation becomes foreign within three years of the transaction.17

Similarly, in Victoria and Queensland, a foreign trust includes, broadly, a fixed or unit trust in which a foreign person holds a beneficial interest of 50% or more.18 Again, in Victoria, the test is more than 50%, while in Queensland, it is 50% or more. In Victoria, the Commissioner may also deem a foreign person to have the requisite interest in a trust regardless of whether that interest is held.19

In Victoria, a discretionary trust will be foreign if it has any foreign capital beneficiaries (s 3B of the Duties Act 2000 (Vic)). Broadly, in Queensland, a discretionary trust may be foreign if any taker-in-default, who is a foreign person, is deemed to have a 50% or more interest in the trust (alone or with related persons) (ss 57 and 60 of the Duties Act 2001 (Qld)). When determining whether a taker-in-default has the requisite interest in a trust, the Commissioner will consider, among other things, the likelihood of distribution to a foreign taker-in-default having regard to the terms of the trust deed (see para 13 of DA000.14.1).

New South WalesIn contrast, in New South Wales the definitions are much broader. In New South Wales, a foreign corporation and a foreign trust are defined with reference to the definition in the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FIRB Act). Under the FIRB Act,

The definition of ‘residential land’ in Queensland is similar to that in Victoria. Unlike in Victoria, however, there is no blanket exemption for retirement villages.


FEATURE

a corporation or fixed or unit trust can be foreign if as little as a 20% interest or beneficial interest is held by a foreign person, although a lower interest could be held, as the test applies to the foreign person and associates.20

The definition of a “foreign discretionary trust” in New South Wales is broad, capturing any discretionary trust with a foreign beneficiary. However, commencing 21 June 2016, the Commissioner has discretion to effectively exempt a trust where the trust deed is amended to remove the trustee’s power to make distributions to foreign persons. The necessary amendment must be made within six months of the grant of exemption.21

Relief from the surcharge

Victoria In Victoria, by delegation from the Treasurer, the Commissioner has discretion to disregard an interest held by foreign persons in a company or trust, effectively exempting the purchaser from the surcharge if satisfied that, having regard to any one or more of the following matters, the person should not be taken to have that interest:22

� the nature and degree of ownership and control the person has in the corporation or the nature and degree of the person’s beneficial interest in the capital of the trust estate;

� the practical influence the person exerts or any rights the person enforces to determine or influence, directly or indirectly, the outcome of decisions about the corporation’s financial and operating polices or the administration and conduct of the trust;

� any practice or behaviour of the person affecting the corporation’s financial or operating policies or the trustee’s administration and conduct of the trust; and/or

� any other relevant circumstances.

In addition, the Treasurer published guidelines for the exercise of the Commissioner’s discretion (Vic stamp duty relief guidelines).23

The Vic stamp duty relief guidelines state that the surcharge is not intended to capture corporations and trusts that are Australian-based and whose commercial activities add to the supply of housing stock in Victoria (whether through new

developments or re-developments, where those developments are primarily residential).

In summary, the Vic stamp duty relief guidelines set out the following broad principals and circumstances which the Commissioner is to also have regard to when exercising his discretion:

� the nature and degree of interest or ownership and control the foreign person has in the corporation or trust;

� the practical influence the foreign person has to determine, directly or indirectly, the outcome of decisions of the corporation or trust;

� the foreign person’s ability to influence the outcome of financial, operating and management decisions of the corporation or trust; and

� any other relevant circumstances, including, broadly, impact on the economy and the community, competition, Foreign Investment Review Board (FIRB) approvals, transparency and regulation of the entity and the independence of its management from the foreign owner.

Queensland While there is no specific legislative exemption in Queensland, a public ruling has been issued, setting out relevant guidelines specific to the surcharge for the exercise of the Treasurer’s general power (delegable to the Commissioner) to grant ex gratia relief (Qld public ruling).24 The guidelines in the Qld public ruling are similar to those in the Vic stamp duty relief guidelines.

Under the Qld public ruling, transactions that will be considered for ex gratia relief are those that are undertaken by Australian-based

foreign corporations and trusts whose commercial activities involve significant development by adding to the supply of housing stock in Queensland (whether through new development or re-development) where the development is primarily residential.

In summary, the factors considered when determining whether ex gratia relief will be available include:

� whether the foreign entity undertaking the relevant transaction is Australian based. In determining whether this is satisfied, the Commissioner is to have regard to a number of factors, for example, location of the head office or principal place of business, where management is located, whether a business is carried on in Australia, whether more than 50% of the goods and services used in the business are from Australian contractors and suppliers;

� whether the foreign entity has complied with any FIRB requirements in relation to the acquisition of the land. Relevant factors for consideration include the nature of any FIRB approval, including whether any conditions were imposed;

� whether the foreign entity meets regulatory requirements. For example, whether they comply with the Corporations Act 2001 (Cth) and Queensland taxation laws; and

� the development must be significant. This should be satisfied where either the development is a “significant development” or the developer is a “significant developer” or the “regional significance test” is satisfied. The “significant development” test will be satisfied if the development comprises

Table 1: Stamp duty surcharge

State Commencement date

Foreign corporation/fixed or unit trust test

Foreign discretionary trust test

Surcharge rate

Victoria 1 July 2015 to 30 June 2016

More than 50% Capital beneficiary

3%

1 July 2016 More than 50% Capital beneficiary

7%

New South Wales

21 June 2016 20% Discretionary beneficiary

4%

Queensland 1 October 2016 50% Taker-in-default 3%


FEATURE

50 or more residential lots. The “significant developer” test should be satisfied if the developer undertakes development or redevelopment of 50 or more residential lots in a year, however, averaging over five years will be permitted. The “regional significance test” is aimed at measuring the significance and impact of regional development relative to local population size, demographics and activity, among other things.

New South WalesNo specific legislative exemption from the surcharge and no guidelines in respect of the general power to grant ex gratia relief, like the Qld private ruling, exist in New South Wales. However, as already highlighted, the New South Wales Commissioner has discretion to exempt a trustee of a discretionary trust in certain circumstances.25

Land tax The land tax surcharge applies to all types of taxable land in Victoria, including commercial property. In New South Wales, the surcharge only applies to residential land.

Victoria In Victoria, the land tax surcharge applies to “absentee owners” of taxable land.26 An “absentee owner” is an “absentee person” who is an owner of land.27 Broadly, the concept of an absentee person includes a natural person absentee, an absentee corporation and an absentee trust.

In the land tax context, an absentee corporation is similar to that of a foreign corporation in the stamp duty context, being either a corporation incorporated

outside Australia or a corporation in which an absentee person holds, broadly, more than a 50% interest.28

An absentee fixed or unit trust broadly includes a trust with a single absentee beneficiary, although the surcharge is only applied to the extent of the absentee beneficiary’s interest in the trust.29

An absentee discretionary trust is a discretionary trust where an absentee person is specifically named as a beneficiary either in the trust deed or in writing pursuant to the trust deed.30

Prior to amendments relevantly applying in the 2017 land tax year, it is also arguable that absentee sub-trusts were not captured, so that, when determining whether a trust was an absentee trust, it was arguably sufficient to only look to the character of the trustee of the head trust, rather than enquiring whether the beneficiaries of the head-trust were absentee persons.31

New South Wales The surcharge only applies to residential land held by a foreign person. The definition of “residential land” and “foreign person” are the same as those adopted in the stamp duty context.32

It is also worth noting, that the principal place of residence exemption and tax-free threshold are not available when imposing the land tax surcharge in New South Wales.33

Relief from the surcharge

Victoria Unlike the stamp duty exemption, the specific legislative exemption from the land tax surcharge is technically limited to companies.34

By delegation from the Treasurer, the Commissioner has discretion to disregard

an interest held by an absentee person in a corporation if satisfied that, having regard to one or more of the following matters, the absentee person should not be taken to hold that interest:

� the nature and degree of ownership and control the absentee person, or that person acting together with another absentee person, has in the corporation;

� the practical influence the absentee person, or that person acting together with another absentee person, exerts to determine or influence, directly or indirectly, the outcome of decisions about the corporation’s financial and operating polices;

� any practice or behaviour of the absentee, or that person acting together with another absentee person, which affects the corporation’s financial or operating policies; and/or

� any other relevant circumstances.

The Treasurer also issued guidelines for the exercise of discretion under the legislative exemption (Vic land tax guidelines).35

The Vic land tax guidelines state that the surcharge is not intended to capture corporations which conduct a commercial operation in Australia and whose commercial activities make a strong and positive contribution to the Victorian economy and community by engaging local labour and utilising local materials and services. In summary, the Vic land tax guidelines set out the following broad principals and circumstances which the Commissioner is to have regard to, in exercising his discretion:

� the nature and degree of interest or ownership and control the absentee person has in the corporation;

� the outcome of decisions of the corporation;

Table 2: Land tax surcharge

State Land tax year Foreign corporation test

Foreign fixed or unit trust test Foreign discretionary trust test

Surcharge rate

Victoria 2016 More than 50% Applied to extent of interest held by absentee beneficiary/unitholder

Beneficiary specifically named in trust deed or declared in writing

0.5%

2017 onwards More than 50% Applied to extent of interest held by absentee beneficiary/unitholder

Beneficiary specifically named in trust deed or declared in writing

1.5%

New South Wales

2017 onwards (residential land only)

20% 20% Discretionary beneficiary 0.75%


FEATURE

� the absentee person’s ability to influence the outcome of financial, operating and management decisions of the corporation; and

� any other relevant circumstances, including, broadly, impact on the economy and the community, competition, FIRB approvals, transparency and regulation of the company, and the independence of its management from the foreign owner.

New South Wales While there is currently no specific legislative exemption from the surcharge in New South Wales, as already highlighted, the New South Wales Commissioner has discretion to exempt a trustee of a discretionary trust, in certain circumstances.25

The Commissioner has not issued any guidelines in respect of the general power to grant ex gratia relief in respect of the surcharge. Given its relatively recent introduction in New South Wales (in the 2017 land tax year), we may see some more guidelines issued in the coming months.

Gabrielle DéalManager, State Taxes Deloitte

Disclaimer

The views expressed in this article are those of the author and not of Deloitte.

References

1 Parliament of Victoria, Parliamentary debates, Legislative Assembly, 7 May 2015, 1 (Tim Pallas).

2 Parliament of Victoria, Parliamentary debates, Legislative Assembly, 3 May 2016, 2 (Tim Pallas).

3 The existing surcharge rate of land tax applying to companies and trustees also applies to absentee owners of land where the land has a value of $350,000 or more as at 30 June. However, as this surcharge has been in place since 2010, it will not be considered further in this article, which is limited to examining recent changes.

4 Cl 14 of the State Taxation Acts Amendment Bill 2015 (Vic).

5 Amendments to the State Taxation and Other Amendments Bill 2016 suggested by the Legislative Council on the consideration of the Bill in Committee 21 June 2016.

6 S 3G of the Duties Act 2000 (Vic).

7 S 3G(3) of the Duties Act 2000 (Vic).

8 S 195-1 (definition of “commercial-residential premises”) of the A New Tax System (Goods and Services Tax) Act 1999 (Cth); GSTR 2012/6.

9 S 232 of the Duties Act 2001 (Qld).

10 DA232.1.1 – AFAD residential land.

11 Ibid, para 15.

12 Ibid, para 16.

13 Under the environmental planning instrument (within the meaning of the Environmental Planning and Assessment Act 1979 (NSW)).

14 S 104I (definition of “residential land”) of the Duties Act 1997 (NSW).

15 S 3A of the Duties Act 2000 (Vic); s 236 of the Duties Act 2001 (Qld).

16 S 3C of the Duties Act 2000 (Vic).

17 S 246A(2) of the Duties Act 2001 (Qld).

18 S 3G(1) of the Duties Act 2000 (Vic); s 237 of the Duties Act 2001 (Qld).

19 S 3D of the Duties Act 2000 (Vic).

20 Para 16 of Revenue Ruling No. G 009 – Definition of foreign person; s 104J(1) of the Duties Act 1997 (NSW).

21 Revenue Ruling No. G 010 – Surcharge land tax and duty – discretionary trusts. The Commissioner’s discretion will eventually be legislated.

22 S 3E of the Duties Act 2000 (Vic).

23 Ibid; Victorian Government Gazette, No. G 33, 20 August 2015, p 1804.

24 DA000.15.1 – Additional foreign acquirer duty – ex gratia relief for significant development.

25 Revenue Ruling No. G 010 – Surcharge land tax and duty – discretionary trusts.

26 Pt 4, Sch 1 of the Land Tax Act 2005 (Vic).

27 S 3 (definition of “absentee owner”) of the Land Tax Act 2005 (Vic).

28 Ss 3 (definition of “absentee corporation”) and 3A of the Land Tax Act 2005 (Vic).

29 S 46IA of the Land Tax Act 2005 (Vic).

30 S 3 (definition of “absentee trust”) of the Land Tax Act 2005 (Vic).

31 Clause 18 of the explanatory memorandum to the State Taxation and Other Acts Amendment Bill 2016 (Vic).

32 S 5A(6) of the Land Tax Act 1956 (NSW).

33 S 5A(4)(g) and (h) of the Land Tax Act 1956 (NSW).

34 S 3B of the Land Tax Act 2005 (Vic); Victorian Government Gazette, No. G 33, 20 August 2015, p 1802. An application could be made to the Treasurer for the grant of ex gratia relief under the general power in respect of trusts. In the author’s experience, this has been successful in certain limited circumstances.

35 S 3E of the Duties Act 2000 (Vic); Victorian Government Gazette, No. G 33, 20 August 2015, p 1802.


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FEATURE

IntroductionIn recent times, there has been an explosion in testamentary trusts. Now it is common for a will to create trusts over property on death; rather than having a disposition to the beneficiaries.

At the heart of trusts, testamentary and inter vivos, is the duty of trustees to invest. For unless trust property is invested well, there will be no, or greatly reduced, trust property for the beneficiaries. However, one of the most difficult tasks for trustees to discharge is their duty to invest. There are three principal reasons for this:

(1) investment for oneself is inherently difficult and risky;

(2) investment for others is more difficult and risky, not the least because trustees may, many years later, face a disgruntled beneficiary who, with the benefit of hindsight, claims for any loss on the investment from the trustees personally; and

(3) investment by trustees is not done in isolation, but rather it is subject to conflicting or constraining duties on trustees.

In England between 1700 and 1900, price levels hardly moved.1 At that time, investing in fixed interest government securities was a prudent trust investment. Now, however, we have been through periods of high and low inflation. But it was in that period that much of the case law on the duty of trustees to invest was formulated.

Bryson J recognised the problems of inflation when he said in Re Handosa:2

“Because of this common experience, there are factors disposing trustees toward seeking to invest in shares or in investment trusts which hold shares. There are strong economic pressures to find ways to do so as a result of the phenomenon of inflation, which has continued throughout most of this century, often strongly, more so in the last 50 years and without any prospect of long continued abatement which it would be reasonable to rely on.”

But this statement is itself now out of date. How quickly times have changed with the low consumer price index rises experienced over the last few years.

In what follows, the basic components of the duty of trustees to invest are set out. The law in NSW is considered, but similar provisions exist elsewhere in Australia.

An example is used of trustees of a testamentary trust in 2017 deciding to invest all the trust funds of $1m in a 10-year term deposit with a return of 7% per annum with a triple A corporate borrower. The trustees may consider they have done well in the present low inflation environment and discharged their duties. But what if, at the end of 10 years, an investment in shares would have yielded the same income return and provided capital growth of 50%? Would the beneficiaries be content not to claim the loss from the trustees personally?

The Trustee Act 1925 (NSW) (Trustee Act) sets out the statutory provisions in relation to the duty of trustees to invest.3

These are in addition to those required at equity and law, except where there is any inconsistency, when the Trustee Act prevails. Most of the provisions of the Act are subject to the provisions of the relevant trust instrument, but not always. On each occasion, the statutory provision needs to be checked. In what follows, all references to sections are to sections of the Trustee Act.

Trustees may invest in any form of investmentPrior to 1998, the Trustee Act4 specified the investments in which trustees were permitted to invest. Now s 14 provides that trustees may invest in any form of investment and may vary any investment, unless expressly forbidden by the trust instrument. The forbidding needs to be expressed clearly. It is not sufficient that the trust instrument simply requires trustees to invest in particular investments.5

This apparent freedom is seriously curtailed and constrained by other provisions of the Trustee Act, and in equity and law. It may also be curtailed or constrained by the provisions of the trust instrument.

It is basic that in investing, trustees must have regard to the provisions of the relevant trust instrument. This may seem so obvious as not to require mention. However, it is easy in practice not to carefully and slowly read all the provisions of the trust instrument to make sure that there is no limitation or restriction,

Abstract: In recent times, there has been an explosion in testamentary trusts. Due to the significant income tax and capital gains tax advantages, it is common for a will to create trusts over property on death, rather than having a disposition to the beneficiaries. At the heart of trusts is the duty of trustees to invest. Trustees are armed with power and may invest at their discretion but must act in the best interests of their beneficiaries. They must act impartially and exercise the care, diligence and skill that a prudent person would exercise when investing for others. Trustees must also take into account the factors set out in the Trustee Act while acting. As such, the obligation on trustees to invest is one of the most difficult tasks for trustees to perform. This article sets out the basic components of the duty of trustees to invest.

by Robin Speed, CTA, Solicitor, Speed and Stracey Lawyers The duty of trustees to invest


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directly or indirectly, on trustees to invest. For example, buried in cl 35(c) of the hypothetical trust instrument may be a requirement to obtain the consent of a particular person before investing or a prohibition on investing in certain securities, eg mining shares.

As to the meaning of “investment”, reference should be had to Hicks’ article.6

Trustees must exercise the care, diligence and skill that a prudent person of business would exercise in investing for others The basic standard required of trustees in investing is to exercise the care, diligence and skill a prudent person of business would exercise in managing the affairs of other persons.7

Where the profession, business or employment of the trustees is, or includes, acting as trustees or investing money for other persons, the standard is expressed as exercising in investing the care, diligence and skill a prudent person engaged in that profession, business or employment would exercise in managing the affairs of other persons.8 An accountant or lawyer who does not consider himself a professional trustee may nevertheless be within the words “investing money for other persons”.

The parliamentary view is that because those persons are engaged in the business of managing the affairs of others, they should be more sophisticated, more experienced and more able to keep up to date with investment trends than a trustee who is not. Hence, the higher standard is required.

The basic statutory duty to invest was expressed in 1886 in similar terms to the Trustee Act by Lindley J in Re Whiteley.9 He said trustees must “… take such care as an ordinary prudent man would take if he were minded to make an investment for the benefit of other people for whom he felt morally bound to provide”.10

The decision of trustees to invest is, therefore, measured against what a prudent person in business would have done at the time in managing the affairs of other persons (“hypothetical prudent person”). This obligation concentrates on the process, ie what a prudent person would have done. It is to be compared with another obligation on trustees not to invest in speculative or hazardous investments, which concentrates on the quality of the

investment.11 Both are objective tests, but different.

Any rules or principles of law or equity that impose a duty on trustees in exercising a power of an investment apply, except to the extent they are inconsistent with the Trustee Act or possibly the trust instrument.12 For example, the duty imposed by equity or law on trustees to invest must be in the best interests of all present and future beneficiaries of the trust.

Using the example mentioned earlier, the Trustee Act measures what trustees have done with what the hypothetical prudent person would have done. Would the prudent person have invested all the trust funds in 2017 in a term deposit with a return of 7% per annum?13

It is important to realise that the duty of trustees to invest is not necessarily performed by trustees exercising reasonable care, diligence and skill; nor by trustees acting honestly and sincerely. The measure is that of the hypothetical prudent person.

This changes over time. For example, the High Court in Fouche v Superannuation Fund Board14 considered whether trustees were in breach of trust when they lent $7,000 secured on a farm worth $11,000 and agreed to lend a further $93,000 to carry out work to convert the farm into a tourist hotel. The court held that the trustees had committed a breach of trust in that they had not acted as the hypothetical prudent person would have acted. Times have changed since 1952 when the case was decided and the High Court today may reach a different conclusion.

The Trustee Act does not specify what trustees must do to find a prudent person and learn what he or she would do. Sometimes this is a difficult task.

Trustees must, in investing, take into account the factors set out in the Trustee ActWithout limiting the matters trustees may take into account when investing, trustees must, so far as appropriate to the circumstances of the trust, have regard to the factors set out in s 14C. The factors particularly relevant in making a decision to invest are the following:

� the purposes of the trust and the needs and circumstances of the beneficiaries;

� the desirability of diversifying trust investments;

� the nature of, and risk associated with, existing trust investments and other trust property;

� the need to maintain the real value of the capital or income of the trust;

� the risk of capital income loss or depreciation;

� the potential for capital appreciation;

� the likely income return and the timing of the income return;

� the length of the term of the proposed investment;

� the probable duration of the trust;

� the liquidity and marketability of the proposed investment during and at the end of the term of the proposed investment;

� the total value of the trust estate;

� the effect of the proposed investment on the tax liability of the trust;

� the likelihood of inflation affecting the value of the proposed investment or other trust property;

� costs (including commission, fees, charges and duties) payable on the making of the proposed investment; and

� the results of a review of the existing trust investments.

Trustees are required to comply with s 14C unless expressly forbidden by the trust instrument.15 The meaning of “expressly forbidden” was noted earlier. It is not sufficient that the trust instrument impliedly forbids compliance; the trust instrument must expressly forbid compliance.

Once having taken the listed factors into account, trustees are not obliged to adopt them except to the extent provided by

… trustees may … face a disgruntled beneficiary who, with the benefit of hindsight, claims for any loss on the investment from the trustees personally;


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the Trustee Act, in equity or at law or the relevant trust instrument. In particular, there is no statutory requirement to diversify investments, only to take into account the desirability of diversity when making the decision to invest.

Section 14C provides that trustees must have regard to the “purposes of the trust”.16 To the extent that these purposes are set out in the trust instrument, or in a letter of wishes, the inquiry of purposes may be relatively simple. But what if trustees were aware from discussions with the creator of the trust that he had a strong aversion to listed securities? Is this a relevant matter for trustees to take into account? For a good article on the duty of trustees to invest, see “Trustee investing: homes and hedges” by Lee.17

The liquidity of the proposed investment during and on the determination of the trust is relevant where it may be least expected. The four major Australian banks issued hybrid securities which were listed on the stock exchange, but at times they were difficult to sell except at a considerable discount. Would the hypothetical prudent person have foreseen that?

Before investing, it is considered good practice for trustees to record in writing that they have taken into account the factors referred to in the section. All too frequently trustees are subject to challenge many years later when they have forgotten the factors they took into account.

Trustees must consider diversifying trust investmentsA little more needs to be said about trustees considering diversifying trust investments.18

A leading case on the duty of trustees to consider diversifying trust investments is Re Mulligan (dec’d).19 There, the testator was a farmer in New Zealand. He died in 1949, leaving his widow with a substantial legacy and a life interest in the family farm. His nephews and nieces on his side of the family were entitled to the estate after the widow died. The trustees were his widow and a trustee company.

The testator and the widow had lived on the farm and ceased to do so a short time before the testator’s death. Then, for some 16 years after the death, the farm was leased. In 1965, it was sold. Following the sale, the proceeds were invested in fixed-interest securities until the widow died 25 years later. After the sale of the farm in 1965, the net proceeds

totalled $108,000 and at the time of death, the $108,000 remained. But the 1990 equivalent inflation figure of that sum was $1,368,000. In graphic terms, it was said that in 1965, $108,000 would have paid for 14 residential properties in Christchurch, but in 1990, it would not have paid for one.

The nephews and nieces sued the trustees for breach of trust claiming that in investing in fixed-interest securities after the sale of the farm, rather than investing a portion in shares, they failed to treat the widow and the nephews and nieces even-handedly.

It was clear from the evidence that the widow was not dependent on her life interest to live and she strongly refused to invest the farm sale proceeds in shares, although she had invested her own money in shares.

Panckhurst J said:20

“Accordingly, it follows that in judging the past performance of trustees one must apply the standards of the relevant period. There is a risk of applying the wisdom of hindsight and of passing judgement on the basis of modern-day standards. The point was well put at first instance in Nestle v Westminster Bank plc (Chancery Division, 29 June 1988) by Hoffman J who said at p 4: [501] ‘In reviewing the conduct of trustees over a period of more than 60 years, one must be careful not to endow the prudent trustee with prophetic wisdom or expect him to have ignored the perceived wisdom of his time.’ Equally, I accept that a trustee is neither a surety, nor an insurer of the fund for which he is responsible. Loss of trust money, or in this case diminution in the real value of a trust fund, does not of itself render a trustee liable. It must be shown that the loss or diminution arose from some failing on the part of the trustee, which can be properly characterised as a breach of trust.”

His honour went on to hold that the widow’s estate was not obliged to contribute to the damages payable by the trustee company to the beneficiaries.

It is worth repeating that the Trustee Act does not impose a duty to diversify investments on trustees. Rather, it puts on trustees the obligation to consider diversification. However, most investment advisers stress the need for diversity and the question often asked rhetorically is why the trustees did not diversify. As Adam J said in Re Baker (dec’d); Rouse v Attorney-General for Victoria:21

“It is obviously prudent that the investment should be spread over a number of companies and over a variety of enterprises … the trustees shall have regard to the need for securing that investments

of the trust in company shares or securities are widely spread and no undue proportion confined to any one company or group of companies operating in a particular field of industry or commerce.”

In Re Zimpel,22 the trust funds included a controlling interest in a company, of which two of the directors of the trust were directors. The company had accumulated profits which could be distributed tax-free to the trust and through to the beneficiaries. But as the company was in need of cash, the directors recommended to shareholders that the cash should be capitalised and distributed as bonus shares. The bonus shares would not be income of the trust, whereas the cash would. The court held that the trustees were required to act impartially and were not entitled to vote in favour of the resolution to issue bonus shares.

The regulations made under s 14DB proceed in a most cautious fashion by providing guidelines where the trust funds do not exceed $50,000. In those cases, the regulations list the investments a trustee can invest in which they “might reasonably consider appropriate”, and the section provides that a trustee’s mere compliance with the guidelines does not comply with s 14A. This is hardly worth the paper it is written on.

Trustees may invest at their absolute discretionIt is common for trust instruments to provide that trustees have an absolute discretion in investing, or some variation of that. But, in the author’s view, such a provision does not permit trustees to disregard the factors in s 14C, including the desirability of diversifying investments and the duty to act prudently.

Trustees are fiduciaries and must exercise their powers in accordance with the purpose for which they were conferred. Where trustees have an almost limitless range of investments to choose from, they must exercise the care, diligence and skill of the hypothetical prudent person in choosing a particular investment.23

The judgment of Baragwanath J in Re White24 is instructive because it involved a trust that owned 52% of the voting shares of a company and some 40% of its equity. A representative of the trustee was on the board. The company went into a kiwi fruit venture which resulted in it going into liquidation. His honour, after a careful and extensive review of the evidence, said that the key issue was not whether a prudent


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trustee would have selected a less risky venture than kiwi fruit, but whether in the actual circumstances the entering into the kiwi fruit venture was not imprudent. He held that in the circumstances it was not imprudent.

It is clear that, when investing, trustees must put aside their own personal interests and views.25 For example, they may strongly favour investing in companies that produce electricity, by wind power, by reason of their concerns about global warming, but an investment in coal companies may be a more favourable investment.26

In Harries v Church Commissioners for England,27 the court considered the circumstances where trustees may be entitled to take into account non-financial considerations in investing. There, the income from the trust funds was required to pay the remuneration and housing of clergy. The court held that part of the income could not be applied to fund low cost housing for young persons at a price below market.

Trustees are under an obligation to invest in the best interests of present and future beneficiaries.28 Normally, this means in the best financial interests of beneficiaries.

Collins has written:29

“In particular, the case of investment decisions will necessarily require prudence in the appropriate balancing of risk and return, not the uninhibited selection of the highest available return. Acting in the best interests of the beneficiary does not mean acting in what proves, with the benefit of hindsight, to have given the beneficiary the very best result available. The standard of both duties is to be assessed objectively, with the term ‘best interests’ pointing to an emphasis on effort, diligence and process, not just outcome, thereby mirroring the duty of care, skill and diligence.”

Sir Robert Megarry VC in Cowan v Scargill said:30

“The starting point is the duty of trustees to exercise their powers in the best interests of the present and future beneficiaries of the trust, holding the scales impartially between different classes of beneficiaries. This duty of the trustees towards their beneficiaries is paramount. They must, of course, obey the law; but subject to that, they must put the interests of their beneficiaries first. When the purpose of the trust is to provide financial benefits for the beneficiaries, as is usually the case, the best interests of the beneficiaries are normally their best financial interests. In the case of a power of investment … the power must be exercised so as to yield the best return for the

beneficiaries, judged in relation to the risks of the investments in question.”

Trustees must have regard to the needs and circumstances of the beneficiariesAt equity and in law, there is no express obligation on trustees to consult with beneficiaries when considering making investments.31 However, s 14C(1)(a) imposes on trustees an obligation “so far as appropriate to the circumstances of the trust” to have regard to the “needs and circumstances of the beneficiaries”. This innocent looking obligation may in fact be an onus obligation. For example, what if the widow in the example previously given is disabled and totally dependent on the income from the trust funds to live, and her children are not? Are trustees obliged, when investing, to seek to earn a greater annual income to pay the widow than they would otherwise do?

It is implicit in the obligation of trustees to have regard to the needs and circumstances of beneficiaries when they know what those needs and circumstances are. In any given case, this may be easy for trustees to find out. But what if trustees were closely associated in business with the deceased and are not familiar with his wife’s or children’s needs or circumstances? In most situations, this information can be best obtained by trustees consulting with beneficiaries when considering investing.

Trustees must act impartiallyIt is sometimes said that trustees have a duty to act impartially between beneficiaries when investing. But it is suggested that this duty is not universal. It is relevant where there are income and capital beneficiaries. Then, trustees are generally required to invest trust funds impartially during the life of the beneficiary, so that a balance is maintained between annual income and growth of corpus.

In Jacobs law of trusts in Australia, it is stated:32

“Where there are successive interests to be considered the trustees must hold the balance evenly and not favour either the tenant for life or the remainderman at the expense of the other. It would not be proper for the trustees to make a change to increase the income of a tenant for life if by so doing they were in any way to lessen the security of the capital moneys or if they were thus to diminish the capital fund. Their duty extends beyond merely preserving the capital intact or

merely providing an income for a tenant for life. They have to invest the funds so that a proper income may be obtained for the tenant for life and at the same time the capital may be preserved for the remainderman.”

In Dal Pont,33 it is stated that trustees “must manage the fund in a manner productive to the interests of the income beneficiaries, but in so doing not risk or reduce capital to the detriment of the beneficiaries in remainder”.

It is noteworthy that the Trustee Act does not expressly impose a duty to act impartially. Rather, the Act proceeds cautiously by stating that a rule or principle of law or equity imposing a duty on trustees in investing continues to apply, including a rule or principle providing a duty to act impartially towards beneficiaries and between different classes of beneficiaries.34

In Re Mulligan (dec’d), Panckhurst J said:35

“The second general principle of particular relevance is the duty of impartiality. It is elementary that a trustee must act with strict impartiality and endeavour to maintain a balance between the interests of life tenant and remainderman. Put another way, a trustee must be even-handed as between income and capital beneficiaries. It is this duty which is at the heart of the present dispute. I am attracted to the way in which the impartiality concept was put by Hoffman J in Nestle v National Westminster Bank plc at pp 4-5:

‘The trustee must act fairly in making investment decisions which may have different consequences for different classes of beneficiaries.’

and

‘They are for example entitled to take into account the income needs of the tenant for life or the fact that the tenant for life was a person known to the settler and the primary object of the trust whereas the remainderman is a remoter relative or a stranger. Of course these cannot be allowed to become the overriding considerations but the concept of fairness between classes of beneficiaries does not require them to be excluded. It would be an inhuman law which required trustees to adhere to some mechanical rule for preserving the real value of capital when the tenant for life was the testator’s widow who had fallen upon hard times and the remainderman was young and well off.’”

What does this mean for trustees? The following is suggested:

� the trustees should invest having regard to the needs and circumstances of the relevant beneficiaries;


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� the trustees should have regard to the purposes of the trust;

� the trustees should have regard to diversifying investments;

� the trustees should review the existing trust investments and have regard to the review; and

� the trustees should, where appropriate, obtain competent advice.

Above all, the trustees should aim to act equitably and be seen to act equitably.

Trustees must take adviceIt is often stated that trustees are under a duty to take advice on matters on which they do not understand.

This duty arises in equity and is not imposed expressly by the Trustee Act; s 14C(2) refers the trustees “may” obtain advice, not “must”.36

In Cowan v Scargill,37 Sir Robert Megarry said “… of the duty to invest this means trustees who do not understand investments must take advice from a person who is independent and impartial and apparently competent to give the advice”.38

The difficulty with the quote is to decide when trustees do not understand a particular investment, as this is often judged in hindsight with some investments particularly complex and hard to understand.

To be cautious, trustees may consider they need some investment advice. Using the example previously given, trustees not competent to invest need to consider obtaining such advice before making an investment in term deposits. But it is no easy task to find an independent and impartial person who is apparently competent to give advice on investments.

Trustees who take advice on investments are not bound to accept and act on the advice. But as Sir Robert Megarry went on to say, trustees are not entitled to reject advice merely because they sincerely disagree with it, unless, in addition to being sincere, they are acting as an ordinary prudent man would act.38

Investing may be complex and complicated. But are trustees authorised to delegate the task to an expert? Section 53 fails to make this clear. Is the position that trustees may delegate only specific acts, or may they delegate, in effect, their duty to invest? An interesting discussion on this is to be found in Lehane.39

Section 53(1) provides that trustees may, instead of acting personally, appoint an agent to “transact any business or do any act required to be transacted or done in the execution of the trust or in the administration of the estate”. Subsection (3) of the same section provides that nothing in the section authorises trustees to appoint an agent where a person acting with prudence would not employ the agent in his own affairs.40

The UK Trustee Act 2000 lists the functions that were not delegable and those which were.41

Of course, the adviser cannot be expected to be competent to advise on what trustees of a particular trust may actually invest in. The adviser would normally be informed by the trustees of what relevant constraints the trustees are under; for example, the trust has 10 or fewer years to run.

The Trustee Act does not state whether the duty to take advice is an ongoing duty. But it is suggested that it is.

Unless expressly forbidden by the trust instrument, the trustees may have regard to the size and nature of the trust, and pay the reasonable cost of obtaining advice out of the trust funds.42

Financing a home for a beneficiaryIn today’s economic climate, trustees may consider lending part of the trust funds to a beneficiary to purchase a house for the beneficiary to live in, and wish the loan to be unsecured and interest-free. As this is unlikely to be considered an investment, the power to do so should be specifically found in the trust instrument.

Section 14DA authorises trustees to purchase houses for beneficiaries, but hedges the power with qualifications.43

Trustees must, at least once a year, review the performance of the trust investmentsTrustees are required by the Trustee Act, at least once a year, to review the performance (individually and as a whole) of the trust investments. This obligation is subject to the trust instrument.

The Act does not specify how this review should take place, but leaves it up to the trustees. It is considered that it is good practice to carry out the review at a formal trustees’ meeting and, where appropriate, depending on the size of the trust funds and the circumstances, to have present the accountant, or financial adviser, or lawyer,

together with relevant beneficiaries. The review should be duly minuted.

Again, using the example previously mentioned, even if in 2017 an investment in a term deposit is what the hypothetical prudent person would have done, the trustees cannot safely forget about the term deposit. Rather, they need to periodically review the investment at least once every year.

On review, the trustees may decide to sell or reduce the holding. If, in 2019, having reviewed the investments, the hypothetical prudent person would sell, then the trustees should consider selling and investing elsewhere. Section 25 provides that trustees are not liable for breach of trust by reason only of the continuing holding of an investment which has ceased to be an investment authorised by the trust instrument. The section is not expressed as “subject to the trust instrument”. It is suggested that it is not safe to rely on this section when reviewing trust investments, as it is likely to be given a restrictive application by the courts.

Conclusion When writing this article, the author came across the will of Sir Cecil Rhodes, written in the 1890s. It established the Rhodes Scholarship, which is still in existence today. It is a masterful piece of immediate disposition to his friends to further the scholarships and a testamentary trust for the scholarships, as well as addressing the practicality of trustees investing in the future.

The obligation on trustees to invest is one of the most difficult tasks for trustees to perform. There are, however, several ways in which the risks can be minimised and these will be subject of a further article.

Robin Speed, CTASolicitor Speed and Stracey Lawyers

References

1 P Deane and WA Cole, British economic growth 1688-1959, 2nd ed, 1969, ch 1 and the pull-out chart at the end of the book.

2 In the application of Handosa, Estate of Frank Robert Handosa (unreported) 21 April 1994, referred to in Antill v Mostyn [2010] NSWSC 587.

3 The Acts in comparable jurisdictions are: ss 14-14F, 89 and 89A of the Trustee Act 1925 (ACT); ss 6-9, 13C and 13D of the Trustee Act 1936 (SA); Pt 1 of the Trustee Act 1893 (NT); Pt 3 of the Trusts Act 1973 (Qld); Pt 2 of the Trustee Act 1898 (Tas); Pt 1 of the Trustee Act 1958 (Vic); Pt III of the Trustees Act 1962 (WA).

4 The Act was amended by the Trustee Amendment (Discretionary Investments) Act 1997.

5 Re Burke [1908] 3 Ch 248; Ovey v Ovey [1900] 2 Ch 424.


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6 A Hicks, “The Trustee Act 2000 and the modern meaning of investment”, (2001) 15(4) Trust Law International.

7 S 14A(2)(b).

8 S 14A(2)(a).

9 (1886) 33 Ch D 347.

10 Ibid at 355.

11 S 14B(2)(b).

12 S 14B.

13 It is worth noting that the term deposits are assumed in the example to be with a company limited on the stock exchange and not those authorised by a federal or state Act. For example, the Public Authorities (Financial Arrangements) Act 1987 (NSW) treats investments issued under the authority of the Act as prudent; compare s 52 of the Inscribed Stock Act 1911 (Cth) and s 11 of the Treasury Bills Act 1914 (Cth).

14 (1952) 88 CLR 609.

15 S 14C(3).

16 See also s 90 where the court in considering the question of a trustee’s liability may take into account the “nature and purpose of the trust”.

17 WA Lee, “Trustee investing: homes and hedges”, [2001] QUT Law JJI 2.

18 See A Butler, “Modern portfolio theory and investment powers of trustees: the New Zealand Experience”, (1995) 7 Bond LR 119.

19 [1998] 1 NZLR 481.

20 Re Mulligan (dec’d) [1998] 1 NZLR 481 at 500.

21 [1961] VR 641.

22 Re Zimpel [1963] WAR 171.

23 G Dal Pont, “Conflicting signals for the trustees’ duty to invest”, (1996) 24 ABLR 140 at 141.

24 Re White [2008] NZHC 80.

25 For example, in 1978, “The British Rail Pension Fund decided to use part of its trust funds to acquire works of art”, The Times, 15 April 1978, p 1.

26 See Lord Nicholls, “Trustees and their broader community: where duty, morality and ethics converge”, (1996) 70 ALJ 205 at 211.

27 Harries v Church Commissioners for England [1992] 1 WLR 1241.

28 G Thomas, “The duty of trustees to act in the best interests of their beneficiaries”, (2008) 2 Journal of Equity 177.

29 P Collins, “The best interests duty and the standard of care for superannuation trustees”, (2014) 88 ALJ 632 at 647.

30 [1985] Ch 270 at 286-288.

31 Re Pauling’s Settlement (No. 2) [1963] Ch 576 at 586; [1963] 1 All ER 857 at 863; X v A [2000] 1 All ER 490 at 496.

32 K Jacobs, J Heydon and M Leeming, Jacobs’ Law of Trusts in Australia (8th ed), LexisNexis Butterworths, 2016, at [18]-[35] and p 402.

33 G Dal Pont, Equity and trusts in Australia, 6th ed, Thomson Reuters, 2015, at [22.105].

34 S 14B(2).

35 Re Mulligan (dec’d) [1998] 1 NZLR 481 at 501.

36 G Dal Pont, “Conflicting signals for the trustees duty to invest”, (1996) 24 ABLR 140.

37 [1985] Ch 270.

38 Ibid at 289.

39 J Lehane, “Delegation of trustees’ powers and current developments in investment funds management”, (1995) Bond Law Rev 36.

40 M Wain and M Shenkin, “Trustee investment powers and the use of asset managers”, (2009) 15(2) Trusts and Trustees 72.

41 WA Lee, Trustee investing: homes and hedges, 2000, at pp 13-15 and 16.

42 S 14C(2). See also ss 53 and 64.

43 A Hicks, “The Trustee Act 2000 and the modern meaning of investment”, (2001) 15(4) Trust Law International 6.

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SUBJECT


Late last year, the High Court handed down its decision in ElecNet (Aust) Pty Ltd v FCT 1 in which the High Court unanimously dismissed an appeal against a decision of the Full Federal Court on whether a particular scheme was a unit trust for the public trading trust rules. This decision has provided clarification of the concept of unit trust.

Broadly, the court considered the characteristics of the trust deed in question and held it was not a unit trust because the beneficial interest created by the trust deed did not create “discrete parcels of rights”2 characterisable as units that could be apportioned like shares in a company.1 In simplistic terms, one message that can be taken from this judgment is, if it does not look like a duck, swim like a duck, or quack like a duck, then it is not a duck. Practitioners should always turn to the relevant trust deed to glean the true nature of the beneficial interest concerned.

BackgroundElecNet (Aust) Pty Ltd (ElecNet) is the corporate trustee of the Electrical Industry Severance Scheme (EISS), a trust established for the purpose of providing portability and security of termination and redundancy benefits to employees in the electrical contracting industry by requiring employers to pay money into a fund, from which payments could be made to employees following termination of their employment. Under the EISS, employers within the electrical contracting industry may become members of the EISS and become required to make weekly payments to ElecNet. These payments are credited by ElecNet to accounts in the name of each of the employees in respect of whom a payment is made. Pursuant to the trust deed for the EISS, when an employee’s employment is terminated, ElecNet is to

make a severance or redundancy payment to that employee to the amount standing to the credit of that employee in their account.

ElecNet requested a private ruling from the Commissioner of Taxation as to whether the EISS constitutes a public trading trust for the purposes of Div 6C of Pt III of the Income Tax Assessment Act 1936 (Cth) (ITAA36). Division 6C applies to public unit trusts operating as trading trusts.3 A public unit trust operates as a trading trust where the business activities of the public unit trust are broader than:

� investment in land for rental purposes; and

� investment or trading in loans, securities, shares and other financial instruments.2

Division 6C essentially treats such trusts similarly to companies for the purposes of taxation. This means that the net income of a public trading trust is taxable in the hands of the trustee at the corporate tax rate and distributions to the unitholders receive the tax treatment of dividends paid by a company.2

Therefore, the outcome of this question had a significant impact for the EISS as if it had constituted a public trading trust, the net income of the EISS would be taxed at the company tax rate rather than at the special rate otherwise applicable under s 99A ITAA36.

The Commissioner ruled that the EISS was not a public trading trust for the purposes of Div 6C because the EISS was not a unit trust within the ordinary meaning of the term. In the Commissioner’s view, the term “unit trust” was not ascertained by the statutory meaning of “unit” in s 102M ITAA36, but described the common understanding of the term “unit trust” where the objects of the trust were divided

into discrete parcels of rights. Since the employees held a contingent right to receive money in the event of a future severance and not a proportionate share of the property of the trust, the trust was not a unit trust.

ElecNet, in submitting arguments in support of the contrary conclusion, sought to rely on the definition of “unit” in s 102M, which states: “‘unit’, in relation to a prescribed trust estate, includes a beneficial interest, however described, in any of the income or property of the trust estate”. Relying on the “expanded definition” of unit in s 102M, ElecNet submitted that whether a beneficial interest in a trust is described as a “unit” in a trust deed is immaterial,4 and instead argued that the following factors were determinative in characterising the EISS as a unit trust:

� the contributions are held on trust for the employees in respect of whom they are made; and

� the terms of the EISS give each worker a discrete interest in the trust fund to the extent of their entitlement to severance payments.5

Lower court decisions ElecNet appealed the Commissioner’s decision and the Federal Court found that the EISS was a unit trust. The Full Federal Court reversed this decision and held that ElecNet was not a unit trust because employee interests in the EISS were not unitised, that is, they did not have units in any meaningful sense, and therefore did not fall within the concept of a unit trust.

In coming to this decision, the Full Federal Court examined the history of unit trusts and concluded that an examination of what is a unit trust “will be assisted by consideration of the core concept of

The High Court has recently provided clarification on the concept of “unit trust”.

by Ella Vines, Harwood Andrews

What is a “unit trust”?


A MATTER OF TRUSTS

A MATTER OF TRUSTS

whether persons have (i) a beneficial interest in the income or property of the trust estate, which is (ii) capable of being functionally described as involving units. But even the absence of (i) will not necessarily be determinative”.6

The Full Federal Court held that, for the following reasons, the EISS could not be properly characterised as a unit trust:

� ElecNet as trustee has the discretion to determine the criteria which would entitle an employee to a conditional distribution;7

� ElecNet has the discretion to vary the amount standing to the credit of an employee’s account;8 and

� ElecNet has the discretion to select the method of calculation of the employee’s entitlement.9

These three discretions, the court held, taken together meant that the EISS did not meet “the functional description of a ‘unit trust’”.10

High Court decision ElecNet appealed this decision and the High Court upheld the ruling of the Full Federal Court, confirming the Commissioner of Taxation’s decision. In reaching this decision, Justices Kiefel, Gageler, Keane and Gordon examined the “effect of the terms of the Deed and the construction of the terms of the provisions of Div 6C by reference to their text, context and purpose”11 and concluded that the correct construction of the term “unit trust” was by reference to its ordinary use, that is a:12

“… trust in which the beneficial interest in the trust estate is divided into fractions, ordinarily called units. It I an express trust of which all the beneficiaries (the unit holders) as ascertainable at any given time. The division of the trust estate into units is the defining feature of a unit trust ordinarily so called.”

Their honours further stated:13

“There is no reason in the text or context of Div 6C to attribute to the undefined expression ‘unit trust’ any meaning other than the meaning evident from the language of Div 6C. That meaning accords with the common usage of the expression ‘unit trust’. As the Commissioner rightly observed, there is no reported case, in Australia or elsewhere, in which the expression ‘unit trust’ has been applied other than in circumstances where, under the applicable trust deed, the beneficial interest in the trust fund is divided into units, which when created or issued are to be held by the persons for whom the trustee maintains and administers the trust estate.”

ConclusionThis is an important decision for determining the main characteristic of a unit trust. That is, it must entail a beneficial interest that is divided into distinct portions and can be likened to shares in the way they can be cancelled, extinguished or redeemed.

The concept of a unit trust is not only important for the public trading trust rules, but also for other parts of the tax Acts, such as CGT event E4,14 and for the landholding regimes under the various state-based Duties Acts.15

Ella VinesLawyer Harwood Andrews

References

1 [2016] HCA 51.

2 ElecNet (Aust) Pty Ltd v FCT [2016] HCA 51 at [53].

3 ElecNet (Aust) Pty Ltd (Trustee) v FCT [2015] FCA 456 at [2].

4 Ibid at [13].

5 Ibid at [14].

6 FCT v ElecNet (Aust) Pty Ltd (Trustee) [2015] FCAFC 178 at [95].

7 Ibid at [109].

8 Ibid at [110].

9 Ibid at [112].

10 Ibid at [105].

11 ElecNet (Aust) Pty Ltd v FCT [2016] HCA 51 at [49].

12 Ibid at [85].

13 Ibid at [56].

14 See s 104-70 of the Income Tax Assessment Act 1997 (Cth).

15 For example, ch 3 of the Duties Act 2000 (Vic).


IntroductionDue to the lack of clear guidance and the importance of complying with the law in relation to the pension exemption, we examine the two methods for calculating exempt current pension income (ECPI) in respect of account-style pensions (ie account-based, allocated and market-linked pensions) under the Income Tax Assessment Act 1997 (Cth) (ITAA97) in the self-managed superannuation fund (SMSF) environment.

The main ECPI provisions are set out in ss 295-385 and 295-390 ITAA97. These provisions provide the foundation for working out how much of the ordinary and statutory income of an SMSF (ie income other than assessable contributions and non-arm’s length income) is exempt from tax when the fund is paying a pension. (We generally refer to the term “pension” for simplicity as the correct tax term is “superannuation income stream”.)

Naturally, it is important to understand both the segregated and the unsegregated methods of calculating ECPI to ensure SMSFs are appropriately treated for tax purposes where one or more pensions are being paid. This understanding is also essential for compliance with the transitional CGT relief provisions. Unless the two ECPI methods are correctly understood, SMSFs may miss out entirely on CGT relief.

From 1 July 2017, a pension must be in retirement phase to obtain an ECPI exemption. A transition to retirement income stream (TRIS) will no longer be entitled to an ECPI exemption from 1 July 2017 as a TRIS will no longer be eligible to be in retirement phase.

Unsegregated methodThe unsegregated method is the most commonly used method for determining

ECPI. Under this method, no particular SMSF assets have been set aside or identified as supporting pensions paid by the fund, and the fund’s exemption is calculated using the following prescribed formula:

Average value of current pension liabilities

Average value of superannuation liabilities

where:

� the numerator (ie the top line above) averages the current value of pension liabilities in that financial year (this does not include liabilities for which segregated current pension assets are held); and

� the denominator (ie the bottom line above) averages the value of the fund’s current and future superannuation benefit liabilities (this does not include liabilities for which segregated current pension assets or segregated non-current assets are held).

Under the unsegregated method, an actuary must certify the exempt proportion of assessable income of the fund each financial year (FY) in accordance with the above formula. When applying the formula, the actuary will broadly have regard to, among other things, the average balance, contributions, earnings and the days during an FY that the average balances are held in the fund.

The unsegregated method does not require any special changes to a fund’s accounting system. There is generally an actuarial certificate and possibly some other supporting records such as trustee resolutions consistent with a fund using the unsegregated method.

Some of the reasons for using the

unsegregated method include:

� the record-keeping requirements

associated with this method are

generally less onerous than for the

segregated method. There may,

therefore, be less administration and

associated cost savings using this

method (rather than the segregated

method). Indeed, this is by far the most

popular method in practice;

� capital losses are not lost (as they are

under the segregated method); and

� the fund may be precluded from

applying the segregated method from

1 July 2017 under the new rules (see

below for further discussion of this

restriction).

Segregated methodThe segregated method is where the

investments of a fund are allocated

between assets that are being used solely

to provide pensions (these assets are

known as segregated current pension

assets) and assets that are not in

accumulation phase.

There are broadly two ways that ECPI

segregation could apply:

� active or actual segregation whereby

certain fund assets are specifically set

aside to fund current pension liabilities;

or

� deemed or de facto segregation

whereby all of the assets of the fund are

supporting current pension liabilities.

Active segregation is not that common

and a considerable number of SMSFs are

segregated as a result of being deemed

segregated (ie 100% of fund assets are

funding pension liabilities).

The pension exemption provisions are complex and should be simplified, particularly due to intersections with the CGT relief provisions.

by William Fettes and Daniel Butler, CTA, DBA Lawyers

Understanding ECPI in view of super reforms


SUPERANNUATION

SUPERANNUATION

Active segregation depends on appropriate record-keeping. For example, it would be best practice to have:

� trustee resolutions recording:

� the specific assets that have been specifically identified as funding the pension liabilities; or

� the specific assets that are not funding pension liabilities, eg an SMSF may have all of its assets funding a pension apart from certain assets which are not funding a pension. It may be easier to record the non-pension assets (eg cash in a separate bank account) rather than the pension assets which may be far more comprehensive (eg a diversified portfolio of investments);

� assuming less than 100% of the fund is segregated — accounting records or computer systems that are set up to track the income/losses, capital gains/losses, tax entitlements and other aspects relating to the assets funding pensions (or, as noted just above, the non-pension assets if this is easier); and

� possibly other documentation which evidences segregation, including a statement or letter of advice, financial statements, tax returns, a fund’s investment strategy etc.

As already noted, deemed segregation is possibly the more common form of ECPI segregation and there may not be any records evidencing this type of segregation.

As discussed above, under active segregation, the fund’s accounting system needs to track the income/losses, capital gains/losses, tax entitlements and other aspects relating to the assets funding pensions. More specifically, the accounting system needs to be able to track not only the income/losses, changes in market values of assets, gross and net capital gains and franking offsets, but also foreign tax credits and other tax attributes of the fund’s segregated assets.

In contrast, under deemed segregation, there is no specific tracking needed as 100% of the fund’s assets are funding pension liabilities at that time.

Some of the reasons for using the segregated method may include:

� it can result in more efficient tax management of the tax exemption provided to income and capital gains from pension assets, eg an asset likely

to give rise to a significant capital gain can be segregated and hence the gain can be realised tax-free;

� allocating investments to a member’s account may assist in keeping separation of “who owns what”, eg some couples like to keep financial separation; and

� there is no requirement for an actuarial certificate.

Can segregation be for part or does it have to be for a full financial year?Certain ATO material suggests that deemed segregation requires a fund to be solely (ie 100%) in pension phase for an entire financial year (EFY), whereas other ATO material suggests that it can apply for part of a financial year (PFY). We therefore examine this issue below.

The following is a recent extract from the ATO’s website:

“Where all SMSF fund members are receiving a pension, for the entire year of income and the combined account balances of these pensions is equal to the market value of the fund’s total assets, in effect all assets of the fund will meet the requirement of being ‘segregated’ as they have the sole purpose of paying super income stream benefits. In this situation, the ATO will accept that the SMSF is not required to identify individual assets as being dedicated to funding a super income stream benefit. You will not need to obtain an actuarial certificate to claim ECPI if:

� you want to claim the tax exemption using the segregated assets method,

� the assets were segregated for the entire year of income

� at all times that pensions were payable during the income year, the SMSF only paid allocated pensions, market-linked pensions or account-based pensions, and no other type of pension.” (emphasis added)

We note that s 295-385(3) recognises that assets can be segregated assets for a PFY as the provision states “at a time assets are solely funding pensions …” provided an actuarial certificate is obtained. In contrast, s 295-385(4) broadly provides that segregated assets supporting account-style pensions for an EFY do not require an actuarial certificate provided s 295-385(5) and (6) are satisfied.

This analysis is consistent with the following extract from the ATO’s website which confirms that an SMSF can be segregated for a PFY:

“Where an SMSF is paying only a pension

prescribed by the superannuation regulations,

most commonly an account based pension,

including a transition to retirement income

stream from segregated assets, an actuarial

certificate is not required. This exemption,

applies to an SMSF, even where it commences

to pay an account based pension during the

year. The only exception is where the SMSF

is also paying pensions not prescribed by

the regulations, where the fund can still have

segregated assets but will be required to get an

actuarial certificate.

This change will be reflected in a soon to be

published addendum to Taxation Determination

TD 2014/7.”

While the ATO’s intent was to clarify PFY segregation in TD 2014/7, the addendum did not provide any further clarification. However, the ATO’s current view is consistent with the above extract and, while this extract does not constitute a public ruling (that a taxation determination usually provides), the ATO generally feels administratively bound by its published material.

Example: a segregated fund

The Charlie Super Fund is entirely (100%) in accumulation for the first four months of a FY. Charlie is the sole member of the fund which has $1.65m in accumulation.

Charlie, however, decided to commence a pension on 1 November 2016 so he would be entirely (100%) in pension mode for the remainder of FY2017.

The segregated CGT relief applies where an asset of the fund was segregated on 9 November 2016. This is the case as the fund was deemed to be segregated on that date under the ATO view that all (ie 100%) of the fund’s assets were supporting pension liabilities at that time.

If an SMSF was segregated for PFY and then unsegregated for the remainder of that FY (ie PFY segregated and PFY unsegregated), an actuarial certificate would be required under s 295-390(3) to (5) but segregated assets are excluded. The formula in s 295-390(3) excludes segregated current pension assets from the numerator and segregated non-current asset from the denominator.


SUPERANNUATION

Example: unsegregated fund

Mrs Spin, being the sole member of the Spin Super Fund, is entirely (100%; so deemed segregation applies) in pension mode from 1 July 2016. Mrs Spin has $1.8m in an account-based pension.

However, she makes a contribution on 20 June 2017 which converts her SMSF to being an unsegregated fund.

An actuarial certificate is required and, broadly, the earnings in respect of the PFY (ie 1 July 2016 to 19 June 2017 inclusive) segregation should be exempt. Broadly, the earnings from 20 June 2017 to 30 June 2017 (inclusive) will be exempt to the extent of the unsegregated proportion as certified by an actuary.

Now, analysing the CGT relief, the segregated CGT relief applies where an asset of the fund was segregated on 9 November 2016. This is the case as the Spin Super Fund was deemed to be segregated on that date under the ATO view that all (ie 100%) of the fund’s assets were supporting pension liabilities at that time. However, since an actuarial certificate is required, many may be led into the trap that the unsegregated CGT relief applies since there is an amount of unsegregated ECPI. In particular, the proportionate CGT relief provision, s 294-115(1)(b) of the Income Tax (Transitional Provisions) Act 1997 (Cth) (ITTPA), being one criterion of proportionate CGT relief applying, provides:

“the proportion mentioned in subsection 295-390(3) of the Income Tax Assessment Act 1997 in respect of the fund for the 2016-17 income year is greater than nil;”

We understand that computer software systems and actuarial practice may not align with the above analysis and there may be differing views. Therefore, advisers need to be careful to check that they are applying the ECPI and CGT rules correctly and do not simply accept what is produced by their computer software or actuarial service provider.

Thus, this complexity may well result in SMSF trustees and their advisers choosing the wrong CGT relief method. As discussed below, this is a complex and technical area of the law that involves actuarial expertise and, in the authors’ opinion, needs urgent attention to clarify the uncertainty.

Expert tax, actuarial, financial product, accounting, legal and commercial advice should be obtained before a choice is made, so that an adviser will not be subject to future legal action for advising on a choice that may require all these skill sets.

Changes from 1 July 2017From 1 July 2017, both methods of ECPI will be subject to the new requirement that the relevant pension is in retirement phase. Transition to retirement income streams are expressly excluded from being in retirement phase. Accordingly, account-based pensions will be tested for the transfer balance cap, but not TRISs.

Additionally, certain SMSFs and small APRA funds will be precluded from using the segregated method to determine their exempt income from 1 July 2017. This restriction will apply to an SMSF where a member of the fund has a superannuation interest in tax-free retirement phase and a total superannuation balance in excess of $1.6m. Note that s 295-387(2)(c) ITAA97 expressly states that the total superannuation balance threshold is $1.6m rather than the general transfer balance cap, so this $1.6m threshold is not indexed.

Transitional CGT reliefAlthough it is beyond the scope of this article to examine the transitional CGT relief provisions in detail, it is worth noting that the relevant provisions in Subdiv 294B ITTPA refer back to the ECPI provisions.

However, in contrast to the EFY approach to ECPI discussed above, these provisions broadly work on a point-in-time basis for the purposes of the pre-commencement period, which is 9 November 2016 to just before 1 July 2017.

Accordingly, funds that were 100% in pension phase on 9 November (including funds with members in TRIS phase prior to 1 July 2017) are deemed to be segregated at the relevant time and are potentially eligible for the segregated CGT relief that applies to SMSFs which are under the segregated ECPI method. If the segregated CGT relief applies, a cost base reset occurs for elected assets at the time that the relevant asset ceases to be a segregated current pension asset of the fund and any notional capital gain is fully disregarded.

In contrast, funds using the unsegregated method will potentially be eligible for the proportionate CGT relief that applies to SMSFs using the unsegregated method.

If this relief is enlivened, the fund will need to account for the non-exempt portion of any notional capital gain on any elected assets in its FY2017 tax return, or opt to defer this notional capital gain indefinitely until such time as the relevant asset is disposed of by the SMSF trustee.

Transitional CGT relief – needs revisingSelf-managed superannuation funds that were segregated on 9 November 2016 must ensure that an asset ceases to be a segregated current pension asset prior to 1 July 2017.

Typically, this is evidenced by a trustee resolution and where a commutation is involved, the ATO in PCG 2017/5 has confirmed that a commutation can be documented even though the value of the member’s superannuation interests are not available on 30 June 2017, subject to a number of qualifications.

This pre-1 July deadline for an asset to cease to be segregated applies despite an SMSF having the lodgment date of its FY2017 tax return to complete the choice in the approved form. (We still await the ATO to issue this approved form.)

Interestingly, despite the uncertainty above relating to when an SMSF is segregated, the segregated CGT relief, as noted above, hinges on whether an asset was a segregated current pension asset at a particular time, ie at 9 November 2016. As you may appreciate from the above, this “point-in-time” segregation adds another layer of complexity to the uncertainty raised above in relation to PFY and EFY segregation.

Furthermore, the explanatory memorandum to the Bill that became the Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 (Cth) and the ATO’s comments in LCG 2016/8 on Pt IVA of the Income Tax Assessment Act 1936 (Cth) relating to the general (tax) anti-avoidance provisions is making the application of the relief more difficult in practice, and further guidance on what is possible without being subject to the general anti-avoidance provisions is required to ensure there is greater certainty when applying the CGT relief provisions.

The above ingredients have the potential for the making of a “perfect storm” whereby many SMSF trustees will lose out unless they correctly apply the CGT relief within the prescribed deadlines.


SUPERANNUATION

We therefore recommend that the CGT relief provisions be simplified and further time be permitted to comply with them. The CGT provisions combine, among other things, complex legal, tax, actuarial and superannuation rules and the time and complexity of getting a sound understanding of these rules, let alone implementing the CGT relief appropriately and on time, is an extremely difficult task, even for SMSF experts. Moreover, SMSFs will incur considerable costs in seeking advice. Indeed, many SMSFs will be dissuaded from making a choice due to the complexity and costs involved.

The old saying that the “law is an ass” appears to apply here. That is, the law, as created by legislators or as administered by the justice system, cannot be relied on to be sensible or fair.

ConclusionUnderstanding the ECPI provisions is critical to ensure that SMSF assets are appropriately exempted from tax where one or more pensions are being paid, and for compliance with the CGT relief.

Further, the segregated CGT relief is in need of revision to enable SMSFs to obtain clarity and obtain advice on how to implement the relief once clarity is provided.

William FettesSenior Associate DBA Lawyers

Daniel Butler, CTADirector DBA Lawyers

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SA FAMILY BUSINESS DAYFocusing on family business tax issues, this full day program will provide practical examples and solutions on the important issues affecting family businesses and their trust advisors including sessions on: growth strategies for family business; SMSF and Property; accounting and legal issues related to structuring and restructuring a business; Div7A – loans and UPE’s; buy-sell agreements and insurance; and much more.

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Justice Croft of the Victorian Supreme Court in late March 2017 handed down a decision1 which has narrowed the meaning of “dutiable interest” for the purposes of the Victorian Duties Act 2000. Some transactions which were previously thought to be dutiable will now not be dutiable if the decision stands.

In essence, the transfer of an interest of a partner in a partnership, one of the assets of which includes dutiable property, may not be dutiable.

Facts Gold Age Australia Pty Ltd (GAA) held three parcels of Victorian real estate on trust for the partnership.

The partnership, which was established by a deed of unit partnership on 7 August 2002, was styled the Faircourse Unit Partnership. At inception, it had three partners, Lopet Pty Ltd (as to 40 units), Northpeak Pty Ltd (as to 40 units), and Gold Age Pty Ltd as trustee for the Gold Age Trust (as to 20 units).

In January 2004, Danvest Pty Ltd (Danvest) was substituted for Gold Age Pty Ltd (Gold Age) as trustee of the Gold Age Trust and became entitled to a 20% interest in the partnership.

Gold Age conducted an aged care business from the parcels of land owned by GAA, and GAA received rent from Gold Age.2

As part of a sale of the aged care business in December 2013, Lopet Pty Ltd and Northpeak Pty Ltd sold their collective 80 units in the partnership to Danvest and Bullhusq Pty Ltd. At the completion of the transaction, Danvest and Bullhusq owned in equal shares all of the units in the partnership. GAA continued to own the parcels of land as manager for the partnership.

By letter dated 27 March 2014, Danvest and Bullhusq sought a private ruling from the Commissioner to the effect that the transactions with respect to the partnership were not dutiable under the Duties Act 2000. The Commissioner found to the contrary and, in the fullness of time, issued an assessment for $1,765,549.3

Danvest and Bullhusq objected.

Legislative provisionsThe relevant provisions of the Duties Act 2000 applicable or potentially applicable were:4

“7. Imposition of duty on certain transactions concerning dutiable property

(1) This Chapter charges duty on —

(a) a transfer of dutiable property; and

(b) the following transactions —

…

(vi) any other transaction that results in a change in beneficial ownership of dutiable property

…

(4) In this Chapter —

…

‘change in beneficial ownership’ includes, but is not limited to —

(a) the creation of dutiable property;

(b) the extinguishment of dutiable property;

(c) a change in equitable interests in dutiable property;

(d) dutiable property becoming the subject of a trust;

(e) dutiable property ceasing to be the subject of a trust.”

“10. What is dutiable property?

(1) Dutiable property is any of the following —

(a) each of the following estates or interests in land in Victoria —

(i) an estate in fee simple;

…

(ac) an interest in any dutiable property referred to in paragraph (a) … other than —

(i) a security interest;

(ii) an option to purchase;

(iii) a lease other than a lease referred to in paragraph (ab);

…

(d) goods in Victoria, if the subject of an arrangement that includes a dutiable transaction over an estate or interest in land …”

“Transfer” is defined in s 3 of the Duties Act 2000 to include:

“… an assignment, a conveyance, an exchange and a buy-back of shares in accordance with Division 2 of Part 2J.1 of the Corporations Act.”

“Interest” is defined in s 3 of the Duties Act 2000 to include “an estate or proprietary right”.

Nature of an interest in a partnershipThe court commenced its consideration by considering the nature of an interest in the property of a partnership. Was the interest of Danvest and Bullhusq in the property (being partnership property) “an interest in [an estate in fee simple]” within the meaning of s 10(1)(ac) of the Duties Act 2000? The court noted that here, unlike other partnerships, legal title to the partnership property vested in GAA, not Danvest and Bullhusq.

Second, a partner’s interest depended on whether it was viewed from the perspective of an external party or another partner. The court noted the effect of s 26 of the Partnership Act 1958 (Vic), which stated that land as partnership property shall,

Is a partner’s interest in a partnership which has Victorian real property as a partnership asset a dutiable interest for Victorian Duties Act purposes?

by Michael Norbury, CTA, Norbury Lawyers

The perplexing partnership interest

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TAX CASES

TAX CASES

unless the contrary intention appears, “be treated as between the partners … as personal estate”.5

Third, describing what a partner holds in the partnership assets as an interest does not refer to a proprietary stake in those assets, rather a convenient label for what was held.6

The court then reviewed decisions including that of Commissioner of State Taxation (SA) v Cyril Henschke Pty Ltd 7 and concluded that the interest held by a partner was a chose in action entitling the partner to a proportion of the surplus after the realisation of assets and the payment of debts and liabilities. It was a species of personal property and conferred no equitable proprietorship interest in partnership assets.8

How was this to be reconciled with the High Court’s earlier statement in Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd 9 that a partner has a beneficial interest in every asset of the partnership, usually also described as sui generis and of “peculiar character”? The critical part of the judgment in this respect follows:10

“The nature of a partner’s interest in the partnership property has often been explained. The partner’s share in the partnership is not a title to specific property but a right to his proportion of the surplus after the realization of assets and the payment of debts and liabilities. However, it has always been accepted that a partner has an interest in every asset of the partnership and this interest has been universally described as a ‘beneficial interest’, notwithstanding its peculiar character. The assets of a partnership, individually and collectively, are described as partnership property (Partnership Act, 1892, as amended (NSW), s 20). This description acknowledges that they belong to the partnership, that is, to the members of the partnership.

In Re Fuller’s Contract,[11] Luxmore J (as he then was) said:

‘… as between the partners, the partnership property must be dealt with in a particular way, but so far as all the rest of the world is concerned, there is no limitation on the interests of the partners; the partners have the beneficial interest in the partnership assets, which are held together as an undivided whole, but they respectively have undivided interests in them.’

It is significant that s 20(ii) of the Partnership Act, 1892, as amended (NSW) treats a partner as having a beneficial interest in real estate belonging to the partnership, for in this respect no distinction

can be drawn between the nature of a partner’s interest in real estate and his interest in personal estate.

The appellant submitted that the nature of a partner’s interest was analogous to that of a residuary legatee in an unadministered estate. There is some similarity between the two cases in that the residuary legatee and the partner each have the right to insist upon due administration, the former of the estate and the latter of the partnership assets and liabilities, and the precise entitlement of each must await the due course of administration. Nevertheless we think that the interest of the partner in an asset of the partnership is sui generis (cf Livingston v Commissioner of Stamp Duties (Qld)).[12] It is, as we have said, recognized as a beneficial interest.

As such it constitutes an equitable interest and is not a mere equity to set aside or rectify a transaction by means of a court order (see Latec Investments Ltd v Hotel Terrigal Pty Ltd ).[13] Consequently it prevails over the subsequent equitable charge held by Canny Gabriel, despite that company’s ignorance of the prior equitable interest at the time when the equitable charge was granted.”

Danvest and Bullhusq contended that the High Court in Cyril Henschke endorsed the result but not the reasoning of Canny Gabriel.

The court also considered that confining a partner’s interest to an equitable chose in action was also consistent with the High Court’s decision in CPT Custodian Pty Ltd v Commissioner of State Revenue (Vic).14

Danvest and Bullhusq contend that two relevant propositions emerged from CPT Custodian. First, a person who has rights generally in respect of property that is held for their benefit by another person does not necessarily have an interest in that property itself; and second, where the right is in respect of a proportional share of the property of another, in circumstances where the amount and value of that property will not be determined until some later time, the right is less than an interest in that property. It did not follow from the second proposition, as the Commissioner contended on a more general basis, that the process of determining the amount or value of some later terms was indicative of the position that an interest, a beneficial interest, was as an existing interest which was merely being quantified and valued at a later time.15

The Commissioner relied on many cases. He submitted that there was, therefore, clear, repeated and long-standing authority

that a partner has a sui generis equitable interest in each of the assets of the partnership.

The judge, however, was unable to accept the Commissioner’s submission.

The judge reiterated his view that a partner has a non-specific and unique kind of “beneficial interest” in the partnership property and one which could not be properly characterised in the context of these proceedings as anything like a relevant vested proprietary interest. The judge held that the cases confirmed that the interest was, when analysed beyond its general description as a “beneficial interest”, an equitable chose in action, an expectancy only.16

Finally, the judge turned to the rights of the partners in the partnership.

Each holder of a unit in the partnership thereby held “an equal and undivided interest in the capital of the partnership”.17 However, that interest was held on trust for the unitholder by the GAA as manager and each unitholder undertook “not to attempt to obtain a partition and/or a separate legal title to his interest in the partnership property”.18 No partner had an immediate or indefeasible right to the income or capital of the partnership. As to the former, while a profit and loss account was to be put to the partners at least annually,19 they were not obliged to distribute any profit in any given year.20 If they did choose to distribute profit, they did not have to do so equally.21 As long as they breached no fiduciary obligation in doing so, it was within the powers of a three-fifths majority of unitholders22 to distribute profits otherwise than pari passu.

GAA had significant powers and rights. These powers and rights meant that GAA could, on behalf of the partnership, incur expenses that would have the effect of depleting the assets or reducing the income of the partnership. GAA held the properties not as “bare trustee” for the partnership, but “for” the partners. GAA otherwise had full legal ownership.23

The court considered Glenn v Federal Commissioner of Land Tax,24 Griffith CJ said of a will by which beneficiaries’ rights could not be enjoyed until expiration of a period:

“… there is no present estate in possession in that property in any person other than the trustees of the will. In one sense, perhaps, the persons who are for the time being entitled to share in the fruits of the land may collectively be called the


TAX CASES

equitable owners, but that point is not material to the present case.”

Here, no partner had a present estate in possession in the property of the partnership, and would not have one until the partnership was dissolved. The only party with such an estate was GAA. All a partner presently held was its equitable chose in action.25

Did the rights enjoyed by a partner answer the statutory definition of an “interest in” the dutiable property of the partnership or “beneficial ownership” of the property of the partnership?24

GAA held dutiable property, since it held on trust for the partners certain estates in fee simple. The Commissioner relied on s 10(1)(ac), which included as “dutiable property” interests in estates in fee simple. “Interest” was not defined, except so as to exclude security interests, options to purchase and leases for which consideration other than rent reserved is paid. For the Commissioner to succeed, an interest for the purposes of s 10(1)(ac) must include an interest that had not vested, was not presently enforceable, was not presently calculable, and may have had a zero or negative value.

The judge adopted Windeyer J in Bolton v FCT,26 in that it was a right to “a fractional interest in a surplus of assets over liabilities on a winding up and in the future profits of the partnership business”. The judge noted that there may never be either a surplus of assets or future profits.27

The judge concluded that the equitable chose in action acquired by each of Danvest and Bullhusq conferred no interest in the partnership property, in particular the land, and did not cause any change in the beneficial ownership of such property. The chose in action remained an item of personal property incapable of conferring any such interest, or changing any beneficial ownership. All that was conferred on those others are equitable rights against each other and against the trustee. The rights may permit partnership assets to be exploited, including land, but no estate or interest in those assets was carved out.28

It followed that no dutiable interest was transferred when Danvest and Bullhusq purchased their partnership interests.

Conclusion A surprising result for the taxpayer. One which is determined by the underlying analysis of the effect of partnership law.

The Commissioner has lodged an appeal with the Victorian Court of Appeal. Should the Commissioner fail on appeal, there may well be remedial legislation.

Michael Norbury, CTAPrincipal Norbury Lawyers

References

1 Danvest Pty Ltd v Commissioner of State Revenue [2017] VSC 125.

2 Danvest at [11]-[14].

3 Danvest at [30].

4 Note that, in contradistinction to the Duties Acts of other jurisdictions, “partnership interest” is not a species of dutiable property in Victoria.

5 Danvest at [49].

6 Danvest at [50].

7 [2010] HCA 43.

8 Danvest at [61].

9 [1974] HCA 22.

10 [1974] HCA 22 at [10]-[13].

11 [1933] Ch 652 at 656.

12 (1960) 107 CLR 411.

13 [1965] HCA 17.

14 [2005] HCA 53.

15 Danvest at [68].

16 Danvest at [78].

17 Cl 5(1) of the partnership deed.

18 R 4 of the partnership rules.





23 Danvest at [89].

24 [1915] HCA 57.

25 Danvest at [94].

26 [1965] ALR 481.

27 Danvest at [95].

28 Danvest at [96].


2017 QUEENSLAND TAX FORUMRegister on or before Friday 21 July 2017 to SAVEConstant change has been the only certainty for taxpayers and advisers in 2017, and the Queensland Tax Forum has never been more topical or important for tax practitioners.

With unprecedented public and political interest in our profession, it is an interesting time to work in tax, and this year’s program delivers different perspectives on the changing face of taxation.

24–25 August 2017 Brisbane Marriott Hotel

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QLD

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17

REGISTER NOW

Early bird closing Friday 21 July 2017. Register now by calling the Queensland team on 07 3225 5200.

IntroductionThe Australian Government has actively supported foreign investment into Australian real property assets through tax policy for over 10 years. This policy manifests itself in the taxation of trusts on a “flow-through” basis and the managed investment trust (MIT) regime introduced in 2007. These policies have facilitated a substantial amount of foreign direct investment into a range of asset classes, including listed and unlisted real estate, privatised government assets and infrastructure, renewable energy and agriculture.

In January 2017, the Australian Taxation Office (ATO) released TA 2017/1, highlighting the proliferation of stapled structures in the market and their inappropriate use to “fragment” a business or “recharacterise” its trading income into a character that is subject to concessional taxation. This alert was the catalyst to the release of the Treasury consultation paper on 24 March 2017 which outlined potential policy options to address the concerns raised by the ATO.

In the consultation paper, Treasury confirmed that it is ready to undertake a holistic examination of the taxation of investment income derived using stapled structures, and they are seeking to understand the following from taxpayers to help them respond to the issue:

(1) What is the right policy to deal with existing integrity concerns?

(2) What asset classes should benefit from tax incentives offered to foreign institutions?

(3) What is the right framework to deliver these incentives (ie “stapled structures” or an alternative)?

PricewaterhouseCoopers (PwC) submitted a response to the consultation paper highlighting that any significant policy change will inevitably have immediate consequences by reducing investor confidence and market capitalisation of Australian institutions. The potential for a significant shift in tax policy will impact a large number of stakeholders, including state and territory governments, a range of foreign institutional investors, Australian superannuation funds and Australian Securities Exchange (ASX) listed entities including real estate investment trusts (REITs).

In this article, we set out the approach to consultation and reform as recommended in the PwC stapled structures submission (the submission). What follows is a summary of the key messages in the submission.

1. Re-affirm the policy objectivesThe submission encouraged the government to reiterate its commitment to policy objectives that have underpinned confidence and growth in Australia’s property, infrastructure and agri-business industries. The particular commitments which the government should affirm include:

� a commitment to continue to tax passive income derived from real property (including REITs and instances where a common observable market exists), privatised assets and certain “included infrastructure” on a flow-through basis;

� a commitment to continue to provide a level playing field for foreign institutions making passive investments in eligible Australian assets — with passive income from these structures, such as

rent, subject to a 15% withholding tax rate, and active trading income, such as sales and services income, subject to a 30% corporate income tax or withholding tax rate; and

� in the event fundamental change is legislated, implement comprehensive transitional rules to ensure that existing structures are not adversely impacted and planned projects are not delayed or curtailed, as this could increase the perceived sovereign risk associated with Australian investments.

2. Restore the integrity of the tax systemThe submission encouraged the government to take effective action to restore the integrity of Australia’s taxation rules and protect the corporate tax base by addressing the ATO’s concerns with respect to the “recharacterisation” of trading income through the use of contrived royalty and synthetic stapled structures.

As an alternative to the three broad policy options set out in the Treasury consultation paper,1 any amendment to the taxation laws to address these integrity issues should be effected through the withholding regime in the Income Tax Assessment Act 1936 (Cth) and the Taxation Administration Act 1953 (Cth), rather than entity level taxation. That is, the amendments should require the trustee of a trust in receipt of royalty or synthetic income derived under arrangements entered into post the announcement in the 2017-18 federal Budget to withhold and remit amounts to the ATO at Australia’s corporate tax rate.

This approach should ensure effective collection of taxes and administrative action until any changes to the current tax policy have been finalised. It should

As the government reviews its policy on stapled structures, Australia’s investment landscape is clouded by uncertainty. The government must now deliver timely, yet considered, legislative action.

by Glenn O’Connell and Angeline Young, PricewaterhouseCoopers

The future of stapled structures

2017 QUEENSLAND TAX FORUMRegister on or before Friday 21 July 2017 to SAVEConstant change has been the only certainty for taxpayers and advisers in 2017, and the Queensland Tax Forum has never been more topical or important for tax practitioners.

With unprecedented public and political interest in our profession, it is an interesting time to work in tax, and this year’s program delivers different perspectives on the changing face of taxation.

24–25 August 2017 Brisbane Marriott Hotel

0196

QLD

_06/

17

REGISTER NOW

Early bird closing Friday 21 July 2017. Register now by calling the Queensland team on 07 3225 5200.


ALTERNATIVE ASSETS INSIGHTS


also limit the potential for an adverse impact on the broader taxation system and stakeholder community in the short term. The potential adverse impacts of Treasury’s broad policy options flagged in the submission include:

� operating company becoming a franking trap (impacting both resident and non-resident investors);

� operating company could become insolvent (impacting directors, ability to operate, creditors etc);

� banking covenants breached (leading to a potential default on third party debts); and

� loss of foreign tax credits for foreign investors (due to effective Australian company taxation).

These issues will need to be carefully considered before implementing the options in the Treasury paper.

3. Better targeting the tax concessions to foreign capitalThe submission encouraged the government to undertake a fulsome consultation and engagement process with stakeholders before any significant changes are implemented to the existing framework. The principles for any review should be clearly laid out and may include, among other things, to:

� constrain the eligibility of the tax concessions to the intended asset classes;

� protect existing investors in stapled structures from adverse change; and

� enhance the effectiveness of Australia’s taxation regime and concessions.

The submission advanced four transaction classes that should be permitted in a stapled structure to encourage passive investment, particularly from foreign institutions. These classes were:

(1) Australian REITs, including the incorporation of a broader definition of “rent” to include amounts paid for the use of physical space (eg student accommodation, hotels etc);

(2) privatisations, comprising government asset privatisations that include some of the largest transactions in Australia (eg toll-roads operating under concessions, ports, airports, utilities etc);

(3) “included infrastructure”, being key infrastructure facilities such as roads, tunnels, bridges, airports, ports,

electricity generation (including renewables), gas pipeline assets, water supply assets, sewage etc; and

(4) other real property where an observable third party rental market exists (eg agricultural land).

In conjunction with this fulsome consultation process into stapled structures, a suggestion was made for the government to commission a review into the use of transparent vehicles and concessions used by other developed countries to attract foreign investment into “included infrastructure” — the focus being not the type of entity used, but the nature of its activities and income.

4. Comprehensive carve-out, transitional and grandfathering rulesThe submission encouraged government to introduce comprehensive transitional measures to protect existing investors should major changes be made to the eligibility of existing investments beyond the synthetic and royalty stapled structures. This recommendation was made to prevent one or more of the following adverse outcomes for investors:

� a breach of debt covenants in existing financing arrangements;

� the inability to extract cash from the project entities due to dividend traps;

� the loss of flow-through taxation treatment and impost of higher Australian withholding tax rates; and/or

� the inability to claim foreign tax credits in their home jurisdiction.

Such transitional measures were considered necessary to reduce the financial impact on existing investments and minimise the impact on Australia’s sovereign risk. The scope and nature of any transitional provisions will necessarily depend on how comprehensive the law changes are, but consideration should be given to:

� affirming that REITs, privatised assets, included infrastructure and assets where a third party rental market exists (refer to the examples given earlier) will not be affected by any changes or new rules;

� grandfathering assets that are currently eligible to be in stapled structures but would be excluded as a result of any change in policy. Unless a specific carve-out is provided (as per the above), any grandfathering should at least

include REITs, privatised assets, included infrastructure and assets where a third party rental market exists. The rationale for grandfathering these assets is that they typically have high restructure costs, complex banking arrangements, support the federal government’s asset recycling program and many have received explicit and implicit regulatory approval from the ATO. Grandfathering is also necessary to recognise that some investors have based the purchase price paid to state and territory governments for these assets on the basis of agreed taxation subject to MITs (or for subsequent purchasers) through stapled structures, and have entered into 99-year tax deeds which are intended to provide certainty to investors over the term of the project; and

� an extended transitional period for structures that become subject to a higher rate of trustee withholding tax on distributions to foreign investors, or loss of flow-through taxation treatment. Such a transitional period would need to be a minimum of five years to allow existing structures to minimise the financial impact and restructure debt arrangements where required. This would apply to arrangements that do not fall into a carve-out or are grandfathered per above.

Additionally, a commitment from the government on policy and approach to carve-outs, grandfathering and transitional rules in a timely manner was also encouraged to reduce the uncertainty for transactions that are being delayed or curtailed as a result of the existing uncertainty.

5. Real estate investment trusts continue to be flow-through vehicles Real estate investment trusts (both listed and unlisted) are typically regarded as the aggregation of businesses, not the fragmentation of groups or re-characterisation of income. The “aggregation” of businesses creates economic efficiency and allows best use of assets. It also allows stapled groups scale for funds management capacity to attract new investment.

The current tax outcomes under this model are appropriate as passive income is taxed on a flow-through basis at the investor’s rate of tax or withholding tax, and the active income is taxed at



the entity level at Australia’s corporate income tax rate. Additionally, integrity concerns with cross-staple dealings in a REIT context are adequately addressed through the non-arm’s length income rule in Subdiv 275-L of the Income Tax Assessment Act 1997 (Cth).

The submission encouraged the government to mitigate any adverse impact on REITs by the carve-out of any changes, or grandfathering REITs operating as aggregation “staples”. Prospectively, Treasury should focus on the potential enhancements to the existing Div 6C of the Income Tax Assessment Act 1936 (Cth) to: (1) expand the term “rent” to more appropriately include payments for the “use of physical space”; and (2) increase safe harbour thresholds. This may allow more REITs to be operated through a single trust structure. An enhancement of this nature could negate the need for stapled structures for aggregation by REITs going forward.

Media release from the Treasurer On 2 May 2017, the government released a statement confirming its commitment to this issue, but also stated that, in “[r]ecognising the economic significance of stapled structures in the Australian economy and that this is a complex and sensitive issue, the Government will not be responding to the issue in the Budget”.

Given that the Treasurer did not commit in the media release to certain policy objectives or protected asset classes, there will remain, at least for the time being, a degree of uncertainty as to the future policy direction and tax treatment of stapled structures. This uncertainty is something that all stakeholders will have to work through in the short to medium term. However, given the high priority of this issue, the authors expect timely and targeted consultation to occur in the months to come — with the consultation period now extended until July 2017.

Glenn O’ConnellDirector PricewaterhouseCoopers

Angeline YoungSenior Manager PricewaterhouseCoopers

Reference

1 Treasury, Stapled structures, consultation paper, March 2017, p 14.

25th NOOSA TAX INTENSIVEThe past, the present, and the futureSave the date! The Noosa Tax Intensive is back and as always, is an event not to be missed!

This year’s program will kick off with a keynote address that will look back at highlights over the past 25 years and will be followed by the high-quality plenary sessions, and of course the brain-teasing workshops, we’ve all grown to love!

16–17 November 2017 Sofitel Noosa Pacific Resort

0195

QLD

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PROGRAM COMING SOON

Request a pre-release of the program by contacting Katie Redhead on 07 3225 5200 or [email protected].


Personal bankruptcy results when an individual is unable to pay his or her debts as and when they fall due and payable.1 Notably, the test is not whether the debts exceed an individual’s assets, it is whether the individual’s income permits the payment of the outstanding debts.

When an individual’s income is insufficient to pay the debts, and in extreme cases where a trustee in bankruptcy has been appointed, the individual’s assets are sold to pay the creditors.

Not all assets are available for the sale and payment of the debts of solvent and bankrupt individuals.

Sections 204 and 205 of the Life Insurance Act 1995 (Cth) provide that insurance proceeds on one’s own life or on the life of a spouse or de facto partner are not available for payment of debts, unless so specifically charged with the payment of debts. The proceeds can, however, be used for the payment of funeral and testamentary expenses.2

These provisions of the Life Insurance Act 1995 are concerned with solvent individuals and estates, and are subject to the provisions of the Bankruptcy Act 1966. The mercy of the Bankruptcy Act 1966 is that it mirrors those provisions for bankrupt individuals and insolvent estates.

Section 116(2) of the Bankruptcy Act 1966 contains a list of assets not divisible among creditors on an individual’s bankruptcy, for example, household items, items of sentimental value, property which is necessary for the bankrupt to earn an income, a basic vehicle, compensation paid as a result of a personal injury3 or death of the bankrupt, their spouse or de facto partner or a member of their family, assets held in trust for the

individual by another etc. Importantly for this column, subsection (2)(d) protects insurance policies on the life of the bankrupt or the spouse or de facto partner of the bankrupt received on or after the bankruptcy, as well as superannuation of the bankrupt held or received on or after bankruptcy.

These provisions are often overlooked by practitioners and do not often come up for judicial comment. However, these provisions exist to assist clients who are nearing rock bottom and should be utilised more often for that reason.

A recent case of Trustees of the Property of Morris (Bankrupt) v Morris (Bankrupt)4 reminds us about the benefits of these provisions.

Debbie Morris’ circumstances were tragic. All in the same year, she gave birth to a baby, her husband went bankrupt, her husband died leaving her alone with the baby and a two-year-old, and she is declared bankrupt herself.

Her husband left three superannuation and life insurance products:

� $311,865.93 of life insurance and related anti-detriment adjustment payment with Plum Super;

� $45,392.48 of superannuation with AustSafe Super; and

� $67,240.27 of superannuation with Plum Super.

After the tragic events, receipt of almost $430,000 would, no doubt, have been a welcome opportunity for a new start by Debbie.

Her trustee in bankruptcy accepted that the first payment of $311,865.93 was not available for payment of creditors as it was a life insurance policy clearly falling within s 116(2)(d).

The trustee pursued the two payments of $45,392.48 and $67,240.27 because they were paid to Debbie well after her husband’s death as a result of the super fund trustees exercising their discretion to pay the death benefits to her as her husband’s dependant in the absence of death benefit nominations.

The bankruptcy trustee contended that because there were no nominations, the exercise of the super fund trustees’ discretion had the result of creating Debbie’s interest while she was a bankrupt and was therefore after acquired property5 for the purposes of the Bankruptcy Act 1966, and not subject to the protection of s 116(2)(d)(iii)(A) and (iv), which protect superannuation.

The bankruptcy trustee submitted that once the interest was created, it vested in Debbie’s trustee in bankruptcy and became divisible among her creditors. In effect, the bankruptcy trustee was saying that the superannuation should not be protected because it was the husband’s and not Debbie’s. The bankruptcy trustee argued that the Bankruptcy Act 1966 specifically refers to life insurance of the spouse or de facto partner being protected, and this is deliberately different from the wording used with respect to superannuation, “the interest of the bankrupt in …” superannuation, this distinction leading to the conclusion that only the bankrupt’s own superannuation is protected from creditors, not the spouse beneficiary’s.

Debbie asked the court to construe the payments as superannuation within the meaning of s 116(2)(d)(iv) in that her husband was a member of the super fund and she became a member in his place.

Logan J acknowledged that the super fund trustees could have exercised their discretion and paid the death benefits to

Mercies of the Bankruptcy Act 1966 and Life Insurance Act 1995 that should be wider known and utilised.

by Katerina Peiros, ATI, Hartwell Legal, and Christine Smyth, ATI, Robbins Watson Solicitors

Bankruptcy – protecting death benefits and insurance


SUCCESSFUL SUCCESSION

SUCCESSFUL SUCCESSION

Debbie’s children or her husband’s estate, or to the four potential recipients in various proportions at their discretion. He also acknowledged that, until the discretion was exercised, Debbie had no rights towards the superannuation other than a right to be considered and of due administration.6 Accordingly, Logan J held that between the date of death of Debbie’s husband and the date that the super fund trustees exercised their discretion to pay the death benefits to Debbie, Debbie had no interest within either fund within the meaning of s 116(2)(d)(iii)(A). On the super fund trustees exercising their discretion in her favour, her interests in the super funds were created and immediately on creation were captured by s 116(2)(d)(iii)(A) and, therefore, were immediately protected.

Logan J said at [30]:

“Parliament, in my view, ought to be taken to have been cognisant in the reference to the [Superannuation Industry Supervision] Act in s 116(2)(d)(iii)(A) of the breadth of persons who under that Act can constitute a beneficiary …

There is another path to exemption in respect of each of the payments in that they are literally payments to the bankrupt, in terms of s 116(2)(d)(iv), from a regulated superannuation fund. Again, that breadth of reference rather looks to be a recognition by Parliament of the breadth of persons who may receive payments from superannuation funds. In other words, it is a recognition that the breadth of persons extends to those who are members of funds, as well as to their spouses and their dependents.”

In a small mercy to Debbie, Logan J dismissed the bankruptcy trustee’s application and ordered the bankruptcy trustee to pay Debbie’s costs of, and incidental to, the application.

It should be noted that, if the superannuation and life insurance had been paid to Debbie’s husband’s bankrupt estate, these proceeds would have been protected under s 249 of the Bankruptcy Act 1966 which replicates s 116 for deceased estates.

ConclusionIt is uncontentious that insurance proceeds on the life of the bankrupt or their spouse or de facto partner are protected from payment of debts of the bankrupt or of the bankrupt spouse or de facto partner.

It is also uncontentious that superannuation of the bankrupt is protected from payment of debts of the bankrupt (whether alive or deceased), provided there has not been

any fraud or deliberate contributions to superannuation to avoid creditors.7

Logan J’s decision confirms that superannuation of a deceased is protected from payment of debts of the bankrupt spouse or de facto partner.

This invaluable clarification draws attention to the following:

� a person who has met a condition of release and who is facing bankruptcy should take extreme care in how their superannuation is handled, because withdrawing it from the superannuation environment as a lump sum could expose it to the trustee in bankruptcy and make it available for payment of creditors, whereas drawing a steady modest pension would not;

� a bankrupt who has met a condition of release who withdraws a lump sum from superannuation will not lose it to their trustee in bankruptcy;

� the overarching purpose of superannuation death benefits continues to trump all else — providing for dependants of the deceased member even if they are bankrupt. Superannuation succeeds as the asset protection strategy of our time;

� as the Commissioner of Taxation and trustees in bankruptcy become more aggressive in their collection strategies, superannuation appears one of the last undefeated fortresses;8

� practitioners drafting wills should consider incorporating clauses in wills directing the personal representatives of estates to keep life insurance and superannuation benefits separate from the other estate assets and not to apply them for the payments of debts;

� personal representatives of all estates should take particular care to quarantine life insurance and superannuation benefits from the other estate assets to ensure they do not inadvertently use these funds to pay creditors; and

� there is nothing like a binding death benefit nomination! If Debbie had been named in a valid binding nomination at the date of her husband’s death, this case would have had no reason to ensue, saving Debbie time, stress and costs.

In every case, practitioners should turn their mind to the benefits of binding nominations.

Katerina Peiros, ATIIncapacity, Wills and Estates Lawyer Accredited Specialist – Wills & Estates (Vic) Hartwell Legal

Christine Smyth, ATIPartner Accredited Specialist – Succession Law (Qld) Robbins Watson Solicitors

References

1 S 5(2) of the Bankruptcy Act 1966 (Cth).

2 Re McCallum; Baird v McCallum (1907) 7 SR (NSW) 523.

3 See the recent case of Berryman v Zurich Australia Ltd [2016] WASC 196.

4 [2016] FCA 846.

5 S 58 of the Bankruptcy Act 1966.

6 As per Sainsbury v Inland Revenue Commissioners [1970] Ch 712 at 725.

7 Cook v Benson [2003] HCA 36.

8 Denlay v FCT [2013] FCA 307.


June 2017

State/date Event Start time Venue CPD

National

7/06/2017 The Chevron decision – webinar 12.30 pm Online 1.5

13/06/2017 Part IVA and Anti-avoidance Tax Refresher 12.00 pm Online 1.5

28/06/2017 Monthly Tax Update – June 12.30 pm Online 1

New South Wales

6/06/2017 Morning Tax Club – CBD – June 7.30 am Perpetual 1.5

8/06/2017 Morning Tax Club – Parramatta – June 7.30 am Spry Roughley Services 1.5

Queensland

6/06/2017 Morning Tax Club – Townsville – June 7.00 am The Balcony Restaurant 1.5

6/06/2017 Masterclass – Extending and Abolishing Trust Vesting Dates 5.00 pm PwC 2

South Australia

21/06/2017 Tax Roundtable – June 5.00 pm DW Fox Tucker –

Tasmania

2/06/2017 Young Tax Professionals – Launceston – June 8.00 am TBC 1

Victoria

28/06/2017 Young Tax Professionals – June 12.30 pm Pitcher Partners 1

29/06/2017 Breakfast Club – June 7.30 am Leonda By the Yarra 1.5

30/06/2017 Geelong Breakfast club

Western Australia

07/06/2017 Superannuation series: Succession and Estate Planning

13/06/2017 Trusts Day 9.00 am Crown Perth 6

13/06/2017 Women in Tax 6.00 pm Old Perth Boys School 1.5

21/06/2017 Young Tax Professionals 2: Consolidations

For information on upcoming events, visit taxinstitute.com.au/cpd.


CALENDAR

0462

NAT

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17th ANNUAL STATES’ TAXATION CONFERENCEEarly bird rate closes Friday 16 June 2017 As in previous years, all state and territory Revenue Commissioners will be in attendance, together with representatives from their respective offices. With strong attendance from both the private and government sectors, the conference has always been a popular forum for interaction among participants in the state taxes community.

27–28 July 2017 The Westin Sydney

DON’T MISS OUT

Register online at taxinstitute.com.au/statestaxes

Cumulative Index

A

Absence choiceCGT main residence exemption......123–125

Accelerated depreciationsmall business ......................................... 593

Accountantsfinancial services licences ...............214, 215

Account-based pensionspartial commutation ................................ 562transition-to-retirement income stream .................................................... 444

Accumulation phase accounttransitional CGT relief ............. 350, 362–368

Active asset testlitigation settlement ..................................211small business restructure roll-overs ........38

Active assetsbusiness premises, sale of .............600, 601

Administrative Appeals Tribunalexpanded grounds of objection ......176–178extension of time .....................418, 501, 502fraud or evasion ............................... 351, 352

Administrative penaltiesreasonably arguable............................62–65

Advertising costscost base of CGT asset .......................... 533

Advisers — see Tax professionals

Affiliatesbusiness premises, sale of .............600, 601

Aggregated turnoverless than $2m per annum ......388–390, 601small business entities ................ 33, 34, 174

Aggregation scheme testsdebt/equity rules .....................374, 376–379

Aggressive tax planning ...........................117private groups, ATO focus .......................307

Agriculture industryR&D schemes ...........................................473

Airbnb ................................293, 294, 450, 451

Airport lounge annual feesdeductions ................................................119

Airtasker .............................................293, 294

Alternative assetselectricity industry severance scheme ..........................................392, 393

investment manager regime ............159–161managed investment trusts ............219–222stapled structures ..........567–569, 635–637student accommodation as eligible investment business .........449–451

tax fixed asset register ....................325–327thin capitalisation rules ....................269–271

Alternative hypothesis test .............254, 255

AmazonGST, low value goods ..............................527

Annual investment income report .....................................................12, 15

Annual turnoverless than $2m per annum ......388–390, 601

Anti-avoidance provisionsCGT choices ............................123–125, 386

Anti-detriment provisionssuperannuation reform ........................... 238

Appealing a decision ................................501

Appointordiscretionary trust deed ...........................288

Arm’s length considerationtransfer pricing benefit ....................606–610

– evidence ...................................203–205

Artificial arrangementsmultinational foreign partnerships .......... 239

Artificial intelligence ..................114, 171, 283

Artificiality test .............................................22

Asia Region Funds Passport ...................286

Assessmentsamendments, state taxes ............... 420, 421default, burden of proof ......................44–46expanded grounds of objection ......176–178full and true disclosure .................... 420, 421validity .......................................120, 417, 418

Asset protectiondeath benefit, bankruptcy ...............638, 639estate proceeds trusts ....................558–560small business restructure roll-overs ...........................................37, 211

Asset washing schemes ......................... 386

Assetsacquisition, duty .......................................188cost base reset — see Cost base reset rules

effective life ......................................326, 528 – residential rental properties ............. 593

intangible depreciating .............................528market value .................................... 133–139partial private use ............................ 135, 136pre-CGT, intangible capital improvements .........................................416

revenue, small business restructure roll-overs ...................................................34

tax fixed asset register ....................325–327

Associatesbeneficiaries of trusts ......................353, 354

Attribution managed investment trustsfixed entitlements .....................................317new regime ..........................12–15, 222, 269withholding tax ................................219–222

Australiacorporate income tax, rate reduction ................................. 141–143, 174

Germany–Australia double tax agreement .............................................. 348

India–Australia double tax agreement .......................................240, 241

New Zealand–Australia double tax agreement .................................................24

Singapore, data sharing with ..................175Switzerland–Australia double tax agreement ..................................9, 249–252

United Kingdom–Australia double tax agreement ........................................251

United States–Australia double tax agreement ................................. 24, 206

Australian businessesexpanding offshore, tax considerations ...............................535–537

Australian Capital Territorydutiable transactions ................................187duty concessions .....................................194landholder regimes ..................................189

Australian financial services licencesmanaged investment trusts .....................219requirements, SMSF advice .....................................214, 215, 258

Australian fund managerscollective investment vehicles .................286investment manager regime rules .................................................159–161

managed investment trusts, substance test ........................................221

Australian holding companiesCGT .......................................................... 480income tax issues ................................... 480sale of shares in overseas company ................................................ 482

Australian real estate investment trusts ..................................................417, 451

Australian Securities and Investments Commissionemployee share schemes .......................286financial services licensing regime ............................................ 214, 258

Australian Taxation Officeartificial intelligence ..................................114client communication list .............................2cross-border debt ....................................591data matching ................. 287, 288, 293, 294data sharing, Singapore and Australia ...175decision impact statements ................... 500diverted profits tax .....................................21electronic lodgment service ........................2Future of the tax profession working group ........................................283

future role of tax professionals ................416interpretive decisions .............................. 499law administration practice statements ............................................. 499

law companion guidelines .............. 7, 8, 500limited recourse loans, non-arm’s length..............................................320, 321

managed investment trusts, substance test ...............................219–222

marketing hubs, safe harbours ...............237offshore hubs, compliance guidelines ................................................417

partner relationship model ...........................2PAYG withholding, large withholders .............................................150

phoenix companies – deterrence and recovery ....................75 – search warrants executed................119

phoenix risk model .....................................77portal services ..............................................2practical compliance guidelines .........8, 499practitioner lodgment service ......................2principles-based innovation test ..................................373, 427, 428, 430

private binding rulings ............................. 498privately owned and wealthy groups ............................................305–309

privatisation and infrastructure framework ......................................567–569

public rulings............................................ 498reinvention work program ............................2risk assessment process ................304–309risk differentiation framework ............................. 237, 306–308

SMSF specific advice ............................. 500standard business reporting .......................2stapled structures ..........567–569, 635–637superannuation circulars ........................ 500tax agent support .........................................2tax avoidance task force ..........................285tax debt reporting.....................................471tax determinations................................... 498Tax risk management and governance review guide ...................... 308

taxpayer alerts ......................................... 500web pages and fact sheets .................... 500

Australian TreasuryBusiness Tax Working Group..................141diverted profits tax .......................21, 57, 347mandatory disclosure ..............................117negative gearing submissions to .....................................................554, 555

Re:think discussion paper .......................143stapled structures ...........................635–637transfer balance cap ............................... 263

Automatic exchange of financial account information ................................175

Automatically reversionary pensionssuperannuation proposed changes ............42, 43, 154–156, 263, 444

transfer balance cap ................................542

B

Backpacker taxrevised arrangements ............................. 238

Bad debtsclaiming, similar business test .................528unpaid present entitlements ...........349, 350

The following cumulative index is for volume 51, issues (1) to (11). Listed below are the pages for each issue:

Vol 51(1): pages 1 to 52 Vol 51(2): pages 53 to 112Vol 51(3): pages 113 to 168Vol 51(4): pages 169 to 232

Vol 51(5): pages 233 to 280Vol 51(6): pages 281 to 341Vol 51(7): pages 343 to 410Vol 51(8): pages 411 to 466

Vol 51(9): pages 467 to 522Vol 51(10): pages 523 to 586Vol 51(11): pages 587 to 658


CUMULATIVE INDEX

Balance cap transfers — see Transfer balance cap

Bank accountsinterest on ................................................ 593large deposit to ........................................ 594

Bankruptcyasset protection, death benefits .....638, 639

BAS agentsclient communication list, ATO changes ......................................................2

Base erosion and profit shiftingdiverted profits tax .................21–27, 57, 347

Benchmark interest rateDiv 7A ..........................................................58FBT ............................................................529

Beneficial ownership of companies.........................................472, 473

Beneficiariesdiscretionary trusts

– Australian non-residents .........296–303 – consent ..............................................313 – definition ........................................... 353

wills ...................................................328, 329

Binding death benefit nomination ..........542

Black economy taskforce ....................... 348

Board of Taxationdebt/equity proposal ....................... 374–381guidance material .................................... 235Review of international taxation arrangements, February 2003 ..............301

Review of taxation impediments facing small business, August 2014 ..........33, 235

Review of the debt and equity tax rules: discussion paper, March 2014 ............................................ 380

Review of the debt and equity tax rules — the related scheme and equity override integrity provisions, March 2014 ............................286, 375, 380

Body corporateGST registration turnover threshold ............7

Bring forward rulesuperannuation contributions ........322, 323

Broadcasting rightsIOC, whether royalty payments ...................................9, 249–252

Budget — see Federal Budget

Budget repair levy .......14, 42, 254, 320, 536

Burden of proofdefault assessments ...........................44–46evidence, hypothetical scenarios used ................................................203–205

sham transaction ............................. 216–218

Business alliance partnersHSBC and The Tax Institute ................... 599

Business premisessale of, CGT concessions ...............600, 601

Business restructures — see Restructuring businesses

Business Tax Working Group ..................141

C

Capital accountor income account, sale of shares ..............................................157, 158

Capital allowancescomposite items .......................................417tax fixed asset register ....................325–327websites ................................................... 349

Capital gainsbusiness premises, sale of .............600, 601foreign trusts ............................................ 349

Capital gains tax — see also Small business CGT concessionsAustralian holding companies ................ 480Australian trust non-resident beneficiaries ...................................296–303

choices ..............................................123–125 – transfer balance cap, SMSFs .....................362–368, 382, 383

event A1 ............80–83, 213, 256, 365, 366, 372, 531, 532

event B1 ....................................................256event C1 ................................................... 532event C2 .............................................83, 532event D1 ...........................................256, 532event D2 ...........................................256, 532event D3 ....................................................256event E1 .........296, 299, 300, 313, 353, 532event E2 ................................................... 532event E4 ....................14, 213, 392, 430, 625event E10 ....................................................14event F1 ............................................256, 532event H1 ................................................... 532event H2 ................................................... 532event I1 ..................................................... 532event I2 ..................................................... 532event J2 .............................................. 39, 213event J5.............................................. 39, 213event J6.......................................................39implications of company constitutions .................................. 242–244

improvement threshold released ..............58market value, rise of ............................ 67–69negatively geared properties ......................432–435, 554, 555

non-resident withholding tax rules .................................................. 58, 287

private groups, ATO focus .......................307share buy-backs .........................................80shares for goods/services .......................422start-up companies, exemptions ........... 430superannuation funds, relief ...............................350, 382–386, 628

Capital improvementsintangible, pre-CGT assets ......................416

Capital raising activitiesfranking credits ........................................ 348

Car spacesrenting out ........................................293, 294

Cars — see also Motor vehiclesFBT

– fleet, simplified calculation ......286, 287 – parking exemption ............................174

indexed car limit ...........................................8

Cash in handwhether a CGT asset ...............................135

Cattle levy regime ........................................34

Cayman Islandstax information exchange agreement ......................................550, 551

Central management and controlresidence of companies ....... 288, 289, 528,

529, 547–553

Childrenestate proceeds trusts ...223, 224, 558–560joint bank accounts, interest on ............. 593

ChoicesCGT

– main residence exemption .......123–125 – roll-over relief .............................123–125 – small business CGT concessions ..............................123–125

– SMSFs, transfer balance cap ...................................362–368, 563

Clawbackscorporate reconstruction relief ................191

Cleaning contractorstaxable payments reporting system ...... 592

Client communication listchanges on ATO portals ..............................2

Clientsgifts to, deductions...................................119high risk ............................................304–309

Code of Professional Conducttax agents .........................................177, 178

Collection of tax — see Tax collection and recovery

Collective investment vehicles ..................15non-resident withholding tax ..........285, 286

Commissioner of Taxationassessment, judicial review ............. 417, 418capital allowances, composite items ......417CGT, incidental costs ......................532, 533discretion to treat as fixed trust .........................................287, 317–319

discretionary powers, CGT withholding ................................................58

employee share schemes, share valuation ........................................181

intangible capital improvements .............416interest on bank accounts ...................... 593law companion guidelines .......................7, 8objection by, timing issues .............266–268phoenix companies, dealing with .............................................. 74–77, 119

practical compliance guidelines ..................8prejudice to, expanded grounds of objection .....................................176–178

re-characterisation of trading income ............................................416, 417

reinvention of ATO ................................... 304remedial powers ...................................... 238superannuation, bring forward rule ..................................................322, 323

tax agent support .........................................2tax debt, setting aside judgments......29–31tort of negligence, implied immunity from ........................................ 494

validity of assessment ..............120, 417, 418

Common Reporting Standarddata sharing, Singapore and Australia...................................................175

Commutationspartial, lump sum death benefits from ................................................562, 563

Companiesbeneficial ownership ........................472, 473constructing constitutions .............. 242–244residence, central management and control .......... 288, 289, 528, 529, 547–553

similar business test .................................528tax fixed asset register ....................325–327

Company restructures — see Restructuring businesses

Company taxrate reduction... 141–143, 174, 245–247, 528

Concessional contributions capproposed legislation ........174, 238, 285, 286proposed reforms.......................................91

Concessional tax benefitsestate proceeds trusts ....................558–560

Condition precedentemployee share schemes, right to acquire shares ........................................287

Connected entitiesbusiness premises, sale of .............600, 601

Conscious maladministration .................475

Consolidated groupsdiverted profits tax ...............................21–27

Constitutionscompanies, constructing ................ 242–244

Construction industryR&D schemes ...........................................473

Contingent liabilitiesCGT .................................................. 138, 139

Continuing professional development .......................................55, 413

Contrary intentiondefinition of partnership .......................... 292interpretation of statutes ......................10, 11

Control — see Central management and control

Control testbusiness premises, sale of .............600, 601

Controlled foreign companiesAustralian businesses expanding offshore ..........................................536, 537

company rules ..........................................481investment manager regime rules ...........161

Controlling interestdiscretionary trusts .................................. 354

Copyrightdepreciation ..............................................528Olympic Games broadcasting rights ...........................................9, 249–252

valuation, expert evidence ...................... 204

Corporate collective investment vehicles ........................................................15

Corporate effective tax rate ....................142

Corporate governanceprivate groups, ATO focus .............. 307, 308

Corporate groupsrestructure — see Restructuring businesses

Corporate income taxrate reduction............................141–143, 174,

245–247, 528

Corporate limited partnershipsformation and composition ................ 59, 60

Corporate residency — see Residence of companies

Corporate restructures — see Restructuring businesses

Cost base electiontransition-to-retirement income stream .................................................... 444

Cost base of CGT assetincidental costs ................................532, 533

Cost base reset rulesSMSFs

– CGT transitional relief .....384–386, 628 – transfer balance cap ................382, 383

Costsdirect/indirect, shares for goods/services ...................................................423

Courier contractorstaxable payments reporting system ...... 592

Court appealstiming .........................................................501

Credit and debit cardsdata matching ...................................287, 288

Credit reporting bureaustax debts ...................................................471

Cross-border transactionsAustralian businesses expanding offshore ...................................................537

diverted profits tax .....................................22evidence, hypothetical scenarios used ........................................................ 203

financing arrangements ....238, 239, 591, 610GST, foreign suppliers ......................126–128

D

Data matching .................. 287, 288, 293, 306

Data mining ........................................ 114, 306

Data sharing ...............................................283Singapore and Australia ..........................175

De facto couplesasset protection on bankruptcy .....638, 639property proceedings ..............................256

Death benefitsasset protection on bankruptcy .....638, 639reversionary pensions ............154–156, 263,

264, 444superannuation proposed changes ............................................. 42, 43


CUMULATIVE INDEX

Debit and credit cardsdata matching ...................................287, 288

Debt test ............................................. 375, 376

Debt/equity rulesBoard of Taxation review ........285, 286, 375proposed amendments .................. 374–381

Debtsrelated party, cross-border financing arrangements ........591, 606–610

Deceased estatesestate proceeds trusts ...223, 224, 558–560executors, tax treatment of commission ...................................394–396

Decision impact statementssuperannuation........................................ 500

Deductionsairport lounge annual fees .......................119commercial website expenditure ....................................348, 349

gifts to clients ............................................119small business, immediate deductibility threshold ........................... 593

Default assessmentsburden of proof ....................................44–46

Deferred compensationprofit participation scheme .............357–359

Deferred notional gainSMSFs, CGT relief ...........................366–368

Departure prohibition orderchallenge to .............................418, 445–447

Depreciable assetsaccelerated, small business ................... 593capital allowances, composite items ......417intangible ...................................................528plant and equipment, residential rental properties .................................... 593

small business restructure roll-overs ........34

Depreciation methodologiestax fixed asset register ....................325, 326

Design testdebt or equity scheme .....................377, 378

Determined member componentsattribution managed investment trusts..........................................................13

Determined trust componentsattribution managed investment trusts .....13

Diesel fuel expensesmining tenements ............................388–390

Digital productsGST, foreign suppliers ......................126–128

Direct/indirect costsshares for goods/services .......................423

Director penalty noticeslarge withholders ..............................149–151phoenix companies..............................75, 76

Disclaimer of rightsdiscretionary trusts ..........................354–356

Disclosureassessment amendment provisions ....................................... 420, 421

mandatory...........................................54, 117public companies .................................... 308trustees of SMSFs ...........................259, 260

Discretionary trustsbeneficiaries

– Australian, non-resident ..........296–303 – consent ..............................................313 – issues ........................................353–356

business premises, sale of .............600, 601disclaimer of rights ..........................354–356foreign, definition and purpose ...... 261, 262guardian or appointor ..............................288small business restructure roll-overs ........34streaming of franking credits .................. 594validity of assessments .................... 417, 418variation clauses .............................. 152, 153

Diverted profits taxmultinational corporations ............ 21–27, 57,

173, 285, 347, 472

DividendsDiv 7A impact, family law settlements ....................................253, 254

franking, company tax rate reduction ........................................ 245–247

Division 7Abenchmark interest rate .............................58complexity................................................ 235family law settlements, impact on .......................................253–256

private companies, matrimonial property proceedings ...................253–256

private groups, ATO focus .......................307

Documentscentral management and control ............................................548–551

proforma constitutions .................... 242–244trust deeds, loss of .......................... 310–316

Dominant use of land .......................596–598

Double tax agreementsAustralian businesses expanding offshore .......................535–537

Germany–Australia .................................. 348India–Australia ..................................240, 241New Zealand–Australia ..............................24Singapore–Australia ...................................25Switzerland–Australia..................9, 249–252United Kingdom–Australia .......................251United States–Australia .................... 24, 206

Dutiable interestpartnerships (Vic) ............................631–633

Dutiable transactionsland-based regimes ........................ 186–195

Duty surchargeforeign investors in land .................. 612–616foreign trusts .................................... 261, 262

Dwellingsmain residence absence choice .....123–125

E

Early stage innovation companiestax incentives for investors ........................ 370–373, 427–431

Eatro ....................................................293, 294

eBayGST, low value goods ..............................527

Economic entitlementparcel of land ....................................... 92–95

Economic groupsATO focus on ...................................304–309

Economic impactcorporate rate cut .............................141–143

Education and trainingThe Tax Institute .......................................525tax professionals ..................................16, 17

Effective life of assetdepreciation .....................................326, 593

Effective tax mismatchdiverted profits tax ............22, 23, 26, 27, 57

Effectively connectedIndia, services for Australian customers .......................................240, 241

Electrical industry severance scheme ........... 350, 351, 392, 393, 624, 625

Electronic distribution platformsGST, low value goods ..............................527

Electronic lodgment service .......................2

Eligible termination paymentsCGT liabilities ................................... 136, 137

Employee participation schemedeferred compensation ..................357–359

Employee share schemesdisclosure documents .............................286

indeterminate rights ..................................287limited recourse loans ................................79start-up companies ..................179–181, 429

EmployeesFBT, food and drink expenses ............... 530

Employment, terminationdeferred compensation ..................357–359electricity industry severance scheme ........ 350, 351, 392, 393, 624, 625

eligible termination payments, CGT ................................................ 136, 137

Employment taxesAustralian businesses expanding offshore ................................537

Enterpriseforeign suppliers carrying on .......... 126, 128

Equity interestsdebt/equity rules ............................. 374–381early stage innovation companies ..............................................429

Equity override provisionsintegrity rule .....................................286, 376

Equity test .......................................... 375, 376

Estate planning — see Succession and estate planning

Estate proceeds trusts ....................223, 224Victoria .............................................558–560

Estoppel ..................................................... 503

Evidencecentral management and control ............................................548–551

foreign evidence requested, Israeli bank ......................................119, 120

given overseas ............................................60hypothetical transactions ................203–207stay in proceedings, criminal charges ...................................120, 157, 158

video link application refused ..........474, 475

Excess superannuation transfersbalance cap proposed changes ...................................43, 264, 541

bring forward rule, whether special circumstances ...............................322, 323

Executorstax treatment of commission ..........394–396

Exempt current pension incomebalance cap proposed changes .........41–43calculation methods ........................626–629CGT relief .........................................350, 544SMSF tax from 1 July 2017 .................... 443

Exemption thresholdFBT ............................................................529

Expert evidencehypothetical transactions ................203–207

Exploration licencealleged false statements ................. 120, 157

Extension of timeapplication for review ..............418, 501, 502

F

Familiesestate proceeds trusts ...223, 224, 558–560

Family businesseslitigation settlement, CGT................208–213

Family law settlementsimpact of Div 7A ..............................253–256

Family trust electionssmall business restructure roll-overs ............................................ 34, 37

Family trusts — see Discretionary trusts

Farm landdevelopment, primary production exemption (NSW) ........436–440, 596–598

Federal Budget 2015-16small business, accelerated depreciation ........................................... 593

working holiday makers .......................... 238

Federal Budget 2016-17collective investment vehicles .................286corporate tax reduction .......... 174, 245–247diverted profits tax .................21–27, 57, 347negative gearing ..............................554–556reforms ......................................................285savings measures ....................................173superannuation

– balance cap and death benefits ..........................................41–43

– reform legislation ..............174, 234, 238, 285, 286

tax policy in caretaker mode .......................5

Federal Budget 2017-18Budget lock-up ........................................ 588Medicare levy .......................................... 592multinational anti-avoidance law ............ 592negative gearing ..............................554–556real property announcements ........592, 593small business ......................................... 593superannuation........................................ 592taxable payments reporting system ...... 592

Federal Governmentcaretaker mode, tax policy in ......................5revenue loss, corporate rate cut .....141–143

Fiduciary and administration servicestax havens ................................547, 549, 551

Fifteen-year CGT concessionsmall business restructuring ............... 34, 39

Fifty per cent CGT discountmining tenement ..............................388–390small business restructuring ......................34

Finance staple ................................... 567, 568

Financial advisersfinancial services licences ......................... 214, 215, 258–260

Financial productsSMSFs, regulation ...........................258–260

Financial services licencesmanaged investment trusts .....................219requirements, SMSF advice .....................................214, 215, 258

Financial statementssignificant global entities ..........................237

Financing arrangementscross-border transactions ............. 238, 239,

591, 610definition ...........................................376, 380

Fixed assetstax fixed asset register ....................325–327

Fixed entitlementstrusts .................................................317–319

Fixed trustsCommissioner’s discretion ......287, 317–319

Fleet carsFBT, simplified calculation ..............286, 287

Flow-through trust structureseligible investment business ...........449–451foreign investment ...........................635, 636

Food and drink expensesFBT ........................................................... 530

Foreign discretionary trust teststamp duty surcharge ..............................614

Foreign evidencerequested from Israeli bank .............119, 120

Foreign investmentAustralian corporate income tax ....................................................141, 142

foreign purchaser surcharge ......................... 97–100, 612–616

investment manager regime ............159–161managed investment trusts

– collective investment vehicles ... 15, 286 – substance test .........................219–222 – taxpayer alert for stapled structures .................................569, 635


CUMULATIVE INDEX

off-campus student accommodation ............................449–451

stapled structures ..........567, 569, 635–637

Foreign Investment Review Board.........................................261, 569, 614

Foreign investorsgoods and services tax ..................592, 593

Foreign partnershipsmultinational anti-avoidance laws ................................................239, 592

Foreign purchaser surchargehousing affordability ...........................97–100state taxes ....................................... 612–616

Foreign residents — see Non-residents

Foreign source income paymentsinternational office holder.............................8

Foreign suppliersGST

– indirect tax zone........................126–128 – low value imported goods ...............................285, 472, 527

Foreign taxAustralian businesses expanding offshore ..........................................535–537

Foreign trustscapital gains ............................................. 349definition and purpose .................... 261, 262

Franking creditscapital raising activities ........................... 348company tax rate reduction, effect of .......................................... 245–247

private groups, ATO focus .......................307streaming ................................................. 594

Franking deficit tax....................................245

Fraudposition of AAT ................................ 351, 352search warrants, validity and execution .................................................240

Freelancingsharing economy, taxation .............293, 294

Freezing ordersphoenix companies....................................75

Freshwater crayfishtrading stock ............................................ 530

Fringe benefits taxairport lounge annual fees .......................119benchmark interest rate ...........................529car parking, exemption ............................174cents per kilometre rates ................529, 530exemption threshold ................................529Federal Budget 2017-18 .......................... 592fleet cars, simplified calculation .....286, 287food and drink expenses ........................ 530non-remote housing, indexation factors .....................................................529

Full and true disclosureassessment amendment provisions ....................................... 420, 421

Future use of land ..................................... 598

G

Garnishee noticesphoenix companies....................................76

Gas to liquid projectsvaluation, upstream and downstream segments .....................85–88

General anti-avoidance provisionsCGT choices ....................................125, 386diverted profits tax ...................................347

Genuine restructuresmall business roll-overs ...........34, 36, 118, 119, 490–493

GermanyAustralia–Germany double tax agreement ....................................... 348

Giftsto clients, deductions ...............................119

existing trusts as beneficiaries of wills .............................................328, 329

Global tax environmentdiverted profits tax .........21–27, 57, 347, 472GST changes ............................................126international tax avoidance ......................472regional corporate rates ...................141, 142tax considerations, business offshore ..........................................535–537

tax reform potential ..................................171

Going concern businesses ........................39

Goods and services taxAustralian businesses expanding offshore ...................................................537

contract for sale of land .................. 476–478foreign investors ..............................592, 593indirect tax zone ...............................126–128low value imported goods ......285, 472, 527margin scheme ................................530, 531market value, assets and liabilities ..........139marriage/relationship roll-over .................531partnerships ..................................... 291, 292refunds .........................................58, 59, 416registration turnover threshold, body corporate ...........................................7

residential property transactions ............ 592retirement village construction ........175, 176review of assessment, extension of time ......................................................418

shares for goods/services .............. 422–424sharing economy .............................293, 294small business roll-over .............................39taxi travel ...................................................474

Goodwillduty on transfer ............................... 186–188

Governanceprivate groups, ATO focus .............. 307, 308

Government revenuecorporate rate cut .............................141–143

Grandfatheringautomatically reversionary pensions ......................................... 154, 155

stapled structures ................................... 636

Gregory effect ............................................142

Guardiandiscretionary trust deed ...........................288

H

Henry Reviewcorporate income tax .......................141–143deductions for rental expenses .............. 556

High wealth individualsATO focus ................................................ 308

Hong Kongcorporate tax rates ...................................142

Housingindexation factors for non-remote, FBT ..........................................................529

Housing affordabilityforeign purchaser surcharge ......................... 97–100, 612, 614

negative gearing and .... 432–435, 554–556

Hub arrangementsoffshore, ATO compliance guidelines ................................................417

safe harbours ............................................237

Hypothetical agreementacquisition of property ............................ 608

Hypothetical borrowingSMSFs .............................239, 240, 320, 321

Hypothetical transactionsexpert evidence ...............................203–207

I

Ideas boom .................................................427

Image rights ................................................487

Immediate deductibility thresholdsmall business ......................................... 593

Imported goodslow value, GST .........................285, 472, 527

Improvement thresholdCGT .............................................................58

Incidental costsCGT assets ......................................532, 533

Incomere-characterisation, student rent .....416, 417

Income or capitaldeferred compensation ..................357–359sale of shares....................................157, 158

Income taxshares for goods/services .............. 422–424

Income testingautomatically reversionary pensions ......................................... 154, 155

Indeterminate rightsemployee share schemes .......................287

Indexation factorsnon-remote housing, FBT ........................529

Indexed car limit ............................................8

IndiaAustralia–India double tax agreement .......................................240, 241

Indirect tax zoneGST

– foreign suppliers .......................126–128 – low value imported goods ...............472

Information exchange and gatheringagreements ......................................550, 551diverted profits tax ...........................347, 472Germany–Australia double tax agreement .............................................. 348

Singapore and Australia ..........................175

Infrastructure projectsinvestment in, stapled structures ......................567–569, 635–637

unit trusts, thin capitalisation ..........269–271valuation, upstream and downstream segments .....................85–88

Inheritance — see Wills

In-house softwaredepreciation ..............................................528website expenditure ........................348, 349

Innovation companiestax incentives for investors ........................ 370–373, 427–431

Innovation test100-point .................................370, 371, 430

Insolvencydeath benefits, protection ...............638, 639grounds of application ....................564, 565

Inspector-General of TaxationATO risk assessment .....304, 305, 307, 309future role of tax professionals ................416GST refunds..............................................416PAYE instalment system ..........................416

Insuranceasset protection on bankruptcy .....................................638, 639

automatically reversionary pensions .......154

Intangible capital improvementsCommissioner’s determination ...............416

Intangible depreciating assets ...............528

Intangible use of land ...............................597

Integrity rulesdebt and equity ...............................286, 376

Inter vivos truststrustees, duty to invest .............................618

Interdependence testdebt or equity scheme .....................377, 378

Interestbank accounts ......................................... 593

Internal funding arrangementstransfer pricing ......................................... 595

International tax avoidance .....................472

International tax environment — see Global tax environment

International wills ...............................102–104

Interposed partnershipsfederal Budget 2017-18 ........................... 592

Intestacyestate proceeds trusts ...223, 224, 558–560

Investmentduty of trustees ................................618–622

Investment management activities ........220

Investment manager regimereforms ..............................................159–161

Investment propertiesnegative gearing ............ 432–435, 554–556plant and equipment depreciation ......... 593

Investmentsinfrastructure projects, stapled structures ......................567–569, 635–637

off-campus student accommodation ............................449–451

SMSFs, ATO standards ..................320, 321tax incentives, start-up companies .................... 370–373, 427–431

unit trusts, thin capitalisation rules ................................................269–271

Israelforeign evidence requested .............119, 120

J

Joint bank accountsinterest on ................................................ 593

Judgmentsapplications to set aside during disputes ..............................................29–31

Judicial reviewvalidity of assessments .................... 417, 418

L

Landcontract for sale, GST ..................... 476–478definition ...........................................439, 440dominant use of...............................596–598used for primary production ...........596–598

Land banking ............................................. 598

Land taxprimary production exemption (NSW) ...........................436–440, 596–598

states and territories, amended assessments .................................. 420, 421

surcharge, foreign trusts ................. 261, 262

Land-based regimesdutiable transactions ....................... 186–195

Law administration practice statementssuperannuation........................................ 499

Law companion guidelines ......................7, 8superannuation........................................ 500

Lease agreementsstudent accommodation ................450, 451

Legislationcontrary intention..................................10, 11interpretation and meaning..............197–202

Legislative intent ................................197–202

Liabilitiesloss of trust deeds ....................................310market value .................................... 133–139

Licencesdepreciation ..............................................528SMSF advice

– accountants ..............................214, 215 – financial services......................258–260

Life insuranceasset protection on bankruptcy .....638, 639SMSFs .......................................................154

Lifetime non-concessional contributions capproposed reforms..............................90, 285


CUMULATIVE INDEX

Limited partnershipscollective investment vehicles ...................15formation and composition ................ 59, 60

Limited recourse loansaccountant advice ....................................215market value substitution rules ...........79–83SMSFs, non-arm’s length.............................239, 240, 320, 321

superannuation........................................ 592

Liquidationduty concessions and exemptions .........192

Litigation settlementssmall business CGT concessions ....208–213

Livestockcattle levy regime .......................................34freshwater crayfish .................................. 530

Living-away-from-home allowanceFBT, food and drink expenses ............... 530

Loanscross-border financing arrangements ................................238, 239

limited recourse — see Limited recourse loans

sham .........................................................351 – deposit loan structure .............145–148,

216–218statute barred, market value ....................135

Lock down rulesdirector penalty notices ...................149, 151

Lodgment dayCGT choices .............................................123

Lodgment issuesprivate groups, ATO focus .......................307

Loss of trust deeds .......................... 310–316

Low income superannuation tax offset ...................................................174

Low value imported goodsGST ..........................................285, 472, 527

Lump sum death benefitssuperannuation

– partial commutation ................562, 563 – proposed changes ...................... 42, 43

Lump sum electionpartial commutation ................................ 562transition-to-retirement income stream .................................................... 444

Lyft .......................................................293, 294

M

Main residence concessionsabsence choice ................................123–125

Managed investment schemes ...............317

Managed investment trustsattribution tax ........................................12–15foreign investment

– collective investment vehicles ... 15, 286 – substance test .........................219–222 – taxpayer alert for stapled structures .................................569, 635

Mandatory disclosure — see Disclosure

Mareva injunctionsphoenix companies....................................75

Margin schemeGST ..................................................530, 531

Market valueassets and liabilities......................... 133–139CGT, rise of .......................................... 67–69mining information .......................67–69, 207shares for goods/services .......................423

Market value substitution rulelimited recourse loans .........................79–85

Marketing costscost base of CGT asset .......................... 533

Marketing hubsoffshore, ATO compliance guidelines .....417safe harbours ............................................237

Marriage breakdownCGT roll-over relief ....................................531family law settlements, Div 7A ........253–256non-resident CGT withholding ................287

Matrimonial property proceedingsprivate companies, Div 7A ..............253–256

Maximum net asset value testasset and liability issues ................. 133–139litigation settlement ..........................210, 211small business entity ...............11, 33, 34, 38

Medicare levy ....... 14, 42, 223, 247, 254, 536Federal Budget 2017-18 .......................... 592

Member componentsattribution managed investment trusts..........................................................13

Member ProfilesMatthew Andruchowycz ..........................248Stephen Bourke .......................................361Will Fennell ............................................... 295Rebecca James .......................................131Elise Lee ......................................................18 Mark Lewis ............................................. 486Jackie Lomax .............................................72Wendy Maloney ........................................425Petrina Stamos .........................................184Julie Van der Velde .................................. 540

Memorandum of wishestrust as beneficiary of will.........................328

Merging superannuation funds.............. 592

Minimum annual pension paymentspartial commutations ......................562, 563

Miningdiesel fuel expenses ........................388–390exploration licence, alleged false statements ..................................... 120, 157

valuation of projects ............................85–88

Mining informationmarket value ................................67–69, 207

Minorsestate proceeds trusts ...223, 224, 558, 559

Motor vehicles — see also Carsother than car, FBT cents per kilometre rates ...............................529, 530

Multinational corporationscross-border internal financing ......606, 610diverted profits tax ..........................21–27, 57, 173, 347, 472

federal Budget 2017-18 ........................... 592foreign partnerships ................................ 239general purpose financial statements ..............................................237

N

National Innovation and Science Agenda .......................................................286tax incentives for investors

– early stage innovation companies................................ 427–431

– start-up companies .................370–373

Negative gearingoverview of debate ..........................554–556rental property expenses ................432–435

Negligence ................................................. 494

Net asset value testmore than $6m per annum .....................601

Netflix tax ............................................126–128

Netherlandscompany central control and management ......................................... 548

New South Walesassessment amendment provisions ....................................... 420, 421

corporate reconstruction relief ....... 190, 191dutiable transactions ....................... 186, 187duty concessions .....................................194foreign discretionary trust ........................614foreign trusts ............................................ 263

land tax .....................................................615land tax, primary production exemption ....................436–440, 596–598

land tax surcharge ...................................615landholder duty ................................191, 613landholder regimes ..................................189residential land defined ............................613

New ZealandAustralia–NZ double tax agreement .........24

Non-arm’s length incomefixed entitlements .....................................287SMSFs, limited recourse borrowing ......................239, 240, 320, 321

superannuation changes ........................ 592

Non-concessional contributions capproposed legislation ........174, 238, 285, 286

Non-profit bodybody corporate, GST registration turnover threshold ......................................7

Non-remote housingFBT, indexation factors ............................529

Non-residentsAustralian trusts, CGT relief ............296–303dividends, company tax rate reduction .................................................247

foreign trusts, definition and purpose ..........................................262, 263

withholding tax – CGT rules ................................... 58, 287 – collective investment vehicles .....................................285, 286

– interest payments to .................145–148 – stapled structures ....................593, 635

Norfolk Islandcompany central control and management ................................. 547, 548

Northern Territoryassessment amendment provisions ....................................... 420, 421

dutiable transactions ................................187duty concessions .....................................194landholder regimes ..................................189

O

ObituaryTom Magney ............................................ 603

OECDglobal tax systems compared .........141, 142mandatory disclosure ..............................117transfer pricing ..........................................472

Off-campus student accommodationeligible investment business ...........449–451

Offshore companiestax implications of an interest in .....................................................480–482

Offshore marketing hubsATO compliance guidelines .....................417

Off-the-shelf constitutions .............. 242–244

Olympic Games broadcasting rightswithholding tax ............................9, 249–252

Ongoing businessesgenuine restructure ..........................118, 119

Online sellingdata matching ...................................287, 288

Onus of prooffraud or evasion ............................... 351, 352sham transaction .............145, 146, 216–219

Optionsfor goods/services ...................................423

Ordinary business activitiesR&D schemes ...........................................473

Over distribution rulesattribution managed investment trusts....................................................12, 14

Ownership interestssmall business CGT concessions .......... 593

P

Panama Papersrelease of taxpayer data ... 14, 174, 175, 304

Parkhound ..........................................293, 294

Part IVACGT choices .............................................125

Part IVC objection proceedingsforeign evidence requested, Israeli bank.................................................119, 120

stay until criminal charges concluded ....120

Partial commutationslump sum death benefits from .......562, 563

Partnership law partnerships ................. 290

Partnershipscontrary intention..................................... 292definition ...........................................290–292dutiable interest (Vic) .......................631–633GST .................................................. 291, 292interposed ................................................ 592investment incentives, start-up companies .............................372, 427, 430

limited ................................................... 59, 60multinational corporations ...................... 239

Patentsdepreciation ..............................................528

PAYG instalmentsIGT review .................................................416sharing economy .............................293, 294

PAYG withholding rules — see Withholding tax

Penaltiesadministrative, reasonably arguable .............................................62–65

Pension phase — see Retirement phase account

Pensionsbalance cap proposed changes .........41–43reversionary

– succession planning ........................ 444 – superannuation proposed changes ............... 42, 43, 154–156, 263

SMSFs, transitional CGT choices ...........................................362–368

Permanent establishmententerprise test ...........................................126India, services for Australian customers .......................................240, 241

Personal income taxcorporate rate cut, impact on ..........141–143

Personal representativestax treatment of commission ..........394–396

Petroleum resource rent tax....................199

Phoenix companiesCommissioner dealing with .................74–77search warrants executed .......................119

Plant and equipment depreciationresidential rental properties .................... 593

Practical compliance guidelines ................8superannuation........................................ 499

Primary productiondominant use of land ......................596–598freshwater crayfish .................................. 530land tax exemption (NSW) ...........................436–440, 596–598

Principal asset test ................................... 204

Principles-based innovation test .....................................373, 427, 428, 430

Private binding rulingssuperannuation........................................ 498

Private companiesDiv 7A, matrimonial property proceedings ...................................253–256

Private groupsATO focus on ...................................304–309

Privately owned and wealthy groupsATO online resource ........................305–308


CUMULATIVE INDEX

Privatisation of infrastructurestapled structures ...................567–569, 636

Procedural fairnessdenial .........................................................267

Product disclosure statementsaccountant advice ....................................215SMSFs .......................................................259

Professional conductsuperannuation fund trustees ................ 260tax agents, expanded grounds of objection .....................................177, 178

Profit participation schemedeferred compensation ..................357–359

Proforma constitutions .................... 242–244

Promoter penalties .........................54, 60, 61

Property developersGST .......................................................... 592land tax exemptions (NSW) ........................... 436, 438, 440, 596

Property settlementsDiv 7A, impact on family settlements ....................................253–256

Proportionate methodSMSFs

– CGT relief ..................................364–368 – cost base reset ........................383–385

Public rulingssuperannuation........................................ 498

Public trading trusts ........ 350, 351, 624, 625

Public unit trusts ...................... 392, 393, 624

Q

Quarantining lossesnegative gearing ...................................... 432

Queenslandassessment amendment provisions ....................................... 420, 421

corporate reconstruction relief ................191dutiable transactions ........................187, 188duty concessions .....................................194foreign trusts ............................................ 263landholder duty ............................... 192, 613landholder regimes ..................................189residential land defined ............................613

R

R&Dearly stage innovation companies ......................................427, 429

private groups, ATO focus .......................307schemes, taxpayer alerts ........................473tax offset claim ........................................ 565tax offset rates ..........................................174

Real Estate Institute of Australia ........... 554

Real estate investment trusts .................................417, 451, 635–637

Real property transactionsfederal Budget 2017-18 ...................592, 593partnerships (Vic) ............................631–633

Reasonably arguable ...........................62–65

Record keepingexemption threshold, FBT .......................529incidental costs, CGT assets .................. 533sharing economy .............................293, 294SMSFs, exempt current pension income ....................................................627

transfer pricing ..................................473, 474trust deeds ........................................310, 314

Recovery of tax — see Tax collection and recovery

Rectification of contractssale of land, GST ............................. 476–478

Redundancyelectricity industry severance scheme ..........................351, 392, 624, 625

Reformsnegative gearing ..............................554–556

superannuation.............54, 90, 91, 154–156, 234, 238, 285, 286

– exempt current pension income ......626 – post 1 July 2017............................... 562 – transfer balance cap ........................ 350 – transitional CGT relief ...................... 350

tax – future for small business ................. 235 – Re:think discussion paper............... 235 – simplification..................................... 468 – technological change and ................171

Refunds of taxGST ..............................................58, 59, 416private groups, ATO focus .......................307

Related-party debtcross-border financing............591, 606–610

Relationship breakdownCGT roll-over relief ....................................531family law settlements, Div 7A ........253–256non-resident CGT withholding ................287

Rental propertiesincome from sharing economy ......293, 294negative gearing ............ 432–435, 554–556off-campus student accommodation ............................449–451

tax law partnerships ........................290, 291travel expenses ........................................ 593

Rental staple.............................................. 568

Reporting obligationscourier and cleaning industries .............. 592data sharing, Singapore and Australia ......175early stage innovation companies ......... 430standard business reporting .......................2tax debts ...................................................471

Research and development — see R&D

Resettlementtrust, loss of deed.............................313, 314

Residencetemporary, CGT relief for trust beneficiaries ...................................296–303

Residence of companiescentral management and control .......... 288, 289, 528, 529, 547–553

Residencyassumption, trust .................................... 349

Residential landforeign investment surcharge ......... 612–616

Residential property transactionsGST .......................................................... 592rental properties ...................................... 593

– income from sharing economy...................................293, 294

– negative gearing ......................432–435

Restructuring businessesconsolidation relief....................................190duty concessions and exemptions .........192employee share schemes ...............179–181federal Budget 2017-18 ........................... 592multinational foreign partnerships .......... 239small business roll-overs ...........33–39, 118,

119, 490–493

Re:think tax discussion paper ............... 235

Retirement phase accountexempt current pension income .............626superannuation proposed changes ....................41–43, 238, 541–545

transitional CGT relief ............. 350, 362–368

Retirement villagesconstruction, GST ............................175, 176residential land, whether defined under .......................................................613

Revenuecorporate rate cut .............................141–143

Revenue assetssmall business restructure roll-overs ........34

Revenue lossesprivate groups, ATO focus .......................307

Reversionary pensionsbefore 1 July 2017 ................................... 444proposed changes ............. 42, 43, 154, 263transfer balance cap .......................542, 543

Ride sourcing ....................................293, 294

Risk assessment processATO .......................................... 304–309, 591

Risk differentiation frameworkmarketing hubs .........................................237private groups ................................. 306–309

Roll-over reliefCGT

– choices available .......................123–125 – marriage/relationship breakdown ....531

litigation settlement ..................................211small business restructures .......33–39, 118, 119, 490–493

RoyaltiesIndia, services for Australian customers .......................................240, 241

IOC broadcasting rights, withholding tax ..........................9, 249–252

Royalty staple ....................................568, 636

Rural landdevelopment, primary production exemption (NSW) ........436–440, 596–598

S

Safe harboursmanaged investment trusts .......................13marketing hubs .........................................237practical compliance guidelines ......... 8, 320SMSFs, rules ............................................240thin capitalisation ........................................27transfer pricing, record keeping ..............473

Salary packaging arrangements ............287

Sale of business premisesCGT concessions ............................600, 601

Sale of landeconomical entitlement (Vic) .............. 92–95rectification of contract, GST .......... 476–478

Same business test ...................................528

Samoasham loan, deposit loan structure .........................145–148, 216–218

tax information exchange agreement .... 550

Schemes — see Tax avoidance

Search warrantsvalidity and execution ...............................240

Security deposit rulesphoenix companies....................................76

Segregated assetsSMSFs

– CGT relief ..................................363–368 – cost base resets ......................382–386 – exempt current pension income ......................................626–628

Self-managed superannuation funds — see also Superannuationadvice licensing, accountants .........214, 215ATO specific SMSF advice ..................... 500automatically reversionary pensions ..........................................154–156

deed of variation .......................................313exempt current pension income ...........................................626–629

limited recourse borrowing, non-arm’s length ..........239, 240, 320, 321

proposed changes ...............................41–43regulation under Corporations Act ..................................................258–260

sham loan structure ........145–148, 216–218SMSF income stream guide ...........362–368transfer balance cap

– cost base resets ......................382, 383 – post 1 July 2017................................541 – transitional CGT relief .............362–368,

384–386, 543, 544

transition-to-retirement income stream ............................................384–386

– post 1 July 2017..............443, 444, 562, 563, 626

unit trusts ................................................. 383

Senate Economics Legislation Committeehearing, GST on low value goods ...........527

Serious Financial Crime Taskforce ...........................................174, 175

Severance schemeelectrical industry ................... 350, 351, 392,

393, 624, 625

Sham loans .................................................351deposit loan structure .....145–148, 216–218

Share buy-backsinteraction with CGT rules ..................79–85matrimonial property proceedings ...................................255, 256

Share optionsemployee tax concessions ..............179–181

Share transactionsdata matching ...................................287, 288

Sharesacquisition, duty .......................................188early stage innovation companies ..........429employee share schemes, right to acquire ................................................287

for goods/services .......................... 422–424

Sharing economytaxation ............................................293, 294

Short-term residential stays ...........293, 294

Significant global entitiesgeneral purpose financial statements .....237

Similar business test .................................528

Simplification of tax system ................... 468

Simplified depreciation poolsmall business ......................................... 593

SingaporeAustralia–Singapore double tax agreements ...............................................25

corporate tax rates ...................................142data sharing with Australia ......................175

Single entity rule ....................................... 533

Single touch payroll reporting ........ 173, 235

Small business CGT concessions15-year exemption .............................. 34, 3950% discount ...........................34, 388–390aggregated turnover threshold ..........34, 174CGT choices available .....................123–125implications of company constitutions .................................. 242–244

less than $2m per annum turnover test ..................................................388–390

litigation settlement .........................208–213maximum net asset value test ....... 133–139ownership interests ................................. 593sale of business premises ..............600, 601singular entity ..............................................11

Small business entitydefinition ................................................... 389

Small business restructuresgenuine restructure requirement ............ 490roll-over relief ......33–39, 118, 119, 490–493

Small businessesaccelerated depreciation ........................ 593immediate deductibility threshold .......... 593sale of premises, concessions .......600, 601tax discount ......................................174, 247tax rate reduction ............ 174, 245–247, 528tax system reforms .................................. 235threshold increase ....................................174

Small-to-medium enterprisesATO publication ....................................... 306

Social media expenditure ....................... 349

Software developmentR&D schemes ...........................................473


CUMULATIVE INDEX

Sophisticated investor teststart-up companies .................371, 372, 430

South Australiaassessment amendment provisions ....................................... 420, 421

corporate reconstruction relief ................191dutiable transactions ................................187duty concessions .....................................194landholder duty ........................................192landholder regimes ..................................189

Special circumstancessuperannuation contributions ........322, 323

Spousesasset protection on bankruptcy .....638, 639family law settlements, Div 7A ........253–256non-resident CGT withholding ................287

Stamp dutyforeign purchaser surcharge ............................... 612, 614, 615

parcel of land (Vic) ............................... 92–95variation of trust deed, resettlement ....................................313, 314

Standard business reporting ......................2

Stapled structuresATO concerns ...........................................417debt/equity rules ..............................377, 378infrastructure projects ....567–569, 635–637

Start-up companiesemployee share schemes ...............179–181limited recourse loans ................................79tax incentives for investors ........................ 370–373, 427–431

State and territory revenue lawsassessment amendment provisions ....................................... 420, 421

Statute barred loansmarket value .............................................135

Statutescontrary intention..................................10, 11interpretation and meaning .........................197–202, 491, 492

Stayz ...................................................293, 294

Streaming provisions ................................152franking credits ........................................ 594

Student accommodationas eligible investment business ......449–451

Substance testmanaged investment trusts ............219–222

Succession and estate planningbalance cap proposed changes ........ 42, 43bankruptcy, asset protection ..........638, 639estate proceeds trusts..............................223, 224, 558–560

executors, tax treatment of commission ...................................394–396

existing trusts as beneficiaries of wills .............................................328, 329

international wills ..............................102–104litigation settlement, CGT................208–213loan accounts and estoppel ................... 503SMSFs

– automatically reversionary pensions ....................................154–156

– reversionary pensions .... 444, 542, 543transfer balance cap .......................541–545

Superannuation — see also Self-managed superannuation funds10% rule, removal ............................ 173, 234ATO interpretive decisions ...................... 499ATO web pages and fact sheets ............ 500automatically reversionary pensions ..........................................154–156

bring-forward rule ............................322, 323circulars .................................................... 500death benefits

– asset protection on bankruptcy ...............................638, 639

– lump sum, partial commutation ............................562, 563

– proposed changes .......................41–43decision impact statements ................... 500federal Budget 2017-18 ........................... 592law administration practice statements ............................................. 499

law companion guidelines ...................... 500non-arm’s length income ........................ 592practical compliance guidelines ............. 499private binding rulings ............................. 498public rulings............................................ 498reforms — see Reforms, superannuation

tax determinations................................... 498taxpayer alerts ......................................... 500transfer balance cap

– CGT relief .......................................... 350 – cost base reset ........................382, 383 – limited recourse borrowing ............. 592 – partial commutation ........................ 563 – post 1 July 2017...............444, 541–545 – proposed changes .....41–43, 154–156,

173, 263–265, 285working holiday makers .......................... 238

Superannuation circulars ........................ 500

Superannuation fundsdutiable transactions ....................... 192, 193merging .................................................... 592self-managed — see Self-managed superannuation funds

Superannuation Reform Package ..........285

SwitzerlandAustralia–Switzerland double tax agreement ...................................................9

residence of companies .................288, 289

Synthetic equity staple ............................ 568

T

Takeoversemployee share schemes ...............179–181

Tasmaniaassessment amendment provisions ....................................... 420, 421

dutiable transactions ........................187, 188duty concessions .....................................194landholder regimes ..................................189

Tax advisers — see Tax professionals

Tax agentsATO support .................................................2high risk clients ................................304–309membership bodies .................................282professional conduct, expanded grounds of objection ......................177, 178

Tax avoidancefraud or evasion ............................... 351, 352international ..............................................472multinational enterprises, diverted profits tax .............21–27, 57, 173, 285, 347

scheme promoter penalties................ 60, 61whistleblower protection ..........................415

Tax changesmandatory disclosure ........................54, 117

Tax collection and recoveryapplications to set aside judgments ..........................................29–31

artificial intelligence ..................................114data mining ...............................................114departure prohibition orders .....................................418, 445–447

Germany–Australia double tax agreement .............................................. 348

phoenix companies....................................75

Tax debtsdeparture prohibition orders .....................................418, 445–447

judgments set aside ............................29–31reporting....................................................471

Tax determinationssuperannuation........................................ 498

Tax disputesCommissioner applying for judgment during ................................29–31

Tax evasionfraud or evasion ............................... 351, 352Panama Papers data .......................174, 175whistleblower protection ..........................415

Tax fixed asset registerinfrastructure projects .....................325–327

Tax governanceprivate groups, ATO focus .............. 307, 308

Tax havensfiduciary and administration services ..................................547, 549, 551

Tax incentivesemployee tax schemes ....................179–181investment, start-up companies .................... 370–373, 427–431

tax offset rates, R&D ................................174

Tax Integrity Package ...............................285

Tax law partnershipsdefinition ...........................................290–292

Tax legislationrewrite process ........................................ 468

Tax offsetsR&D tax incentives

– claim ................................................. 565 – rates ...................................................174

start-up companies .........370–373, 427, 430

Tax professionalsartificial intelligence ..................................114ATO partner relationship model ..................2constructing company constitutions .................................. 242–244

CPD planning this year ..............................55education ............................... 16, 17, 70, 525future challenges ......................................283future role of ..............................................416high risk clients ................................304–309membership bodies .................................282practitioner lodgment service ......................2SMSFs, CGT transitional relief ................ 386standard business reporting .......................2tax agent portal ............................................2technological change ...............................171

Tax reformsfuture for small business ......................... 235Re:think discussion paper ...................... 235simplification ............................................ 468technological change and .......................171

Tax refundsGST ..............................................58, 59, 416private groups, ATO focus .......................307

Tax scheme — see Tax avoidance

Tax treaties — see Double tax agreements

Taxable Australian real propertyvaluation, expert evidence ...................... 204

Taxable payments reporting systemcourier and cleaning industries .............. 592

Taxation of financial arrangementsmanaged investment funds .......................15

Taxi travelGST ...........................................................474

TaxLine personal research service ........115

Taxpayer alertssuperannuation........................................ 500

Tax-related expensestravel ......................................................... 530

Technological changetax professionals in the future .................283tax reform potential ..................................171

Temporary Budget repair levy ...............................14, 42, 254, 320, 536

Temporary resident exemptionCGT, trust beneficiaries...................296–303

Ten per cent ruleremoval............................................. 173, 234

Ten Year Enterprise Tax Plan ..................285

Termination of employmentdeferred compensation ..................357–359electricity industry severance scheme .........................350, 351, 392, 393

eligible termination payments, CGT ................................................ 136, 137

Testamentary trustsestate proceeds trusts compared ......................................223, 224

trustees, duty to invest ....................618–622

The Tax Instituteadvocacy for members ................................5Budget lock-up ........................................ 588Chartered Tax Adviser designation.........413CommLaw1 Australian Legal Systems Dux, study period 2 2016

– Mabel Ong ....................................... 484CommLaw2 Dux, study period 2 2016

– Jeffery Zhenfeng Wei ....................... 538CommLaw3 Property Law Dux, study period 2 2016

– Nicole David ..................................... 485Corporate Tax Adviser of the Year

– Michael Barbour .............................. 604Corporate Tax Dux, study period 2 2016

– David Austin ..................................... 484CTA1 Foundations Dux, study period 3 2016

– Terry Gan .......................................... 539CTA2A Advanced Dux, study period 2 2016

– Ann Tran ........................................... 602CTA2A Advanced Dux, study period 3 2016

– Mariana Knight ................................. 602CTA2B Advanced Dux, study period 3 2016

– Kelly Venhuizen ................................ 539CTA3 Advisory Dux, study period 1 2016

– Annie Kam ........................................ 538CTA3 Advisory Dux, study period 2 2016

– Chaga Manjerie Ratnaweera .......... 485evolution of ................................................413face-to-face/digital delivery of courses ...................................................412

future commitment ...................................170HSBC partnership ................................... 599Ken Spence tribute ................................. 345obituary, Tom Magney ............................ 603senior tax counsel appointment............. 469simplification of tax system..................... 468submissions

– on 2017-18 Budget .......................... 468 – on diverted profits tax.........................57 – to Senate Economics Legislation Committee ........................................527

– to Treasury...........................................34superannuation reforms, consultation ............................................285

tax education and training .......................525tax professionals in the future .................283TaxLine personal research service .........115technology steering group .......................171training ......................................................525volunteer members ..................................524

Thin capitalisationsafe harbours ..............................................27unit trusts, infrastructure investments ....................................269–271

Timing issuesCGT choices .............................................123Commissioner’s objection ..............266–268mandatory disclosure ..............................117

Tort of negligence ..................................... 494

Trading businessesre-characterisation of income .........416, 417


CUMULATIVE INDEX

Trading stockfreshwater crayfish .................................. 530small business restructure roll-overs ........34

Trading trustspublic trading trusts ........................350, 351public unit trusts ..................... 392, 393, 624

TrainingThe Tax Institute .......................................525tax professionals ..................................16, 17

Transfer balance capsuperannuation

– CGT relief .........................350, 362–368, 384–386, 628

– cost base reset ........................382–386 – limited recourse borrowing ............. 592 – partial commutation ........................ 563 – post 1 July 2017...............444, 541–545 – proposed changes ..... 41–43, 154–156,

173, 238, 263–265, 285, 320

Transfer pricingcross-border internal financing ......606–610diverted profits tax ...................................347evidence, hypothetical scenarios used ................................................203, 595

internal funding arrangements ............... 595multinational anti-avoidance law ...............................................21–27, 472

record keeping .................................473, 474

Transitional CGT reliefSMSFs

– exempt current pension income ......................................626–629

– transfer balance cap ............... 362–368, 384–386, 543, 544

Transition-to-retirement income streamSMSFs

– CGT relief ........350, 384–386, 543, 544 – post 1 July 2017..............443, 444, 542,

543, 562, 563, 626

TransparencyATO risk assessment process........304–309companies, beneficial ownership ...........473

Travel expensesresidential rental properties .................... 593tax-related ................................................ 530

Treaties — see Double tax agreements

Trust beneficiariesfixed entitlements .............................317–319non-resident, Australian trusts .......296–303

Trust cloningsmall business restructure .........................34

Trust componentsattribution managed investment trusts .....13

Trust deedsloss of ............................................... 310–316reconstituting ....................................312, 313variation clauses .............................. 152, 153

Trust streaming provisions ......................152

Trusteesattribution managed investment trusts..........................................................14

– under/over distribution rules ........12, 14 – withholding tax ....................................14

duties – care of trust deeds ...........................310 – on change of trustee ........................192 – investment ................................618–622

Trusts — see also Discretionary trusts; Unit trustsAustralian, non-resident beneficiaries, CGT relief .......................................296–303

business premises, sale of .............600, 601dutiable transactions ....................... 192, 193estate proceeds .............223, 224, 558–560existing trusts as beneficiaries of wills .............................................328, 329

fixed, Commissioner’s discretion.................................287, 317–319

foreign, definition and purpose ...... 261, 262investment incentives, start-up companies .....................................372, 430

large bank deposit from .......................... 594loss of trust deeds ........................... 310–316managed investment trusts .................12–15public trading trusts ....... 350, 351, 624, 625public unit trusts ..................... 392, 393, 624residency assumption ............................. 349small business concessions, litigation settlement .......................208–213

tax resettlement ................................313, 314trustees, duty to invest ....................618–622winding up, loss of deed ..................314, 315

U

Uber .............................................293, 294, 474

Ultimate economic ownershipsmall business roll-over requirement ..................................33, 36, 37

Under distribution rulesattribution managed investment trusts....................................................12, 14

Unincorporated small businessestax discount ..............................................174

Unit trustsclarification of concept .................... 624, 625dutiable transactions ................................194public unit trusts ..................... 392, 393, 624small business concessions, litigation settlement .......................208–213

SMSFs, cost base reset .................382, 383thin capitalisation rules ....................269–271

United KingdomAustralia–UK double tax agreement .......251corporate tax rates ...................................141

United StatesAustralia–US double tax agreement ........................................ 24, 206

corporate tax rates ...........................141, 142

Unpaid present entitlementsCGT liabilities ....................................137, 138writing off .........................................349, 350

Unrestricted non-preserved benefits .....................................541, 562, 563

Unsegregated methodSMSFs, exempt current pension income ....................................................626

V

Valuationemployee share schemes interests ........181evidence, hypothetical scenarios used ................................................203–205

infrastructure projects, upstream and downstream segments..............85–88

mining information ............................... 67–69

VATAustralian businesses expanding offshore ...................................................537

Vestingemployee share schemes .......................180trusts, loss of deeds .........................314, 315

Victoriaassessment amendment provisions ....................................... 420, 421

corporate reconstruction relief ................191dutiable transactions ................................187duty concessions .....................................194estate proceeds trusts ....................558–560foreign trusts ....................................262, 263land tax surcharge ...................................615landholder duty ....................... 192, 612, 613landholder regimes ..................................189partnerships, real property .............631–633residential land defined ............................613stamp duty ........................................612, 614

Visastemporary resident ..........................296, 300

W

Wash sale schemes ................................. 386

Website expendituredeductions .......................................348, 349

Western Australiaassessment amendment provisions ....................................... 420, 421

dutiable transactions ........................187, 188duty concessions .....................................194landholder regimes ..................................189

Whistleblower legislation ..................54, 285

Whistleblower protection .........................415

White papertax reform ..................................................285

Willsestate proceeds trusts ...223, 224, 558–560executors, tax treatment of commission ...................................394–396

existing trusts as beneficiaries .......328, 329international ......................................102–104

Winding upduty concessions and exemptions .........192grounds of application ....................564–566phoenix companies....................................75trusts, loss of deeds .........................314, 315

Withholding taxattribution managed investment trusts...................................12, 14, 219–222

director penalty notices ...... 75, 76, 149–151IOC payment, broadcasting rights ...........................................9, 249–252

non-residents – CGT rules ................................... 58, 287 – collective investment vehicles .....................................285, 286

– interest payments to ................................145–148, 217, 218

– stapled structures ....................593, 635

Working holiday makerstax changes ............................................. 238

Worldwide gearing debt test ...................271

Write offsunpaid present entitlements ...........349, 350

Legislation

A New Tax System (Goods and Services Tax) Act 1999 .................7, 98, 613Div 23 ........................................................127Div 138 ..................................................... 292Div 142 ...........................................52, 58, 59s 3-5(1) ..................................................... 290s 9-5 ..........................................................478s 9-17.........................................................531s 9-25(5) ............................................126, 127s 9-25(5)(d) ................................................126s 9-25(6) ....................................................126s 9-27 ........................................................127s 9-75 ........................................................423s 9-80 ........................................................478s 19-50 ...........................................52, 58, 59s 40-65 ......................................................478s 40-65(1) ..................................................478s 75-10 ......................................................531s 84-65 ......................................................127s 84-140 ....................................................127s 195-1 .............127, 290, 423, 474, 478, 616

A New Tax System (Goods and Services Tax Transition) Act 1999s 13(2)(a) ....................................................127s 13(3) ........................................................127s 13(4) ........................................................127

Acts Interpretation Act 1901s 2(2) ............................................................10s 15AA ......................................201, 222, 491s 15AB .......................................................198s 15AB(1) .....................................................62s 15AB(1)(a) ...............................................491

s 23(b)..........................................................10

Administration Act 1903 (WA)s 14 ...................................................224, 560

Administration and Probate Act 1919 (SA)Pt 3A

– s 72G ........................................224, 560

Administration and Probate Act 1929 (ACT)s 49 ...................................................224, 560Sch 6 ........................................................ 560

Administration and Probate Act 1958 (Vic)s 51 ............................................................224s 51(3) ....................................................... 560

Administration and Probate Act (NT)s 66...................................................224, 560Sch 6 ........................................................ 560

Administration and Probate and Other Acts Amendment (Succession and Related Matters) Bill 2016 (Vic) ............ 559

Administration and Probate Regulations (NT)reg 3 ......................................................... 560

Administrative Appeals Tribunal Act 1975s 29(7) to (10) ........................................... 266s 29(9)....................................................... 266s 29(9)(b)....................................................267s 29(10) ......................................................267s 44...................................................266, 388s 44(3)(c) ................................................... 388

Administrative Decisions (Judicial Review) Act 1977 ..................................... 564s 3(1) ......................................................... 565

Bankruptcy Act 1924s 95(2)(b) ................................................... 389

Bankruptcy Act 1966................................ 264s 5(2) ......................................................... 638s 58 ........................................................... 638s 116 ......................................................... 638s 116(2) ..................................................... 638s 116(2)(d) ................................................. 638s 116(2)(d)(iii)(A) ......................................... 638s 116(2)(d)(iv) ............................................. 638s 249 ......................................................... 638

Broadcasting Services Act 1992 ............250

Budget Savings (Omnibus) Bill 2016 ....................................................173, 174

Co-operation, Community Settlement, and Credit Act, 1923 (NSW) .................. 440

Companies Act 1961 (NSW) ......................10

Competition and Consumer Act 2010 ........................................................... 488

Copyright Act 1968s 10(1) ................................................... 9, 250s 91 ............................................................251

Corporations Act 2001 ............ 181, 191, 214, 215, 219, 237, 255, 614

Ch 5C ........................................................318Ch 7 ...........................................................258s 124(1) ........................................................38s 124(2) ........................................................38s 180 ......................................................... 308s 206D .........................................................74s 206F .........................................................74s 436 ...........................................................75s 447A .........................................................77s 459A ........................................75, 564, 565s 459C(2)(a) .............................................. 565s 459G ..................................................... 565s 459P ........................................75, 564, 565s 459S(1) .................................................. 566s 459S(2) ..........................................565, 566s 461............................................................75s 461(1)(k) ....................................................75s 588FGA ....................................................76s 708 .................................................371, 431s 761A ...................................................... 260s 761G(6)(a) .............................................. 260


CUMULATIVE INDEX

s 763A .............................................. 214, 260s 764A ...................................................... 260s 764A(1)(g) .............................................. 260s 765A ...................................................... 260s 766B(1) .................................................. 260s 766B(2) .................................................. 260s 766B(3) .................................................. 260s 766B(4) .................................................. 260s 766C ...................................................... 260s 911A(1) ................................................... 260s 911A(2)(j) ................................................ 260s 1012D(2A) .............................................. 260s 1013C .................................................... 260s 1015D(2) ................................................ 260s 1017B .................................................... 260s 1017B(1A)(a) .......................................... 260s 1017B(4) ................................................ 260s 1017C(2) ................................................ 260s 1017C(3) ................................................ 260s 1017C(6) ................................................ 260s 1017C(9)(a) ............................................ 260s 1017D .................................................... 260s 1017D(4) ................................................ 260s 1017D(5) ................................................ 260s 1017D(7) ................................................ 260s 1017DA .................................................. 260s 1017E ..................................................... 260s 1017F ..................................................... 260s 1017G .................................................... 260s 1019A .................................................... 260s 1019B .................................................... 260s 1041E..................................................... 260s 1041G .................................................... 260s 1041H .................................................... 260

Corporations Regulations 2001reg 7.1.03B ............................................... 260reg 7.1.04E ............................................... 260reg 7.1.29 ...................................................214reg 7.1.29(1) .............................................. 260reg 7.1.29(3)(c) ...........................................214reg 7.1.29(4) ...................................... 215, 260reg 7.1.29(5) .............................................. 260reg 7.1.29(6) .............................................. 260reg 7.6.01(1)(a) .......................................... 260reg 7.6.01(1)(h) .......................................... 260reg 7.6.01(1)(hc) ........................................ 260reg 7.9.19 .................................................. 260reg 7.9.20(1) ............................................. 260reg 7.9.20AA(1) ........................................ 260reg 7.9.21 ................................................. 260reg 7.9.38 ................................................. 260reg 7.9.43(a) ............................................. 260reg 7.9.45(1)(a) .......................................... 260reg 7.9.52 ................................................. 260reg 7.9.53 ................................................. 260reg 7.9.54 ................................................. 260reg 7.9.55 ................................................. 260reg 7.9.62(1A) ........................................... 260reg 7.9.63H .............................................. 260reg 7.9.64(1)(f)........................................... 260reg 7.9.64(1)(g) .......................................... 260

Crimes Act 1900 (NSW) ............................157s 178BB............................................ 120, 157s 178BB(1) .................................................157

Crimes Act 1914 ........................................ 588s 3E ...........................................................240

Criminal Code Act 1995 ..............................74

Customs Act 1901 .....................................472

Diverted Profits Tax Bill 2017 ..................472

Docks Regulations 1934 ..........................178

Duties Act 1997 (NSW)..............................262Pt 2B .........................................................262s 11(1)(j) ......................................................194s 54(3) ........................................................195s 57 ............................................................195s 58 ............................................................316s 62A .........................................................195s 62A(2) .....................................................195

s 104I ................................................ 262, 616s 104J........................................................262s 104J(1) ....................................................616s 104K .......................................................262s 104T ..................................................98, 99s 104ZB .......................................................99s 146 ..........................................................194s 146A .......................................................194s 148 ..........................................................194s 149 ..........................................................194s 150(2) ......................................................194s 152 ..........................................................195s 155(1) ......................................................195s 271 ..........................................................316s 272 ..........................................................316s 273D .......................................................194s 273D(2) ...................................................194s 273D(3) ...................................................194s 273E(2) ...................................................194s 273E(5) ...................................................194

Duties Act 1999 (ACT)s 54(2) ........................................................195s 58 ............................................................195

Duties Act 2000 (Vic)ch 3 ...........................................................625s 3 ...............................................98, 261, 631s 3A ...........................................................616s 3B ...........................................................613s 3B(1) .......................................................262s 3B(2) .......................................................262s 3C ...........................................................616s 3D .................................................. 262, 616s 3E ...........................................................616s 3G .................................................. 262, 616s 3G(1) .......................................................616s 3G(3) .......................................................616s 7 ..............................................................631s 10 ............................................................631s 10(1)(ac) .........................................631, 633s 18A .........................................................262s 36 to 36B ...............................................195s 37 ............................................................316s 41 ............................................................195s 41A ..........................................................195s 56 ............................................................195s 70(2) ........................................................262s 71 ............................................................195s 73 ............................................................194s 78 to 80 ....................................................92s 81 ....................................................... 92–94s 82 ..............................................................92s 83............................................................195s 86............................................................195s 250D .......................................................194s 250DD ....................................................194s 250DF .....................................................194

Duties Act 2001 (Qld) ................................262Pt 8 ............................................................194s 9(1)(i) .......................................................194s 26 ............................................................194s 55 ............................................................194s 57 ...................................194, 195, 262, 613s 60................................................... 262, 613s 117 ..........................................................195s 119 ..........................................................195s 123 ..........................................................195s 232 ..........................................99, 262, 616s 234 .........................................................262s 236 .........................................................616s 237................................................. 262, 616s 237(2) ......................................................262s 245..........................................................262s 246A .........................................................98s 246A(2) ...................................................616s 409 .........................................................194s 412 ..........................................................194Sch 6 ................................................ 194, 195

– Ch 3, Pt 1 ..........................................195

Duties Act 2001 (Tas)s 41 ............................................................195s 42 ............................................................316s 50 ............................................................195s 60............................................................194s 219 ..........................................................316s 220 .........................................................316s 225..........................................................195

Duties Act 2008 (WA)s 29 ............................................................195s 103..........................................................195s 115 ..........................................................195s 116 ..........................................................195s 118 ..........................................................195s 122 ..........................................................195s 127 ..........................................................195

Duties Amendment (Landholder and Corporate Reconstruction and Consolidation) Bill 2016 (Tas)s 60............................................................194

Environmental Planning and Assessment Act 1979 (NSW) .........441, 616Pt 3A ........................................................ 436s 78A ........................................................ 440

Evidence Act 2005s 128 ..........................................................158s 128(7) ............................................. 120, 158

Fair Work Act 2009 ....................................415

Family Law Act 1975 .................................287Pt VIIIAB ....................................................256s 75(2) ........................................................255s 79 ...................................................253–256s 90AE(2)(b) ...............................................253s 90AE(4) ...................................................255s 90AE(4)(a) ...............................................256s 90AE(4)(b) ...............................................256

Federal Court of Australia Act 1976Pt VAA

– Div 2 ...................................................158s 35A(1) .................................................... 564s 35A(5) ............................................564, 565

Foreign Acquisitions and Takeovers Act 1975 ...............................................97, 613s 4 ..............................................................261s 11 ............................................................262s 17 ..............................................................97s 18 ............................................................262

Fringe Benefits Tax Assessment Act 1986s 26 ............................................................529s 31G ........................................................ 530s 31G(1)(b) ................................................ 530s 31G(2) .................................................... 530s 58Y .........................................................119

Higher Education Funding Act 1988Sch 1 .........................................................429

Horticultural Stock and Nurseries Act, 1969 (NSW)............................................... 440

Image Rights (Bailiwick of Guernsey) Ordinance 2012 ........................................487

Income and Corporation Taxes Act 1988 (UK) .................................................. 495

Income Tax Assessment Act 1915s 3 ............................................................. 292

Income Tax Assessment Amendment Regulations 2007 (No. 2) ....................... 563

Income Tax Assessment Bill 1996......... 302

Income Tax Assessment (Debt and Equity Examples) Declaration 2016 .....375Pt 6 ............................................................379Pt 9 ............................................................379

Income Tax Assessment Regulations 1997reg 995-1.01(3) ................................... 42, 155reg 995-1.01(4) ................................... 42, 155reg 995-1.03 ....................................562, 563

Income Tax Rates Act 1986 .....................174

Income Tax (Transitional Provisions) Act 1997

Subdiv 294B ....................................384, 628s 110-35 ................................................... 533s 294-100 ................................................. 444s 294-110 .........................................365, 385s 294-110(1) .............................................. 368s 294-110(1)(a) .......................................... 383s 294-110(1)(e) .......................................... 383s 294-110(2) .....................................368, 383s 294-110(3) .....................................368, 383s 294-115 to 294-120 .............................. 385s 294-115(1) .............................................. 368s 294-115(1)(a) .......................................... 383s 294-115(1)(b) ..................................383, 627s 294-115(1)(d) .......................................... 368s 294-115(1)(e) ..................................368, 383s 294-115(2)......................................368, 383s 294-115(3) .....................................368, 383s 294-120 .........................................383, 385s 294-120(1) ............................................. 368s 294-120(1)(a) .......................................... 368s 294-120(2) ............................................. 368s 294-120(4) .....................................368, 385s 294-120(5) .....................................366, 368s 294-120(5)(a) ......................................... 368s 294-120(7) ............................................. 368

Industry Research and Development Act 1986s 29A .........................................................429

Inscribed Stock Act 1911s 52 ............................................................623

International Organisations (Privileges and Immunities) Act 1963s 6 ..................................................................8

International Tax Agreements Act 1953 ...................................................200, 206s 3(11) ........................................................201s 4(2) ............................................................24

Interpretation Act, 1897 (NSW)s 21 ..............................................................10

Interpretation Act 1960 (Ghana)s 19 ........................................................... 202

Interpretation Act 1987 (NSW) .......436, 439s 5(1) ..........................................................441s 5(2) ..........................................................441s 21(1) ....................................................... 439s 21(e) ...............................................439, 441s 21(f) .........................................................441

Interpretation of Legislation Act 1984 (Vic)s 37(c) ....................................................10, 11

Intestacy Act 2010 (Tas)s 13 ...................................................224, 560

ITAA36.............................................8, 468, 472Pt III

– Div 6 .........................296–298, 303, 351 – Div 6C ................................................624 – Div 6E ................................................297 – Div 10B ..............................................207

Pt IIIA ................................................ 297, 303Pt IV ...........................................................417Pt IVA ................ 22–24, 26, 35, 36, 123, 125,

265, 347, 365, 372, 378, 386, 489, 567, 606, 628

Div 6 ................................................... 12, 349Div 6AA .................................................... 558Div 6B ................................................. 15, 449Div 6C................................ 15, 161, 270, 350,

351, 391, 392, 449, 450, 568, 637Div 7A ...............34–38, 52, 58, 79, 123, 142,

235, 253–256, 285, 307, 354 – Subdiv EA ............................................38 – Subdiv EB............................................38

Div 13 ............ 203, 205, 594, 595, 606–610Div 16K ........................................................80s 6(1) ............... 251, 252, 288, 290, 528, 568s 21 ............................................................422s 21A(2)(b)..................................................422s 23AH .................................... 239, 535, 536s 23AJ ...................................................... 595


CUMULATIVE INDEX

s 25(1) ........................................................297s 26(a) ............................................... 291, 421s 26(e) ...................................... 358, 359, 396s 26AFB ................................... 146, 216, 217s 44...................................................253–256s 95...................................................298, 349s 95(1) ....................................................... 349s 95(2)(a) ................................................... 298s 97 ...................................................302, 350s 97(1) ...............................................300, 303s 97(1)(a) ................................................... 298s 98................................... 372, 417, 418, 430s 98(3)....................................................... 303s 98A(1) .................................................... 303s 99...................................................372, 430s 99A ................351, 372, 417, 418, 430, 624s 99B ........................................................ 349s 102AA to 102AGA ................................ 558s 102AC(1) ................................................ 558s 102AC(2) ............................................... 558s 102AE(2) ................................................ 558s 102AE(2)(c)(ii) ..........................................224s 102AE(2)(d)(ii) ........................................ 559s 102AG ................. 223, 224, 328, 329, 558s 102AG(2) ............................................... 558s 102AG(2)(d) ........................................... 558s 102AG(2)(d)(ii) .........................................224s 102AG(2A) .....................................224, 559s 102AG(3) ................................................329s 102AG(4) ................................................329s 102AG(7) ............................................... 559s 102M .....................................449–451, 624s 102MB ....................................................451s 102MB(1) ................................................451s 102MB(2) ................................................451s 109C .......................................................253s 109C(1) ...................................................254s 109C(1)(a) ...............................................253s 109C(1)(b) ...............................................253s 109C(3) ...................................................254s 109J...............................................253–256s 109J(a) ...........................................254, 256s 109J(b) ...................................................254s 109ZD .....................................................256s 124R(5) ................................. 204, 205, 207s 128B ...................................................... 200s 136AA ........................................... 607, 608s 136AA(3).................................................607s 136AD ...................................206, 607, 608s 136AD(3) ...................................... 606–608s 136AD(3)(a) ............................................ 608s 136AD(3)(b) ........................................... 608s 136AD(3)(d) ...................................608, 609s 160L .......................................................297s 166..........................................................417s 166A .......................................................327s 169..........................................................418s 170 .................................326, 327, 420, 421s 170(1) ..................................................... 353s 170(3) ......................................................326s 175 ..........................................................607s 177 ..........................................................607s 177(1) ......................................................607s 177A(1) ....................................................125s 177C(2) ...................................................125s 177D .......................................................125s 177D(2)(a) ...............................................381s 177F ........................................................125s 177H(1)(a) ................................................347s 221YK .....................................................146s 273 ..........................................................319s 318 .........................................161, 270, 353s 318(1)(a) ..................................................253s 318(3)(a) ................................................. 354s 318(6)(a) ..................................................270s 340 .........................................................481s 435 .........................................................481Sch 2F

– s 272-5.......................................317, 319

– s 272-5(1) ...........................................317 – s 272-5(2) ...........................................317 – s 272-5(2)(c) .......................................319 – s 272-5(2)(d) .......................................319 – s 272-5(3) ...........................287, 317–319 – s 272-5(3)(b) .......................................318 – s 272-5(3)(b)(i) ....................................319 – s 272-5(3)(b)(ii) ...................................319 – s 272-5(3)(b)(iii)...................................319 – s 272-65 ....................................317, 319

ITAA97 .................................174, 468, 472, 492Pt 2-10

– Div 40 .................................................207Pt 2-42 ..................................................... 488Pt 2-45

– Div 373 ...............................................207Pt 3-1 ....................................... 296, 302, 385Pt 3-3 ...................................... 296, 302, 385Pt 3-90 ......................................................201Div 6 ................................................. 297, 298Div 6C....................................................... 568Div 40 .......................................326, 348, 417Div 43 ........................................................327Div 83A ............................................... 79, 422Div 102 ......................................................297Div 115 .........................................................34Div 122 ......................................................372Div 128 ..................................................... 559Div 136 .................................... 298, 301–303Div 152 .............................................213, 600Div 230 ..................................................... 568Div 276 ........................................................12Div 292 ......................................................323Div 294 ..................................................... 368Div 328 .............................................292, 348Div 360 ......................................................370Div 815 .............................347, 594, 607, 609Div 855 ............... 67, 68, 296–302, 480, 481Div 974 ...............................59, 374–378, 429Subdiv 40-E ..............................................327Subdiv 40-I ...............................................327Subdiv 108-D ...........................................416Subdiv 112-A ........................................... 490Subdiv 112-B ........................................... 490Subdiv 115-A ................................... 213, 298Subdiv 115-C ..................297, 299, 300, 302,

303, 349Subdiv 122-A ..................................... 34, 201Subdiv 122-B ..............................................34Subdiv 124-M ...........................................372Subdiv 126-A ...................................256, 287Subdiv 152-A ............................................213Subdiv 152-C ...................................213, 388Subdiv 152-E ...............................38, 39, 213Subdiv 207-C ............................................143Subdiv 275-L ...................................568, 637Subdiv 276-C .............................................13Subdiv 276-C to 276-E ..............................12Subdiv 276-D..............................................13Subdiv 276-E ..............................................13Subdiv 328-C ....................................34, 490Subdiv 328-G ......................37, 38, 490, 492Subdiv 360-A .................................. 372, 429Subdiv 768-A ...................................239, 482Subdiv 768-G .......................................... 482Subdiv 768-H ..................................298, 301Subdiv 768-R.......................... 298, 299, 302Subdiv 802-A ............................................481Subdiv 815-A .................. 203, 607, 609, 610Subdiv 815-B ............................................610Subdiv 815-C ............................................610Subdiv 820-A ........................................... 269s 1-3 ..........................................................148s 2-15(3) .................................................... 290s 4-15.........................................................418s 4-15(1) .................................................... 395s 5-5 ............................................................29s 6-1 ......................................................... 395s 6-5 ........................................ 358, 395, 422

s 6-5(1) ..................................................... 359s 6-5(2) .............................................358, 395s 6-10 ...............................................298, 395s 6-10(4).................................................... 298s 6-25(2) ................................................... 395s 8-1 ..................................................119, 432s 15-2 ...................................... 359, 395, 396s 15-2(1) .................................................... 395s 25-5 ....................................................... 530s 25-35 .............................................349, 350s 25-35(1)(a) ............................................. 349s 26-25 ......................................................146s 26-26 ..................................................... 568s 40-35 ......................................................417s 40-95 ......................................................327s 40-95(7)..................................................528s 40-102 ....................................................327s 40-110 ....................................................327s 40-130 ....................................................326s 40-130(1)(b) ............................................326s 40-230 ........................................................8s 40-730(8) ..................................................67s 40-880 ...................................................327s 70-100 ......................................................34s 83A-10 ....................................................373s 83A-340 .................................................287s 83A-340(1) .............................................287s 102-5 ............................298–300, 367, 384s 102-20 ...........................................299, 303s 102-25(1) ............................................... 488s 102-25(2) ................................................124s 103-10 ....................................................531s 103-25 ....................................................123s 103-25(1) ................................................213s 103-25(1)(a).............................................123s 103-25(2) ................................................213s 104-5 ......................................................213s 104-10 ....................................................373s 104-55(3) ............................................... 298s 104-60(1) ............................................... 488s 104-70 ....................................................625s 104-185 ..................................................213s 104-185(1)(a) ...........................................213s 104-185(1)(d) ..........................................213s 104-185(2)(a) ..........................................213s 104-197 ..................................................213s 108-5 .....................................135, 213, 488s 108-25 ................................................... 364s 108-70 ......................................................58s 108-70(2) ................................................416s 108-70(3) ................................................416s 108-75 ......................................................58s 109-5(2) ..................................................424s 109-55 ......................................................34s 110-25 ................................................... 532s 110-25(2) ....................................... 202, 424s 110-25(2)(b) ................................... 201, 202s 110-25(3) ............................................... 532s 110-35(1) ............................................... 532s 110-35(1)(b) ........................................... 533s 110-35(2) ............................................... 532s 110-35(3) ............................................... 532s 110-35(4) ............................................... 532s 110-35(5) ............................................... 533s 110-35(6) ............................................... 533s 110-35(7) ............................................... 533s 110-35(8) ............................................... 533s 110-35(9) ............................................... 533s 110-35(10) ............................................. 533s 110-35(11) .............................................. 533s 110-40(2) ............................................... 532s 110-45(1B) ............................................. 532s 110-55 ................................................... 532s 115-10 .................................................... 303s 115-215 .........................................296–300s 115-215(2) .............................................. 298s 115-215(3)......................................299, 300s 115-215(3)(b) ......................................... 298s 115-215(4) .............................................. 298

s 115-215(4A) ........................................... 299s 115-215(6) ............................................. 298s 116-30(1) ............................................... 303s 118-20 ................................................... 300s 118-24 ................................................... 300s 118-37 ................................................... 300s 118-145 ...................................................124s 118-145(4) ...............................................124s 121-20 ................................................... 368s 121-25 ................................................... 368s 122-70(3) ....................................... 201, 202s 126-5(1) .........................................256, 287s 126-5(1)(a)...............................................256s 126-5(1)(b) ..............................................256s 126-5(1)(d) ..............................................256s 126-5(1)(da) ............................................256s 126-5(1)(e) ...............................................256s 126-5(1)(f) ...............................................256s 136-10 ....................................................301s 136-25 ....................................................301s 152-10....................................213, 389, 601s 152-10(1)(a) .............................................213s 152-10(1)(b) .............................................213s 152-10(1)(c)(ii) ..........................................213s 152-10(1)(d) .............................................213s 152-10(1A) ....................................... 33, 213s 152-10(1B) ................................................33s 152-10(2) ........................................ 213, 242s 152-10(2)(a) .............................................213s 152-10(2)(b) .............................................213s 152-15 ........................... 133, 135, 213, 292s 152-20 ....................................................133s 152-20(1) ................................................138s 152-20(2)(b) ............................................138s 152-20(2)(b)(i) ..........................................135s 152-25(2) ................................................210s 152-35 ....................................................213s 152-40 ............................34, 135, 600, 601s 152-40(1)(a)....................................213, 490s 152-40(3) ................................................213s 152-40(4)(b)(iii) ........................................213s 152-40(4)(d) ............................................213s 152-40(4A)(b)..........................................213s 152-47 ....................................................601s 152-47(2).................................................213s 152-50 to 152-70 ...................................213s 152-55 ........................................... 213, 243s 152-60 ....................................................243s 152-70(1) .................................................243s 152-325(1) ..............................................242s 170-275(1).............................................. 299s 170-280(3) ............................................. 299s 202-45(g)(i) .............................................256s 275-10(3)(b) ............................................451s 276-10 ........................................... 220, 317s 276-270 ....................................................13s 292-465..................................................323s 292-465(3) ..............................................323s 295-385 ..............362, 364, 365, 368, 626s 295-385(3) ....................................368, 627s 295-385(4).....................................368, 627s 295-385(5) .............................................627s 295-385(6) .............................................627s 295-387 ...............................368, 383, 386s 295-387(2)(c) ..........................................628s 295-390 ....................... 362, 367, 384, 626s 295-390(3) ............................364, 367, 628s 295-390(7) ............................................ 368s 295-550 .........................................287, 319s 295-550(1) .....................................239, 320s 307-65(2) ............................................... 562s 328-105 ................................................. 292s 328-110 .................................143, 181, 389s 328-115(2) ......................................292, 389s 328-120(1) ............................ 292, 389, 390s 328-125 ...................11, 139, 161, 373, 600s 328-125(1).........................................11, 213s 328-125(1)(b) ..........................................213s 328-125(2)(b) ..........................................213


CUMULATIVE INDEX

s 328-125(3) ........................................11, 213s 328-125(4) ..............................................213s 328-125(4)(b) ..........................................213s 328-125(7) ..............................................213s 328-130 ................ 161, 210, 373, 431, 600s 328-425 ................................................. 492s 328-430(1)(a) ............................................34s 328-430(1)(f) .......................................... 490s 328-435 ..........................................34, 490s 355-205 ........................................428, 429s 360-10 ....................................................373s 360-15 ....................................................371s 360-15(1) ................................................371s 360-15(1)(a)(i) ..........................................372s 360-15(1)(b) ................................... 372, 431s 360-15(1)(c) .................................... 373, 431s 360-15(1)(e) .............................................431s 360-15(2) ....................................... 373, 431s 360-20....................................................373s 360-25 ....................................................431s 360-25(1) ................................................373s 360-25(2) ........................................371, 373s 360-30 ...................................................372s 360-30(1) ................................................373s 360-30(3) ...............................................373s 360-30(4)................................................373s 360-35 ...................................................373s 360-40 ...................................................373s 360-40(1) ....................................... 370, 371s 360-40(1)(a)(i) .........................................373s 360-40(1)(a)(ii) .........................................373s 360-40(1)(a)(iii) ........................................373s 360-40(1)(b) ............................................373s 360-40(1)(c) ............................................373s 360-40(1)(d) ............................................373s 360-40(1)(e) ............................................373s 360-40(2) ...............................................373s 360-40(3) ...............................................431s 360-45 ..................................371, 373, 431s 360-45(1) ................................................373s 360-45(2)................................................431s 360-50 ...................................................372s 360-50(1) ................................................373s 360-50(2) ...............................................373s 360-50(2) to (5) ......................................372s 360-50(3) ...............................................373s 360-50(4)................................................373s 360-60 ...................................................373s 360-65 ...................................................373s 701-1(1) .................................................. 533s 705-47 ....................................................201s 705-47(5)(b)(i) .........................................201s 705-60....................................................201s 711-20.....................................................201s 711-45 ....................................................201s 711-45(1) .................................................201s 768-50 ....................................................481s 768-915 ................................296–300, 302s 768-915(1)(a) .........................296, 297, 302s 768-915(1)(b) ........................296, 300, 302s 815-10 ....................................................607s 815-15 ...........................................206, 607s 815-15(1) ................................................ 609s 815-15(1)(c) ............................................ 609s 815-30(1) ................................................607s 815-30(1)(a) ............................................607s 815-30(2)(b) ............................................607s 815-130 ..................................................347s 820-37 ....................................................271s 820-80 ...................................................271s 820-85(2) ................................................270s 820-90(3)(c) ............................................271s 820-185(2) ..............................................271s 820-790(2) ..............................................271s 820-790(2)(b) ..........................................271s 820-905 ........................................ 270, 271s 820-905(1) ..............................................271s 842-15(5) ................................................161s 842-215(3) ..............................................161

s 842-220 ..................................................161s 842-225 ..................................................161s 842-230 ..................................................161s 842-230(2)(b) ..........................................161s 842-230(2)(c) ..........................................161s 842-235 ..................................................161s 842-235(6)(b) ..........................................161s 842-235(9) ..............................................161s 842-240 ..................................................161s 842-245 ..................................................161s 842-250(8) ..............................................161s 855-10 ........................................... 297, 349s 855-10(1) .......................................296–302s 855-10(1)(a) ....................................300, 301s 855-10(1)(b) ................................... 297, 300s 855-15 ........................................... 297, 480s 855-20 ........................................... 161, 480s 855-25 ................................... 161, 297, 301s 855-30 ..........................................204, 301s 855-30(2)...........................67, 68, 204, 207s 855-40 .................296, 297, 299–301, 303s 855-40(2)(c)(i) ........................................ 303s 960-100 ..................................................371s 974-5(4) ..................................................375s 974-10(2) .................................................375s 974-15 .....................................................376s 974-15(2) .........................................374, 376s 974-15(4) ................................................ 380s 974-15(5) ................................................ 380s 974-20 ....................................................375s 974-20(1)(c) .............................................375s 974-35 ................................................... 380s 974-70 ...........................373, 376, 377, 568s 974-70(1) .................................................357s 974-70(2).........................................374, 376s 974-70(4) ................................................ 380s 974-70(5) ............................................... 380s 974-75 ....................................................375s 974-75(1) .................................................376s 974-80 ............................55, 374–380, 568s 974-80(1)(d) ............................................378s 974-80(2) ................................................376s 974-85 ....................................................376s 974-130 ................................................. 380s 974-135(3).............................................. 380s 974-135(4) .............................................. 380s 974-135(6)...............................................375s 974-155 ................................. 376, 377, 379s 974-155(1)(c) ...........................................377s 975-505 ..................................................373s 995-1 ......................59, 213, 253, 297, 354,

371, 373, 431, 492, 530s 995-1(1) ..........................................290, 292

Judiciary Act 1903s 64........................................................... 494

Land Tax Act 1928 (Vic) ........................... 438

Land Tax Act 1956 (NSW) ........................262s 5A(4)(g) ....................................................616s 5A(4)(h) ....................................................616s 5A(6) .......................................................616

Land Tax Act 1958 (Vic) ............................475

Land Tax Act 2005 (Vic) ................... 261, 598Pt 4

– Sch 1 .................................................616s 3 ..............................................................616s 3A ...........................................................616s 3B ...........................................................616s 46IA ........................................................616

Land Tax Assessment Act 1910 ............. 438

Land Tax (Exemptions) Act 1942 (Vic) ............................................................ 438

Land Tax (Exemptions) Bill 1942 (Vic) ............................................................ 438

Land Tax Management Act 1956 (NSW) ........................................................ 435s 3 ..............................................................441s 3(1) .................................................438, 441s 3A ...................................................421, 441

s 7 .....................................................439–441s 8 ..............................................................441s 9 ..............................................................441s 9(1) ..........................................................441s 9(4) ......................................................... 439s 9A ...........................................................441s 9AA .........................................................441s 9C ...........................................................441s 10 ...................................................439, 441s 10(1) ........................................................597s 10(3) ........................................................597s 10A .........................................................441s 10AA .....................436, 439, 441, 596, 597s 10AA(2) ..........................................440, 596s 10AA(3) ............... 436–438, 440, 596–598s 10AA(4) ...................................................441s 10B .........................................................441s 10CA.......................................................441s 10D .........................................................441s 10E .........................................................441s 10P .........................................................441s 10Q .........................................................441s 10R .........................................................441s 10S .........................................................441s 11 ............................................................441s 12 ............................................................441s 14 ............................................................441s 15 ............................................................441s 20 ............................................................441s 21 ............................................................441s 21A .........................................................441s 21B .........................................................441s 21C .........................................................441s 21D .........................................................441s 22 ............................................................441s 23 ...................................................439, 441s 24 ............................................................441s 25(1) ........................................................441s 25(2) ........................................................441s 25A .........................................................441s 26 ............................................................441s 27 ............................................................441s 29 ............................................................441s 33............................................................441s 34............................................................441s 46 ............................................................441s 47 ...........................................420, 439, 441s 62J ..........................................................441s 62K .........................................................441s 62L..........................................................441s 62TC .......................................................441s 64............................................................441s 68A .........................................................441s 72 ............................................................441

Land Tax Management (Amendment) Act 1975 (NSW)........................................ 440

Life Insurance Act 1995s 204 ........................................................ 638s 205 ........................................................ 638

Limitation Act 1969 (NSW)s 14(1)(a) ....................................................139s 47(1) ........................................................139

Limitation Act 1974 (Tas)s 4(1)(a) ......................................................139s 24(1) ........................................................139

Limitation Act 1985 (ACT)s 11(1).........................................................139s 27(1) ........................................................139

Limitation Act 2005 (WA)s 13(1) ........................................................139s 38............................................................139

Limitation Act (NT)s 12(1)(a) ....................................................139s 32(1) ........................................................139s 44............................................................139

Limitation of Actions Act 1936 (SA)s 32 ............................................................135s 35............................................................135

s 35(a) ........................................................135s 48............................................................135

Limitation of Actions Act 1958 (Vic)s 5(1)(a) ......................................................139s 21(1) ........................................................139

Limitation of Actions Act 1974 (Qld)s 10(1)(a) ....................................................139s 27(1) ........................................................139

Migration Act 1958 ................................... 296s 30(1) ..........................................................97s 32(12) ........................................................97

New Business Tax System (Capital Gains Tax) Act 1999Sch 1 ........................................................ 302

New Business Tax System (Capital Gains Tax) Bill 1999Ch 1 .......................................................... 302

New Business Tax System (Debt and Equity) Act 2001 .......................................374

New Business Tax System (Debt and Equity) Bill 2001EM ............................................................ 380

New Business Tax System (Integrity and Other Measures) Act 1999Sch 9 ........................................................ 302

New Business Tax System (Integrity and Other Measures) Bill 1999Ch 11 ........................................................ 302

New Business Tax System (Thin Capitalisation) Bill 2001 ..........................271

New International Tax Arrangements (Managed Funds and Other Measures) Act 2005Sch 1 ........................................................ 302

New International Tax Arrangements (Managed Funds and Other Measures) Bill 2004 ........................302, 303

Partnership Act 1891 (Qld)s 5 ................................................................59

Partnership Act 1892 (NSW) ................... 290s 20 ........................................................... 632s 20(ii) ....................................................... 632

Partnership Act 1958 (Vic)s 26 ............................................................631

Partnership (Limited Liability) Act 1988 (Qld)s 5(1) ............................................................60s 8 ................................................................60s 8(3) ............................................................59s 8(4)(a) ........................................................60

Pay As You Go Withholding Non-compliance Tax Act 2012 ................77

Payroll Tax Act 1971 (Qld) ....................... 488

Payroll Tax Act 1971 (Vic)s 9A .............................................................10s 9A(1A)(c) ...................................................10

Payroll Tax Act 2007 (NSW) .................... 354s 72(2)(g) ................................................... 354s 72(6) ...............................................354–356

Petroleum Resource Rent Tax Assessment Act 1987 .............................198

Public Authorities (Financial Arrangements) Act 1987 (NSW) ............623

Public Service Act 1999s 13 ............................................................120

Stamp Duties Act 1923 (SA)s 71(3) ........................................................194s 71(4b) ......................................................194s 71(5)(b) ....................................................195s 71(5)(e) ....................................................195s 71CC ......................................................195s 71DC.......................................................194s 91(1) ........................................................195s 92 ............................................................194s 98............................................................195s 102K .......................................................194s 102L........................................................194


CUMULATIVE INDEX

Stamp Duty Act 1978 (NT)s 56C .........................................................194s 87 ............................................................195Sch 2 .........................................................195

State Revenue Legislation Amendment Act 2002 (NSW) .................441

State Revenue Legislation Amendment Act 2014 (NSW) .................441

State Revenue Legislation Further Amendment Act 2000 (NSW) .................441

State Revenue Legislation Further Amendment Act 2003 (NSW) .................441

State Revenue Legislation Further Amendment Act 2005 (NSW) ........438, 441

State Revenue Legislation Further Amendment Bill 2000 (NSW) .................441

State Taxation Acts Amendment Bill 2015 (Vic)cl 14 ...........................................................616

State Taxation and Other Acts Amendment Bill 2016 (Vic) .....................616

Statutes Amendment and Repeal (Budget 2015) Act 2015 (SA)s 53............................................................194

Succession Act 1981 (Qld)Pt 3 ............................................................224s 10 ............................................................103s 33T .........................................................102s 35 to 37 ................................................. 560Sch 2 ........................................................ 560

Succession Act 2006 (NSW)Pt 4.2 .........................................................224s 6 ..............................................................103s 48............................................................102s 112 ......................................................... 560

Superannuation (Excess Transfer Balance Tax) Imposition Bill 2016EM ............................................................ 368

Superannuation Industry (Supervision) Act 1993 ................................... 258, 500, 542Pt 8 ............................................................321s 10(1) ........................................................258s 19 ............................................................258s 38A ........................................................ 260s 42A(1) .....................................................258s 52B ................................................239, 321s 66........................................................... 383s 101 ......................................................... 260

Superannuation Industry (Supervision) Regulations 1994 ............................443, 500Pt 6 ............................................................216reg 1.06(9A).............................................. 562reg 6.01(7) ................................................ 443Sch 7 ........................................................ 562

Superannuation (Resolution of Complaints) Act 1993s 5 ............................................................. 260

Tax Agent Services Act 2009 ..........177, 215s 30-10 ..............................................177, 178s 90-5 ....................................................... 260

Tax and Superannuation Laws (2016 Measures No. 2) Bill 2016 .......................173

Tax and Superannuation Laws Amendment (2014 Measures No. 3) Regulation 2014 .........................................77

Tax and Superannuation Laws Amendment (2015 Measures No. 1) Bill 2015......................................................159

Tax and Superannuation Laws Amendment (2016 Measures No. 1) Bill 2016 .....................................................126Sch 1 .........................................................126Sch 2 .................................................126, 127

Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill 2016 .................................................... 238

Tax and Superannuation Laws Amendment (Debt and Equity Scheme Integrity Rules) Bill ...................375s 974-150(1)(c)(v) .......................................381s 974-150(1)(c)(vi) .......................................381s 974-155 ..........................................377, 378s 974-155(1)(a) ...........................................381s 974-155(1)(b) ...........................................381s 974-155(1)(c) .................................. 378, 381s 974-155(1)(c)(i).........................................381s 974-155(1)(c)(iii) .......................................381s 974-155(1)(c)(iv) .......................................381s 974-155(2)(a) ...........................................378s 974-155(2)(a)(i) ........................................381s 974-155(2)(a)(ii)........................................381s 974-155(2)(a)(iii) .......................................381s 974-155(2)(a)(iv) ......................................381s 974-155(2)(b) ...........................................378s 974-155(3)...............................................381

Tax and Superannuation Laws Amendment (Employee Share Schemes) Act 2015 ................................. 302

Tax and Superannuation Laws Amendment (Employee Share Schemes) Bill 2015 ..................................179

Tax Law Improvement Act (No. 1) 1998 ........................................................... 302

Tax Law Improvement Bill (No. 1) 1998 ........................................................... 302

Tax Laws Amendment (2006 Measures No. 1) Act 2006 ..................... 299Sch 1 ........................................................ 302

Tax Laws Amendment (2006 Measures No. 1) Bill 2006 ...................... 302EM ............................................................ 303

Tax Laws Amendment (2006 Measures No. 4) Act 2006 ..................... 299Sch 4 ........................................................ 302

Tax Laws Amendment (2006 Measures No. 4) Bill 2006 .............302, 303

Tax Laws Amendment (2006 Measures No. 7) Bill 2006 ......................213

Tax Laws Amendment (2008 Measures No. 5) Act 2008EM .............................................................451

Tax Laws Amendment (2010 Measures No. 3) Bill 2010EM ............................................................ 222

Tax Laws Amendment (2011 Measures No. 5) Act 2011 .........................................153Sch 2 ........................................................ 302

Tax Laws Amendment (2011 Measures No. 5) Bill 2011 ......................................... 302

Tax Laws Amendment (2017 Measures No. 1) Bill 2017 ..........................................431

Tax Laws Amendment (Combating Multinational Avoidance) Bill 2015EM .........................................................21, 26

Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Act 2013Pt 1

– Sch 1 .................................................610

Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013 ..........................610

Tax Laws Amendment (New Tax System for Managed Investment Trusts) Act 2016 ....................................... 222

Tax Laws Amendment (Repeal of Inoperative Provisions) Act 2006 ......... 396

Tax Laws Amendment (Small Business) Act 2007 ................................. 389

Tax Laws Amendment (Small Business Restructure Roll-over) Bill 2016 ........................................................... 490EM ...............................................................33

Tax Laws Amendment (Tax Incentives for Innovation) Act 2016 ................. 370, 427Sch 1 .........................................................431

Tax Laws Amendment (Tax Incentives for Innovation) Bill 2016 ..................427, 431EM .................................................... 373, 428

Tax Laws Amendment (Transfer of Provisions) Bill 2010 ..................................76

Taxation Administration Act 1953 ..........................178, 372, 472, 499, 635Pt IVC ....... 29, 119, 120, 146, 204, 296, 607s 3CA.........................................................237s 8AAZLGA ...............................................416s 14H .........................................................447s 14S ................................................446, 447s 14S(1)(b) ................................................. 446s 14V ......................................................... 446s 14X ......................................................... 446s 14ZZK ....................................148, 352, 552s 14ZZK(b) ...................................................45s 14ZZK(b)(i) ..............................................207s 14ZZO(b)(i) ..............................................207s 26AFB ....................................................146s 44..............................................................37s 98..............................................................14s 109E .................................................. 52, 58s 109F .........................................................38s 109N ............................................38, 52, 58s 159GZZP..................................................80s 159GZZZK ...............................................79s 159GZZZQ ...............................................80s 175 ..........................................................120s 177A(1) ....................................................125s 177C(2) ...................................................125s 177D .......................................................125s 177E .........................................................38s 177F ........................................................125s 177F(1) ......................................................23s 221YK .............................................146, 147s 221YK(3)(a) .............................................147s 318 ..........................................................161Sch 1 .........................................................149

– Div 12 ........................................ 149, 150 – Div 15 .................................................149 – Div 268 ..............................................151 – Div 269 ................................................75 – Div 358 ..............................................373 – Subdiv 16-B ..............................149, 151 – Subdiv 16-C ......................................150 – Subdiv 18-D ........................................76 – s 11-5 .................................146, 147, 218 – s 12-35.......................................149, 151 – s 12-245 ............................. 147, 217, 218 – s 12-383(b) ............................... 219, 220 – s 12-402(3)(b) ....................................161 – s 12-402(3)(c) .....................................161 – s 12-402(3)(d) ....................................161 – s 12-402(3)(e) .....................................161 – s 12-402(3)(f)......................................161 – s 12-402(3)(g) .....................................161 – s 12-402(3)(h) .....................................161 – s 14-200 ............................................287 – s 16-5 ................................................149 – s 16-70 ...............................................150 – s 16-70(1) .................................. 149, 150 – s 16-75 .......................................149, 151 – s 16-75(1) ...................................149, 151 – s 16-80 ..............................................151 – s 16-85 ..............................................149 – s 16-85(3) ..........................................149 – s 16-95 ..............................................149 – s 16-100 .............................................149 – s 16-105 .............................................149 – s 16-150 .....................................150, 151 – s 18-15 .................................................76 – s 18-125(3) ...........................................76 – s 255-5 ................................................29 – s 255-110 .............................................76 – s 260-5 ................................................76

– s 269-15.............................................151 – s 269-30(1) ........................................151 – s 269-30(2) ........................................151 – s 284-7 ................................................62 – s 284-15 ..................................62, 64, 65 – s 284-75(5) ........................................373 – s 284-75(6) ........................................373 – s 284-90 ..............................................62 – s 288-105 ............................................42 – s 290-50(1) ................................... 52, 60 – s 340-5 ..................................... 501, 502 – s 350-10 ............................................607 – s 350-10(1) ...........................................29 – s 353-10............................................ 446 – s 355-25 ..............................................77 – s 357-60 ............................................373 – s 359-5 ..............................................373 – s 388-50 ....................................150, 151 – s 388-50(1A) ......................................150 – s 396-55 ................................... 373, 431 – s 396-55(b) ........................................373 – s 396-60(1)(a) ....................................431

Taxation Administration Act 1996 (NSW)s 8 ..............................................................420s 9 ..................................................... 420, 421s 10 ............................................................421

Taxation Administration Act 1996 (SA)s 10 ............................................................421

Taxation Administration Act 1997 (Vic)s 9 ..............................................................421

Taxation Administration Act 1999 (ACT)s 9 ..............................................................421

Taxation Administration Act 2001 (Qld)s 22 of the .................................................421

Taxation Administration Act 2003 (Tas)s 19 ............................................................421

Taxation Administration Act 2003 (WA)s 17 ............................................................421s 17(2)(b) ....................................................421

Taxation Administration Act (NT)s 21 ............................................................421

Taxation Laws Amendment (2012 Measures No. 2) Act 2012 ........................77

Taxation Laws Amendment Bill (No. 3) 1990 ..............................................................80

Taxation Laws Amendment Bill (No. 3) 1998EM .............................................................256

Taxation Laws Amendment Bill (No. 5) 1992 ............................................................252

Treasury Bills Act 1914s 11 ............................................................623

Treasury Laws Amendment (2017 Enterprise Incentives No. 1) Bill 2017 ............................................................528

Treasury Laws Amendment (Combating Multinational Tax Avoidance) Bill 2017 ........................347, 472

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016 ................................... 173, 174, 245, 246Sch 2 .........................................................174

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2017 ...............528

Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 ..................................383, 384, 562, 628Sch 1 ........................................................ 368Sch 8

– Pt 1 ................................................... 368 – s 307-65(2)........................................ 562

Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016 ...................................................350, 384EM ....................................................263–265

Treasury Laws Amendment (GST Low Value Goods) Bill 2017 ................... 472, 527


CUMULATIVE INDEX

Treasury Laws Amendment (Income Tax Relief) Bill 2016 .................................173

Trustee Act 1893 (NT)Pt 1 ........................................................... 622

Trustee Act 1898 (Tas)Pt 2 ........................................................... 622

Trustee Act 1925 (ACT)Pt 2

– Div 2.2 ................................................316s 14 to 14F ............................................... 622s 63............................................................316s 89........................................................... 622s 89A ........................................................ 622

Trustee Act 1925 (NSW) ............................618Pt 2

– Div 2 ...................................................316s 14A .........................................................620s 14A(2)(a). .................................................623s 14A(2)(b) .................................................623s 14B .........................................................623s 14B(2) .....................................................623s 14B(2)(b) .................................................623s 14C ................................................ 619, 620s 14C(1)(a) ..................................................621s 14C(2) ............................................622, 623s 14C(3) .....................................................623s 14DA ...................................................... 622s 14DB.......................................................620s 25 ........................................................... 622s 53............................................................623s 53(1) ....................................................... 622s 53(3) ....................................................... 622s 63............................................................316s 63(2) ........................................................316s 64............................................................623s 90............................................................623

Trustee Act 1936 (SA)Pt 2 ............................................................316s 6-9 ......................................................... 622s 13C ........................................................ 622s 13D ........................................................ 622s 91 ............................................................316

Trustee Act 1958 (Vic)Pt 1 ........................................................... 622Pt 2 ............................................................316

Trustee Act 1983 (NT)Pt 2 ............................................................316

Trustee Act 2000 (UK) .............................. 622

Trustee Amendment (Discretionary Investments) Act 1997 ............................ 622

Trustees Act 1962 (WA)Pt 4 ............................................................316Pt III........................................................... 622s 92 ............................................................316s 95............................................................316

Trusts Act 1973 (Qld)Pt 3 ........................................................... 622Pt 5 ............................................................316s 96................................................... 316, 594s 97 ............................................................316

Valuation of Land Act 1916 (NSW) ......... 439s 4 ............................................................. 440s 6A .......................................................... 440

Wills Act 1936 (SA)s 8 ..............................................................102s 25B .........................................................102

Wills Act 1968 (ACT)s 9 ..............................................................103s 10 ............................................................103s 15C .........................................................102

Wills Act 1970 (WA)s 8 ..............................................................102s 20 ............................................................102

Wills Act 1997 (Vic)s 7 ..............................................................103s 17 ............................................................102

Wills Act 2008 (Tas)

s 8 ..............................................................103s 60............................................................102

Wills Act (NT)s 8 ..............................................................103s 46 ............................................................102

Rulings and other materials

Auditing and Assurance Standards BoardAASB 16 ...................................................327

Australian Taxation OfficeESS 2015/1 ...............................................181GSTR 2001/6 ................................... 423, 424GSTR 2003/13 .........................................291GSTR 2004/6 .................................. 291, 292GSTR 2012/5 ............................................478GSTR 2012/6 ............................................616GSTR 2016/2 ....................................... 52, 58ID 2001/743 ..............................................124ID 2003/61 ............................................... 532ID 2003/166 ..............................................135ID 2003/315 ................................................79ID 2003/316 ................................................79ID 2004/303 ..............................................478ID 2004/511 ............................................. 488ID 2004/668 ................................................82ID 2006/94 ..................................................82ID 2006/307 ..............................................252ID 2006/308 ..............................................251ID 2007/60 ............................................... 303ID 2011/37 ........................................ 135, 136ID 2011/42 .................................................327ID 2011/43 .................................................327ID 2011/44 .................................................327ID 2012/16................................................ 499ID 2014/44........................................394, 395ID 2015/27 ................................................321ID 2015/28 ................................................321ID 2016/1.......................................................7IT 2328 ..................................................... 303IT 2639 ..................................................... 395IT 2667 ..................................................... 530LCG 2015/1 ..........................................7, 500LCG 2015/2 ................................... 23, 27, 57LCG 2015/7 ................................................15LCG 2015/D6..............................................14LCG 2015/D8........................................13, 15LCG 2015/D11 ............................................15LCG 2016/1 ..............................................127LCG 2016/2 ..............................................118LCG 2016/3 ......................................118, 491LCG 2016/5 ................................................58LCG 2016/6 ................................................58LCG 2016/7 ................................................58LCG 2016/D2..............................................38LCG 2016/D3....................................... 36, 37LCG 2016/D8.........350, 363, 368, 386, 500LCG 2016/D9 .......................................... 350PBR 41494 ............................................... 488PBR 42873 ............................................... 488PBR 53699 ...............................................424PBR 61666 .............................................. 488PBR 75367 ...............................................210PBR 1011434884971 ...............................256PBR 1011533024600 ...............................424PBR 1011543866023...............................221PBR 1011544672063 ...............................221PBR 1011620103509 ...............................210PBR 1011702973663 ...............................213PBR 1011791878944 .............................. 488PBR 1012032995512 .................................82PBR 1012061751719 ................................213PBR 1012081597497 ...............................256PBR 1012119087422.......................220–222PBR 1012224948432 ..............................256PBR 1012326954685 ..............................256PBR 1012386145619 ......................220, 221PBR 1012387344596 .....................220, 221PBR 1012457494141 ................................256

PBR 1012708528770 ...............................221PCG 2006/5 ............................................ 499PCG 2016/1 ..................................8, 237, 318PCG 2016/5 .............................240, 320, 321PCG 2016/10 ............................................287PCG 2016/D16 .........................287, 317–319PCG 2017/1 ..............................................417PCG 2017/2 ..............................................474PCG 2017/5 ..............................................628PCG 2017/D4 ...................................591, 610PR 2006/8 ..................................................60PR 2007/71 ...............................................373PS LA 1998/1 .......................................... 499PS LA 2002/11 .........................................319PS LA 2003/3 .......................................... 498PS LA 2007/9 .............................................80PS LA 2008/19 .........................................327PS LA 2010/4 ...........................................153PS LA 2011/17 ..........................................501PS LA 2011/18 ....................................75, 418SMSFD 2013/2 ........................................ 562SMSFD 2014/1 ........................................ 562TA 2015/2 ................................................. 348TA 2016/2 ............................................57, 239TA 2016/8 ................................................. 239TA 2016/10 ............................................... 238TA 2016/11 ............................................... 239TA 2017/1 ..........................417, 451, 567, 635TA 2017/2 ..................................................473TA 2017/4 ..................................................473TA 2017/5 ..................................................473TD 92/153 .....................................................8TD 93/234 .................................................424TD 94/89 .....................................................82TD 2001/18 .................................................58TD 2001/26 .............................................. 356TD 2002/25...............................................135TD 2006/70 ..............................................135TD 2007/14 ...............................................139TD 2012/21 ...............................................316TD 2013/22 .............................................. 499TD 2014/7 ............................... 364, 368, 627TD 2016/3 ................................................ 348TD 2016/11 .......................................... 52, 58TD 2016/12 .......................................... 52, 58TD 2016/13 .................................................52TD 2016/14 ...............................................119TD 2016/15 ...............................................119TD 2016/16 ..............................239, 320, 321TD 2016/17 ...............................................287TD 2016/19 .............................................. 349TD 2016/D4 ............................................. 349TD 2016/D5 ............................................. 349TD 2017/1 ..................................................416TD 2017/2 ..................................................529TD 2017/3 ..................................................529TD 2017/4 ................................................. 530TD 2017/5 ................................................. 530TD 2017/6 ..................................................529TD 2017/7 ................................................ 530TD 2017/8 ................................................. 530TD 2017/10 ............................................... 533TD 2017/11 ............................................... 593TR 93/32 .................................................. 292TR 94/8 ............................................290, 292TR 97/3 ......................................................327TR 2004/15 ...............................................529TR 2006/7 .........................................287, 319TR 2006/10 .............................................. 498TR 2008/1 ................................................ 386TR 2012/D5 ..............................................377TR 2013/5 ............................... 154, 443, 562TR 2013/D6 ..............................................254TR 2014/5 ........................................253–256TR 2014/5EC ............................................256TR 2015/4 .................................................138TR 2016/1 .................................................327TR 2017/D1 ...............................................417TR 2017/D2 ......................................528, 529

Double Tax AgreementsAustralia–India double tax agreement

– art 7(1) ................................................240 – art 7(1)(a) ............................................240 – art 7(1)(b) ............................................240 – art 12..................................................240 – art 12(2) ..............................................240 – art 12(3) ..............................................240 – art 12(3)(g) ..........................................240 – art 12(4) ..............................................240

Australia–NZ double tax agreement – art 3 .....................................................24

Australia–Switzerland double tax agreement

– art 12(3) .................................9, 249–251Australia–UK double tax agreement

– art 12..................................................251Australia–US double tax agreement

– art 3 .....................................................24 – art 9 ...................................................610

Federal Court Practice NoteCM7 ...........................................................207

Federal Court Rules 2011Pt 23 ..........................................................207r 5.04 .........................................................207r 39.05 ..................................................29–31r 39.05(f) ......................................................31r 39.05(g) .....................................................31r 39.05(h) .....................................................31

Revenue Rulings (NSW)DUT 037 ....................................................195G 009 ........................................................616G 010 .........................................................616

Supreme Court (General Civil Procedure Rules) 2005 (Vic)r 54.02 .......................................................316

Supreme Court Rules (NT)r 54.02 .......................................................316

Swiss Code of Obligationsart 657 .......................................................357

Tax Practitioners BoardTPB(EP) 01/2010 ......................................178

Uniform Civil Procedure Rules 2005 (NSW)reg 36.15 .....................................................29reg 36.15(2) .................................................30

Cases

AAL Hamblin Equipment Pty Ltd v FCT [1974] HCA 1 ...............................................421

Alcan (NT) Alumina Pty Ltd v Commr of Territory Revenue (2009) 239 CLR 27 .............................. 200, 202, 491

Alexander v Ajax Insurance Co Ltd [1956] VLR 436 .............................................30

Allan McLean (dec’d), In re (1911) 31 NZLR 139 ............................................. 395

Allen’s Asphalt Staff Superannuation Fund v FCT [2011] FCAFC 118 ............. 62, 65

Allsop v FCT [1965] HCA 48 ....................... 358Altnot Pty Ltd and FCT [2013] AATA 140 ...................................135, 136, 213

Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (1920) 28 CLR 129.................................................197

Ambrose (Trustee) in the matter of Poumako (Bankrupt) v Poumako [2012] FCA 889 ...........................................316

Anderson v Commr of Taxes (Vic) (1937) 57 CLR 233 .................................... 202

Anglo American Investments Pty Ltd; DCT v [2016] NSWSC 975 .........................120

Anglo American Investments Pty Ltd v DCT [2017] NSWSCA 17 ...........................475

Ansett Transport Industries (Operations) Ltd v Comptroller of Stamps (Vic) [1983] 2 VR 305 .................................................... 533


CUMULATIVE INDEX

Antill v Mostyn [2010] NSWSC 587 ........... 622AP Energy Investments Pty Ltd; FCT v [2016] FCA 577 ......................... 69, 207

Application of Perpetual Trustee Co Ltd; Re Estate of the late Evelyn Mary Dempsey [2016] NSWSC 159 ...................102

Atkins v Godfrey [2006] WASC 83 ............. 395AusNet Transmission Group Pty Ltd; FCT v [2015] FCAFC 124 ...................203-206

Austin Distributors Pty Ltd v FCT (1964) 13 ATD 429 ......................................421

Australian Boot Trade Employees’ Federation v Whybrow & Co (1910) 11 CLR 311 ................................................ 202

Australian Consolidated Press Ltd v Ettinghausen (unreported, Sup Ct of Appeal, NSW, 13 October 1993) ............. 488

Australian Pipeline Ltd as Responsible Entity for the Australian Pipeline Trust v FCT [2013] FCA 1372 .................................201

Australian Securities and Investments Commission v Healey [2011] FCA 717 ..... 308

Australian Securities and Investments Commission v Park Trent Properties Group Pty Ltd (No. 4) [2015] NSWSC 1767 ........ 260

BBaker (dec’d), Re; Rouse v Attorney-General for Victoria [1961] VR 641...........................620

Bakri v DCT [2017] FCA 20......... 418, 445-447Bamford; FCT v [2010] HCA 10 ...........152, 313Barp Nominees Pty Ltd [2016] NSWSC 990 ...............................................316

Barr Smith, Re [1920] SALawRp 36 .......... 396Bell v FCT [2013] FCAFC 32 ................137, 138Benjamin and FCT [2015] AATA 923 ......... 266Benjamin v FCT [2016] FCA 1157 .......266-268Berryman v Zurich Australia Ltd [2016] WASC 196 ...................................... 639

Beville; FCT v [1953] ALR 490 .....................291BHP Petroleum (Timor Sea) Pty Ltd v Minister for Resources (1994) 49 FCR 155 ............................................... 299

Binetter; DCT v [2017] FCA 69 ....................475Binetter v FCT [2016] FCAFC 163 ...... 351, 352Black-Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg AG [1975] AC 591 ...................................... 202

Blank v FCT [2014] FCA 87..........................357Blank v FCT [2015] FCAFC 154 ..................357Blank v FCT [2016] HCA 42 .................357-359Blenkinsop v Blenkinsop Nominees Pty Ltd as Trustee for the Blenkinsop Family Trust [2015] WASC 463 .........288, 353

Blenkinsop v Blenkinsop Nominees Pty Ltd as Trustee for the Blenkinsop Family Trust [No. 2] [2016] WASC 61 ....................288

Blue Metal Industries Ltd v Dilley [1969] UKPCHCA 2 ...........................................10, 11

Bolton v FCT [1965] ALR 481 ..................... 633Boulder Perseverance Ltd; FCT (WA) v [1937] HCA 61 ........................................... 380

Bowmil Nominees Pty Ltd, Re [2004] NSWSC 161 ...............................................313

Boyer and Boyer [2014] FamCAFC 49 .......256BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 .... 200

BPG Caulfield Village Pty Ltd v Commr of State Revenue [2016] VSC 172 ...............92

Breakwell and FCT [2015] AATA 628 ..........139Breakwell v FCT [2015] FCA 1471 ...............135Brisbane Bears – Fitzroy Football Club Ltd v Commr of State Revenue [2016] QSC 231 .................................................... 488

Broken Hill South Ltd v FCT (NSW) (1937) 5 CLR 337 ...................................... 202

Brooker v Pridham (1986) 41 SASR 380 ....135Brooks v FCT [2000] FCA 721 ................... 533Bruton v London & Quadrant Housing Trust [2000] 1 AC 406 ................................451

Burke, Re [1908] 3 Ch 248 ......................... 622Burns v McFarlane [1940] HCA 25 ............ 389Buzza v Comptroller of Stamps (Vic) [1951] HCA 16 .............................................313

Byrne Hotels Qld Pty Ltd; FCT v [2011] FCAFC 127.............................. 138, 139

Bywater Investments Ltd v FCT [2015] FCAFC 176 .................................................552

Bywater Investments Ltd v FCT; Hua Wang Bank Berhad v FCT [2016] HCA 45 ......................288, 528, 529, 547-552

Bywater Investments Ltd v FCT; Hua Wang Bank Berhad v FCT [2016] HCATrans 184 ............................................552

CC & J Clark Ltd v IR Commrs [1975] 1 WLR 413 ................................................. 202

Cameron Brae Pty Ltd v FCT [2007] FAFC 135 ...............................................63, 65

Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd [1974] HCA 22 .............. 632

Caparo Industries plc v Dickman [1990] 2 AC 605 ........................................ 495

Caratti v Commr of the Australian Federal Police (No. 2) [2016] FCA 1132 ................. 239

Carr v Western Australia (2007) 232 CLR 138 ..............................................201

Casualife Furniture International Pty Ltd; DCT v [2004] VSC 157 .................................76

CDPV Pty Ltd v Commr of State Revenue (Vic) [2017] VSCA 89 ................................. 598

Central Cane Prices Board; R v; Ex parte Colonial Sugar Refining Co Ltd [1917] St R Qd 1 ......................................................80

Certain Lloyd’s Underwriters v Cross (2012) 248 CLR 378 .................................. 202

Chevron Australia Holdings Pty Ltd v FCT (No. 2) [2014] FCA 707 .......................207

Chevron Australia Holdings Pty Ltd v FCT (No. 4) [2015] FCA 1092 .... 203-206, 610

Chevron Australia Holdings Pty Ltd v FCT [2017] FCAFC 62 .......591, 594, 606-610

Chief Commissioner of State Revenue (NSW) v Metricon Qld Pty Ltd [2017] NSWCA 11 ........................436, 440, 596, 598

Chief Commissioner of State Revenue (NSW) v Tasty Chicks Pty Ltd [2012] NSWCA 181..................................................11

CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 ...........198, 491

City Mutual Life Assurance Society Ltd v Sir James Joynton Smith [1932] HCA 62 .......................................................441

Clark; FCT v (2011) 190 FCR 298 ...............313Club Culture Pty Ltd; DCT v [2017] FCA 338 ............................................. 564-566

Clyne v DCT (1981) 150 CLR 1 ...................437Colonial First State Investments Ltd v FCT [2011] FCA 16 ..................... 313, 317-319

Comber; FCT v (1986) 10 FCR 88 ............. 202Commissioner for Main Roads v North Shore Gas Co Ltd [1967] HCA 41 .............441

Commissioner of Stamp Duties (NSW) v JV (Crows Nest) Pty Ltd (1986) 7 NSWLR 529 ............................................... 450

Commissioner of Stamp Duties (NSW) v Simpson (1917) 24 CLR 209 .................... 202

Commissioner of State Revenue v Landrow Properties Pty Ltd (2010) 79 ATR 800 ...................................................92

Commissioner of State Revenue v The Muir Electrical Co Pty Ltd [2003] VSCA 112 ................................................10, 11

Commissioner of State Revenue (Vic) v ACN 005 057 349 Py Ltd [2017] HCA 6..........................................................475

Commissioner of State Revenue (Vic) v Price Brent Services Pty Ltd [1995] 2 VR 582 .................................................... 450

Commissioner of State Taxation (SA) v Cyril Henschke Pty Ltd [2010] HCA 43 ... 632

Commissioner of Taxes (Vic) v Lennon (1921) CLR 579 .............................................80

Commonwealth v New South Wales [1923] HCA 34 ........................................... 598

Consolidated Media Holdings Ltd; FCT v (2012) 250 CLR 503 ....................... 303

Cook v Benson [2003] HCA 36 ................. 639Cooling; FCT v (1990) 22 FCR 42 .............. 389Cooper Brookes (Wollongong) Pty Ltd v FCT [1981] HCA 26 ..............94, 197-199, 440

Cormack v CBL Cable Contractors Ltd [2006] STC 38 ........................................... 495

Coshott v Prentice [2014] FCAFC 88 ..........216Council of the City of Newcastle v Royal Newcastle Hospital [1957] HCA 15 ...............................................440, 598

Council of the City of Newcastle v Royal Newcastle Hospital [1959] UKPC 5 ......... 598

Council of the Town of Gladstone v The Gladstone Harbour Board [1964] Qd R 505 ....................................................597

Cowan v Scargill [1985] Ch 270 ......... 621, 622CPT Custodian Pty Ltd v Commr of State Revenue (Vic) [2005] HCA 53 ......... 632

Craig Williamson Pty Ltd v Barrowcliff [1915] VLR 450 .............................................80

Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 .................. 496

CSR Ltd; FCT v [2000] FCA 1513 .............. 358Cypjayne Pty Ltd v Sverre Rodskog [2009] NSWSC 301 ................................... 303

DD Marks Partnership v FCT [2016] FCAFC 86 ........................................59, 62, 63

Dalco; FCT v [1990] HCA 3 .................. 45, 373Danvest Pty Ltd v Commr of State Revenue [2017] VSC 125 ...................631-633

Dawson (dec’d), Re [1966] 2 NSWR 211 ....316De L v Director-General Department of Community Services (NSW) [1997] HCA 14 ..........................................................31

Denlay v FCT [2013] FCA 307 .................... 639Denlay v FCT [2016] NSWSC 975 ...............120Dennis v Dennis [2016] TASSC 62 ............. 503Di Lorenzo Ceramics Pty Ltd v FCT [2007] FCA 1006 ........................................256

Dixon; FCT v [1952] HCA 65 ....................... 358Donaldson v Natural Springs Australia Ltd [2015] FCA 498 ....................................243

Dorney v FCT [1980] 1 NSWLR 404 ...........316Doutch v FCT [2016] FCAFC 166 ....... 388-390Downs Distributing Co Pty Ltd v Associated Blue Star Stores Pty Ltd (in liq) (1948) 76 CLR 463 ......................... 389

DTMP and FCT [2016] AATA 684 .......176, 177Duce and Boots Cash Chemists (Southern) Ltd’s Contract, Re [1937] Ch 642 ........................................................124

EEdwards Will Trusts, Re [1948] Ch 440 ......329ElecNet (Aust) Pty Ltd (Trustee); FCT v [2015] FCAFC 178 .................. 624, 625

ElecNet (Aust) Pty Ltd (Trustee) v FCT [2015] FCA 456 .......................... 624, 625

ElecNet (Aust) Pty Ltd v FCT [2016] HCA 51 ............. 350, 351, 392, 393, 624, 625

Elsey and Elsey (1997) FLC ¶92-727 ..........256Elsey v FCT [1969] HCA 48 .........................421Emu Bay Railway Co Ltd v FCT [1944] HCA 28 ........................................... 380

Epic Energy (Pilbara Pipeline) Pty Ltd v Commr of State Revenue [2011] WASCA 228 .......................................439, 441

Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55 .........146

Esquire Nominees Ltd v FCT [1973] HCA 67 ...............................................547, 551

Estate Gowing, Re; Application for Executor’s Commission [2014] NSWSC 247.......................................394, 395

Excellar Pty Ltd and FCT [2015] AATA 282 ....................................134-136, 139

FFenn v Grafton (1836) 2 Bing N.C. 617 .......441Ferella v Chief Commr of State Revenue (NSW) [2014] NSWCA 378 ....................... 598

Financial Synergy Holdings Pty Ltd v FCT [2015] FCA 53 .....................................201

Financial Synergy Holdings Pty Ltd v FCT [2016] FCAFC 31 ................................201

Fouche v Superannuation Fund Board (1952) 88 CLR 609 .....................................619

Fuller’s Contract, Re [1933] Ch 652 ........... 632Futuris Corporation Ltd; FCT v [2008] HCA 32 .......................................................417

Futuris Corporation Ltd; FCT v [2012] FCAFC 32 .................................................. 608

GG and G [2001] FamCA 1453 ......................256GE Capital Finance Pty Ltd v FCT (2007) 159 FCR 473 .................................. 200

George v FCT [1952] HCA 21 ................. 44, 45Gibson v Skibs A/S Marina [1966] 2 All ER 476 ................................................178

Glenn v Federal Commr of Land Tax [1915] HCA 57............................................ 632

Gorringe v Calderdale Metropolitan Borough Council [2004] 2 All ER 326 ...... 494

Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 .................................. 494

Greenhatch; FCT v [2012] FCAFC 84 ........ 302Greenville Pty Ltd v Commr of Land Tax (NSW) (1977) 7 ATR 278 ............ 437, 440

Gregory v Hudson [1997] NSWSC 140 ......................................328, 329

Gregory v Hudson (No. 2) [1997] NSWSC 413 ................................................329

Grey v Pearson (1857) 6 HL Cas 61 ...........197Groth v Secretary, Department of Social Security [1995] FCA 1708 ...............323

Groves v FCT [2011] FCA 222 .....................476Gulbenkian’s Settlements, Re [1970] AC 508 ...............................................329, 353

Gulbenkian’s Settlements (No. 2), Re [1970] Ch 408....................................... 355

Gutteridge and FCT [2013] AATA 947 ..........11

HHandbury Holdings Pty Ltd v FCT (2008) 74 ATR 560 .....................................201

Handbury Holdings Pty Ltd v FCT [2009] FCAFC 141 ..................................... 202

Handosa, Re; Estate of Frank Robert Handosa (unreported, Sup Ct, NSW, 21 April 1994)..............................................618

Haritos v FCT [2015] FCAFC 92 ....................45Harries v Church Commrs for England [1992] 1 WLR 1241 .....................................621

Harris v DCT (2001) 47 ATR 406 ................ 494Harvey v Oliver (1887) 57 LT 239 ................316Hawkins v Barkley-Brown [2010] NSWSC 48 ................................................ 395

Hawkins v Barkley-Brown [No. 2] [2010] NSWSC 395 ................................... 395

HJA Holdings Pty Ltd v ACT Revenue Office [2011] ACAT 91 ............................... 355

HNA Irish Nominee Ltd v Kinghorn [2010] FCAFC 57 ........................................243

Holland v Hodgson (1872) LR 7 CP 328 ....194Hooke, Re (1970) 2 NDLR (3d) 525 ........... 394Horan v James [1982] 2 NSWLR 376 .........329


CUMULATIVE INDEX

Hua Wang Bank Berhad v FCT (No. 7) [2013] FCA 1020 ........................................ 553

Hua Wang Bank Berhad v FCT [2014] FCA 1392 ....................................................552

IIABH and HRBH [2006] FamCA 379 ..........256In the Estate of Stone (dec’d); Patterson v Halliday [2003] VSC 298 ........................... 395

In the Marriage of Bland (1994) 19 FamLR 325 ..............................................................256

In the matter of NA Investment Holdings Pty Ltd; Perpetual Nominees Ltd v NA Investment Holdings Pty Ltd [2011] NSWSC 282 .............................................. 566

In the Will of Lambe [1972] 2 NSWSC 273 ............................................102

In the Will of Shannon (1977) 1 NSWLR 201 ........................................... 396

Independent Commission Against Corruption v Cunneen [2015] HCA 14 ......491

Inez Investments Pty Ltd v Dodd (unreported, Sup Ct, NSW, 9 July 1979) .... 134

Inland Revenue Commissioners v Duke of Westminster [1936] AC 1 ............ 202

IT Case No. 726 (1951) 18 SAfTC 90 ..........424

JJayasinghe; FCT v [2016] FCAFC 79 ..............8JEL and DDF [2000] FamCA 1353 .............256Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (No. 2) (1987) 162 CLR 153 ..........................439, 441

Johnson Matthey Ltd v AC Rochester Overseas Corporation (1990) 23 NSWLR 190 ..........................................477

Jones, Re [1942] Ch 328 .............................329Junghem v Wood (1958) 58 SR (NSW) 327 ..................................................451

KKafataris v DCT [2008] FCA 1454 ........................................... 313, 317, 353

Kennedy Holdings and Property Management Pty Ltd v FCT [1992] FCA 645 ......................................................291

Keris Pty Ltd (Trustee) v DCT [2015] FCA 1381 ......................................................76

Kerslake v White (1819) 2 Stark R. 508 ......441Kocharyan v FCT [2015] FCAFC 196 ..........139

LLacey v Attorney-General (Qld) [2011] HCA 10...............................................199, 200

Lack, Re [1983] 2 Qd R 613 ....................... 395Latec Investments Ltd v Hotel Terrigal Pty Ltd [1965] HCA 17 .............................. 632

Lawrence v FCT [2009] FCAFC 29 ...............38Le Grand v FCT [2002] FCA 1258 ...............357Leda Manorstead Pty Ltd v Chief Commr of State Revenue (NSW) [2011] NSWCA 366 ...................................... 597, 598

Legal Practice Board v Computer Accounting and Tax Pty Ltd [2007] WASC 184 ..................................................215

Legal Services Commissioner v Bone [2013] QCAT 550 ....................................... 396

Lehrer, Re and The Real Property Act 1900-1956 [1961] SR (NSW) 365 .....439, 441

Livingston v Commr of Stamp Duties (Qld) (1960) 107 CLR 411 .......................... 632

Liwszyc v FCT [2014] FCA 112 ....................323Luck v Fogerty (unreported, Sup Ct, Tas, 22 March 1996) ................................. 395

Ludekens (No. 2); FCT v [2016] FCA 755 .....60Lumsden v IR Commrs [1914] AC 877 ...... 202Lunt v Wrs Pacific Pty Ltd [2002] WASC 27 ....................................................316

Lutheran Church of Australia South Australia District Inc v Farmers’ Co-operative Executors & Trustees Ltd [1970] HCA 12 ......................................329

Lynton and FCT [2012] AATA 667 ......322, 323

MM & T Properties Pty Ltd and FCT [2011] AATA 857 .........................................134

Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42 ....................316

Mack v Lenton (1993) 32 NSWLR 259 .......316Maks v Maks (1986) 6 NSWLR 34 ..............316Mareva Compania Naviera v International Bulkcarriers SA (The Mareva) [1980] 1 All ER 213 ..................................................75

Maurici v Chief Commr of State Revenue (2003) 212 CLR 111 ................................... 440

Mayo v W & K Holdings (NSW) Pty Ltd (in liq) (No.2) [2015] NSWCA 119 ...............477

McCallum, Re; Baird v McCallum (1907) 7 SR (NSW) 523 ........................................ 639

McCracken v Attorney-General (Vic) [1995] VICSC 78 .........................................329

McDonald; FCT v [1987] FCA 200 ............. 290McGraw-Hinds (Aust) Pty Ltd v Smith (1979) 144 CLR 633 ...................................437

McLaurin v FCT [1961] HCA 9 .................... 358McNeil; FCT v [2007] HCA 5 .......................357McPhail v Doulton [1970] UKHL 1 ......329, 353Meehan v Jones (1982) 149 CLR 571 ..........82Mercanti v Mercanti [2015] WASC 297.......153Mercanti v Mercanti [2016] WASCA 206 ... 353Mercanti v Mercanti [2017] HCA 1 ............. 356Metricon Qld Pty Ltd v Chief Commr of State Revenue (No. 2) [2016] NSWSC 332 .............................................. 598

Midland Railway Co of Western Australia Ltd; FCT v [1952] HCA 5 ........................... 380

Miley and FCT [2016] AATA 73 ........... 134, 135Millar v FCT [2015] FCA 1104 ......................145Millar v FCT [2016] FCAFC 94 .....145, 216-218Mills v Meeking (1990) 169 CLR 214 ..........199Minister Administering the Crown Lands Act v NSW Aboriginal Land Council [2008] HCA 48 ...................................440, 598

Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30 .....................45

Minsoul Pty Ltd v FCT (1974) 48 ALJR 283.................................................83

Momcilovic v The Queen (2011) 245 CLR 1.................................................. 202

Morrison and FCT [2015] AATA 114 ............145Mort v Bradley [1916] SALawR 11 ................80Mould v Commr of State Revenue [2015] VSCA 285 ........................................291

Mulligan (dec’d), Re [1998] 1 NZLR 481 .......................................620, 621

Murphy; R v [1985] HCA 50 ....................... 533Murry; FCT v (1998) 193 CLR 605 ..............188Myer Emporium Ltd; FCT v [1987] HCA 18...............................357-359, 388, 389

NNarain v Parnell [1986] FCA 84 .................. 533National Outdoor Advertising Pty Ltd v Wavon Pty Ltd (1988) 4 BPR 97,322 ........451

Neil Martin Ltd v HM Revenue and Customs Commrs [2007] EWCA Civ 1041 .............................................494, 495

Neil Martin Ltd v HM Revenue and Customs Commrs CA [2008] Bus LR 663 ................................................ 494

New Access Investment Group Pty Ltd and FCT [2017] AATA 63 ...........................418

New South Wales Aboriginal Land Council v Minister Administering the Crown Lands Act [2016] HCA 50 ..............597

Noetel v Quealey [2005] FamCA 677 .........256Normandy Finance and Investments Asia Pty Ltd; FCT v [2016] FCAFC 180 .....351

NR Allsopp Holdings Pty Ltd v FCT [2016] FCFA 87 .............................................59

OOrica Ltd v FCT [2015] FCA 1399 .............. 238Oswal (Radhika Pankaj) v FCT (unreported, Fed Ct of Aust, 10 June 2016) .................................... 296-303

Oswal v FCT (2013) 233 FCR 110 .............. 302Ovey v Ovey [1900] 2 Ch 424 ..................... 622

PPacific Carriers Ltd v BNP Paribas [2004] HCA 35 ............................................243

Palgo Holdings Py Ltd v Gowans (2005) 221 CLR 249 ..............................................491

Pauling’s Settlement (No. 2), Re [1963] Ch 576 ........................................................623

Peabody; FCT v [1994] HCA 43 ................. 608Pepin v Bruyere [1902] 1 Ch 24 ..................102Perilya Broken Hill Ltd v Valuer-General [2015] NSWCA 400 ................................... 440

Permanent Trustee Australia Ltd, Re (1994) 33 NSWLR 547 ...............................316

Perpetual Executors and Trustee Association of Australia Ltd v FCT [1948] HCA 24 ..............................................80

Perre v Apand [2004] FCA 1220 ...................31Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 .....................................81

Phillips, Re Estate of Joel [2007] NSWSC 639 .............................................. 396

Poletti v FCT [1994] FCA 623 ..................... 446Porlock Pty Ltd, Re [2015] NSWSC 1243 .............................................316

Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28 ......................................199, 437, 491

QQueensland v Congoo [2015] HCA 17 ...... 200

RRablin, DCT v; DCT v Shaw [2016] QSC 68 ................................................149-151

Radhika Pankaj Oswal v FCT (unreported, Fed Ct of Aust, 10 June 2016) .......... 296-303

Raftland Pty Ltd v FCT [2006] FCA 109 .....146Raftland Pty Ltd v FCT [2007] FCAFC 4.....217Rainn Pty Ltd v Commr of State Revenue [2016] VSCA 338 ........................597

Ramsden; FCT v [2005] FCAFC 39 ........... 355Ransley v FCT [2016] FCA 778 ...120, 157, 158Rawson Finances Pty Ltd v FCT [2013] FCAFC 26 ...................................................119

Rawson Finances Pty Ltd v FCT [2016] FCAFC 95 ...................................................119

Raymond William Jolley v FCT [1989] FCA 62 ....................................................... 290

Reliance Carpet Co Pty Ltd v FCT (2007) 160 FCR 433 ............................................. 200

Reseck v FCT [1975] 133 CLR 45 .............. 358Resource Capital Fund III LP; FCT v [2014] FCAFC 37 .........................69, 203-206

Resource Capital Fund III LP (No. 2); FCT v [2014] FCAFC 54 ............................ 206

Resource Capital Fund III LP v FCT [2014] HCATrans 235 .................................207

Richards v Richards [2015] VSC 335 ........ 395Rigoli v FCT [2016] FCAFC 38 .................44-46RKW Ltd v HMRC [2014] UKFTT 151.... 79, 83Robinson v FCT [2017] FCA 162 .................501Robinson v Local Board of Barton-Eccles (1883) 8 AC 798......................................... 439

Ronpibon Tin NL v FCT [1949] HCA 15 ........15Rosati and Rosati [1998] FamCA 38 ..........255Rose v FCT [1951] HCA 68 ..........................291Rothwell and Rothwell (1994) FLC ¶91-108 ...............................................256

Royal Sydney Golf Club v FCT (1995) 91 CLR 610 .................................................441

RSPG and FCT [2016] AATA 687................175Ryde Municipal Council v Macquarie University [1978] HCA 58 ..................440, 598

Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65 ......................................477

SSacks v Gridiger (1990) 22 NSWLR 502 ... 353Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252 ................491

Sainsbury v IR Commrs [1970] Ch 712 ..... 639Sandini Pty Ltd v FCT [2017] FCA 287 .......531Saunders v Vautier [1841] EWHC Ch J82 ............................................... 224, 313

Scanlon and FCT [2014] AATA 725.... 136, 138Scott v FCT (1935) 35 SR (NSW) 215 ........ 395Seven Network Ltd; FCT v [2016] FCAFC 70 .......................................9, 249-252

Seven Network Ltd v FCT [2014] FCA 1411 .....................................................249

Seymour and FCT [2016] AATA 397 .............60Sheppard, Re (1972) 2 NSWLR 714 .......... 395Shire of Arapiles v The Board of Land and Works (1904) 1 CLR 679 ................... 202

Smeaton Grange Holdings Pty Ltd v Chief Commr of State Revenue (NSW) [2016] NSWSC 1594 ................ 353, 354, 356

Smith v Anderson (1880) 15 Ch D 247 .......291Smith v Smith (1861) 1 Drew & Sm 384 .......................................................316

SNF (Australia) Pty Ltd; FCT v (2011) 193 FCR 149......................................608, 609

SNF (Australia) Pty Ltd; FCT v [2011] FCAFC 74...........................................206, 492

SNF (Australia) Pty Ltd v FCT (2010) 79 ATR 193 ................................................ 202

Snook v London and West Riding Investments Ltd [1967] 2 QB 786 .............146

Southern Estates Pty Ltd v FCT (1967) 117 CLR 481 ...............................................437

Spassked Pty Ltd v FCT [2003] FCA 84 ......79Speight, Re (1883) 22 Ch D 727 .................316Spence v FCT [1967] HCA 32 .....................291Spencer v The Commonwealth of Australia [1907] HCA 82 .............. 67, 133, 134

Sports Club plc v Inspector of Taxes [2000] STC (SCD) 443 ...............................487

SSE Corporation Pty Ltd v Toongabbie Investments Pty Ltd as trustee for the Toongabbie Investments Unit Trust [2016] NSWSC 1235 ..................................476

Stage Club Ltd v Millers Hotels Pty Ltd [1981] HCA 71 .............................................135

State Government Insurance Office v Rees (1979) 144 CLR 549......................... 533

Steele v FCT [1999] HCA 7 ............................79Stevens v Kabushiki Kaisha Sony Computer Entertainment (2005) 224 CLR 193 ..............................................199

Stock v Frank Jones (Tipton) Ltd [1978] 1 WLR 231 ..................................................199

Stokes; FCT v [1996] FCA 1128 ..................418Sutherland Shire Council v Heyman (1985) 157 CLR 424 .................................. 496

Swan v Uecker [2016] VSC 313 ..................451Syttadel and Holdings Pty Ltd and FCT [2011] AATA 589 .................................134

TTagget v FCT [2010] FCAFC 109 ............... 358Tatham v Huxtable [1950] HCA 56 .............329Taxpayer and FCT [2010] AATA 455 ...........213Taylor v The Owners - Strata Plan No. 11564 [2014] HCA 9 ............................491

Tech Mahindra Ltd v FCT [2015] FCA 1082 ................................................... 238

Thomas v FCT [2017] FCAFC 57 ............... 594Tikva Investments Pty Ltd v FCT [1972] HCA 68 .......................................................291

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 ...............................243


CUMULATIVE INDEX

Total Holdings (Australia) Pty Ltd; FCT v (1979) 24 ALR 401 .............................79

Townson v Tickell (1819) 106 ER 575 ........ 356Tran and FCT, Re [2012] AATA 123 .............323Travelex Ltd v FCT [2010] HCA 33 ..............491Troughton v DCT [2008] FCA 18 ................ 446Trust Co Ltd v Chief Commr of State Revenue [2007] NSWCA 255 ................... 439

Trustee for the Estate of Fuse (No. 5) Will Trust v FCT (1990) 21 ATR 1123 ..................80

Trustee for the Whitby Trust and FCT [2017] AATA 343 ........................................ 530

Trustees of the Property of Morris (Bankrupt) v Morris (Bankrupt) [2016] FCA 846 ..................................................... 638

Tsai Mei-Lan Lee v Chief Commr of State Revenue (NSW) (1991) 41 ATR 1 .....194

TVKS and FCT [2016] AATA 1010 .............. 356

UUber BV v FCT [2017] FCA 110 ...................474Unit Construction Co Ltd v Bullock [1960] AC 351 ............................................ 553

VVasiliades v FCT (No.2) [2017] FCA 185 ......................................................474

Venturi and FCT [2011] AATA 588 ...............134Victoria Park Racing and Recreation Grounds Co Ltd v Taylor [1937] HCA 45 .......................................................252

WW Thomas & Co Pty Ltd v FCT [1965] HCA 54 .......................................................421

Wade; FCT v [1951] HCA 66 ....................... 530Walstern v FCT [2003] FCA 1428 ..................63Wambo Coal Pty Ltd v Sumiseki Materials Co Ltd [2014] NSWCA 326 .......243

Ward v FCT [2016] FCAFC 132 ...........322-323Warner; FCT v [2015] FCA 659 .....................77Watters, Re Estate of Dibbs [2006] NSWSC 1277 ............................................ 395

Wertman v Minister of National Revenue 64 DTC 5158 ...............................................291

Western Australian Trustee Executor and Agency Co Ltd v Commr of State Taxation (WA) (1980) 147 CLR 119 ........... 202

Westraders Pty Ltd; FCT v (1980) 144 CLR 55 ............................................... 200

Whitby Land Co Pty Ltd v DCT [2017] FCA 28 ........................................................417

White, Re [2008] NZHC 80 ..........................620Whiteley, Re (1886) 33 Ch D 347 ................619Windshuttle v FCT [1993] FCA 553 ........... 268Wood v Holden (Inspector of Taxes) [2005] EWHC 547 ..................................... 553

Wood v Holden (Inspector of Taxes) [2006] EWCA Civ 26 .........547, 548, 551, 552

Woodlings; DCT v (1995) 13 WAR 189 .........77Woodside Energy Ltd v FCT (2006) 155 FCR 357 ............................................. 202

Woodside Energy Ltd v FCT [2009] FCAFC 12 ...................................................198

XX v A [2000] 1 All ER 490 ............................623

YYallingup Beach Caravan Park v Valuer-General (1994) 11 SR (WA) 355 ..............................................................194

Yanner v Eaton [1999] HCA 53 .................. 440Yazbek v FCT [2013] FCA 39 ..................... 353Young v Queensland Trustees Ltd (1956) 99 CLR 560 ................................................139

ZZappia v FCT [2017] FCA 390 .................... 594Zheng v Cai (2009) 239 CLR 446 ...............199Zimpel, Re [1963] WAR 171.........................620

Authors

A

Abbott, ADoes the ATO think your client is too risky? ...................................................... 304

Andruchowycz, MMember Profile .........................................248

Athanasiou, ALarge withholders and DPNs – a bridge too far? ....................................................149

President’s Report – 2016 – the end of the journey ..........282 – ATO to stand and deliver ......................2 – Election’s over – what of proposed tax changes? ......................................54

– The future of tax is sooner than you think ............................................114

– Looking forward ................................170 – Superannuation – a difficult evolution ........................................... 234

B

Barbour, MMember Profile ........................................ 604

Bembrick, PMid Market Focus

– CGT concessions when selling business premises ........................... 600

Bennett, MImage rights in Australia: fair game or foul ball? ..............................................487

Bishop, EHypothesising the future after Chevron .................................................. 606

Bourke, SMember Profile .........................................361

Brandon, GMid Market Focus

– GST changes – it is more than a “Netflix” tax ........................................126

Brass, JEarly stage innovation companies – a deeper dive ..........................................427

Broderick, PA Matter of Trusts

– Are foreign trusts the new black? ................................................261

– Real life examples of problematic variation clauses ...............................152

– Unit trusts and cost base resets under the TBC ................................. 382

Bugden, LAlternative Assets Insights

– The use of stapled structures a concern … again ..............................567

Burgess, MLost trust deeds .......................................310

Burns, AMid Market Focus

– Company tax rates: consider the total tax liability ..................................245

– Tax considerations when doing business offshore ............................ 535

Butler, DSuperannuation

– $1.6m balance cap examined – more tax on death benefits ................41

– The $1.6m transfer balance cap explained .......................................... 263

– Accountants and the new AFSL regime ................................................214

– ATO’s revised view on LRBAs and the NALI risk ......................................320

– Automatically reversionary pensions and super reform ..............154

– Lump sum payment arising from a partial commutation ..................... 562

– Proposed superannuation reforms – July 2016 .............................................90

– Transitional CGT relief for pension and TRIS assets for FY2017 ........... 384

– TRIS strategies after 1 July 2017 .... 443 – Understanding ECPI in view of super reforms ....................................626

– What ATO publications can be relied on? .......................................... 498

C

Cardan, TThe increased impact of Div 7A on family law settlements ............................253

Caredes, STax Counsel’s Report

– Australia’s diverted profits tax ..........347 – Blowing the whistle on tax avoidance ..........................................415

– Caretaker mode and tax policy ...........5 – Mandatory disclosure – is this necessary in Australia? ....................117

– Putting the new parliament to the test ...............................................173

– Recent draft guidance by the ATO ....................................................237

– Tax policy – the year in review .........285

Chau, GSuperannuation

– Transitional CGT relief for pension and TRIS assets for FY2017 ........... 384

– TRIS strategies after 1 July 2017 .... 443

Chen, SA look at how the Commissioner deals with phoenix companies ..........................74

Chu, HValue allocation: upstream and downstream segments ............................85

Chye, JAustralia as a holding jurisdiction ........... 480Mid Market Focus

– Using start-up employee share options to attract talent ....................179

Court, DThe regulation of an SMSF under the Corporations Act ....................................258

Cullen, RAlternative Assets Insights

– Foreign purchaser surcharge ............97

D

Davis, LIs a “statutory fiction” necessarily a horror story for taxpayers? ................... 203

De Zilva, AThe proposed debt and equity amendments: improvements or more uncertainty? ............................................374

Déal, GRecent state taxes changes affecting foreign investors in land .........................612

Deutsch, RSenior Tax Counsel’s Report

– A new initiative in tax debt reporting ............................................471

– Cross-border related-party financing arrangements ...................591

– GST on low value goods ..................527

Diaz, DWhose sham to prove? Millar in the Full Federal Court ..........................................145

Dibden, AAlternative Assets Insights

– Applying the “substance test” for withholding MITs ...............................219

– Student accommodation as an eligible investment business ........... 449

Dunne, J

The MAAL and the diverted profits tax – a comparative ..................................21

Dunnett, H

Lost trust deeds .......................................310

E

Eynaud, A

A Matter of Trusts – Real life examples of problematic variation clauses ...............................152

F

Fennell, W

Member Profile ........................................ 295

Ferraro, R

Tax Education – Success – but still not the final finishing line! ......................................183

– Teaching how to deal with ambiguity .............................................16

– Time and effort equals confidence in advice ..............................................70

– Understanding tax law .....................129

Fettes, W

Superannuation – The $1.6m transfer balance cap explained .......................................... 263

– Automatically reversionary pensions and super reform ..............154

– Lump sum payment arising from a partial commutation ..................... 562

– Understanding ECPI in view of super reforms ....................................626

Figot, B

Superannuation – The $1.6m transfer balance cap explained .......................................... 263

Folan, R

Tax Education – Gaining confidence in tax with outstanding results .......................... 484

– Learning and practising tax ............ 538 – Learning the core areas of tax ........ 602

Ford, S

Alternative Assets Insights – Thin capitalisation and unit trusts ................................................. 269

G

Gioskos, M

Large withholders and DPNs – a bridge too far? ....................................................149

New tax incentives for investors in start-up companies ................................370

Goodman, E

The proposed debt and equity amendments: improvements or more uncertainty? ..................................374

Goodwin, R

Royalty withholding tax – payments for Olympic Games broadcast rights .........249

Grey, C

Corporate tax residency after Bywater Investments .............................................547

Gribbin, C

Negative gearing: an update ahead of the 2017-18 federal Budget .................. 554

H

Haskett, A

The proposed debt and equity amendments: improvements or more uncertainty? ............................................374

He, Jing Lin

The economic impact of a corporate tax rate cut in Australia ...........................141


CUMULATIVE INDEX

I

Ioannou, JSmall business restructure ........................33

J

James, RMember Profile .........................................131Superannuation

– Accountants and the new AFSL regime ................................................214

– ATO’s revised view on LRBAs and the NALI risk ......................................320

– Proposed superannuation reforms – July 2016 ..........................................90

Jeremiah, RA Matter of Trusts

– Estate proceeds trusts post-Victorian intestacy amendments .................... 558

Jones, DMid Market Focus

– Capital gains tax: the rise of market value? ......................................67

– Income or capital? Taxpayer draws a blank ....................................357

K

Kaur-Bains, SPrimary production exemption for land tax................................................... 436

Kendall, KWhose sham to prove? Millar in the Full Federal Court ..........................................145

King, AMid Market Focus

– The new attribution tax regime for MITs: part 2 .........................................12

L

Lawrence, SImage rights in Australia: fair game or foul ball? ..............................................487

Lee, EMember Profile ...........................................18

Lomax, JMember Profile ...........................................72

Longridge, JThe economic impact of a corporate tax rate cut in Australia ...........................141

Lowis, MMember Profile ........................................ 486

M

Magid, LObituary, Tom Magney ........................... 603

Mahar, FThe economic impact of a corporate tax rate cut in Australia ...........................141

Maloney, WMember Profile .........................................425

Martins, PA Matter of Trusts

– Case study: litigation settlements and CGT SBC .................................. 208

– Deemed to be a “fixed trust” – draft guidelines .................................317

McCarthy, TNew tax incentives for investors in start-up companies ................................370

McLean, CAlternative Assets Insights

– When is a trust a unit trust? ............ 392

Meli, JLimited recourse loan plans: timing and market value substitution issues ........................................................79

Miller, B$1.6m super transfer balance cap...........................................................541

Monotti, WA Matter of Trusts

– Real life examples of problematic variation clauses ...............................152

Montani, DNegative gearing: separating fact from fiction ...................................................... 432

Morecombe, ESmall business restructure: is it “genuine”? .............................................. 490

N

Norbury, MTax Cases

– Bakri and the departure prohibition order ................................................. 445

– Club Culture and the winding-up application ........................................ 564

– Diesel fuel and Doutch .................... 388 – Economic entitlement and the Victorian Duties Act ............................92

– Out of time, out of options .............. 266 – The perplexing partnership interest ...............................................631

– The right to silence and the Commissioner ...................................157

– Rigoli and the burden of proof ...........44 – Special circumstances and the “bring forward” rule...........................322

– Superannuation, shams and Samoa ...............................................216

– Time to appeal? ................................501

O

O’Connell, GAlternative Assets Insights

– Applying the “substance test” for withholding MITs..........................219

– The future of stapled structures ......................................... 635

– Student accommodation as an eligible investment business ........... 449

O’Donohoe, JBrave new world … recent developments in duty law ......................186

P

Pandey, RIs the Commissioner immune from the tort of negligence? .......................... 494

Paull, CAlternative Assets Insights

– Fixed assets – a case for further inspection ..........................................325

– When is a trust a unit trust? ............ 392

Pawson, MPresident’s Report

– The best of both worlds ...................412 – Celebrating our volunteer members ...........................................524

– How can we simplify the tax system? ............................................ 468

– Investment in the future ................... 344 – Reflections on the valuable work of our tax policy team ...................... 588

Peiros, KSuccessful Succession

– An international will or a will in each jurisdiction? ..............................102

– Bankruptcy – protecting death benefits and insurance .................... 638

– Estate proceeds trusts: benefits for families .........................................223

– Existing trusts as beneficiaries of wills ................................................328

– Loan accounts and estoppel .......... 503 – Tax treatment of executor’s commission ...................................... 394

R

Raghavan, RAlternative Assets Insights

– Investment manager regime – observations one year in ..................159

Richardson, SHypothesising the future after Chevron .................................................. 606

Rowland, NCEO’s Report

– A busy time for your Institute ...........115 – A different type of tax education .....525 – Challenges and opportunities for tomorrow’s tax professionals ...........283

– The evolution of The Tax Institute ..............................................413

– Membership update for the first half of 2016 ............................................3

– The past, present and future of tax advocacy .................................... 469

– Tax, technology and the potential for reform ...........................................171

– Tax and small business – there’s work to be done ............................... 235

– Member satisfaction – the Institute’s first priority ....................... 589

– Ways to help you plan CPD for this financial year .......................................55

– Why The Tax Institute exists............ 344

Russell, TTrust beneficiaries and exemptions from CGT: reflections on the Oswal litigation .................................................. 296

S

Sahyoun, CAlternative Assets Insights

– The use of stapled structures a concern … again ..............................567

Santinon, NTransitional CGT choices to be made by SMSFs ............................................... 362

Simmonson, AMid Market Focus

– Shares as consideration for goods and services ......................................422

Skilton, EA Matter of Trusts

– Estate proceeds trusts post-Victorian intestacy amendments .................................... 558

Slegers, PBrave new world … recent developments in duty law ......................186

Transitional CGT choices to be made by SMSFs ............................................... 362

Smedley, DA Matter of Trusts

– Deemed to be a “fixed trust” – draft guidelines .................................317

Smyth, CSuccessful Succession

– An international will or a will in each jurisdiction? ..............................102

– Bankruptcy – protecting death benefits and insurance .................... 638

– Estate proceeds trusts: benefits for families .........................................223

– Existing trusts as beneficiaries of wills ................................................328

– Loan accounts and estoppel .......... 503 – Tax treatment of executor’s commission ...................................... 394

Somers, RA Matter of Trusts

– Case study: litigation settlements and CGT SBC .................................. 208

Speed, RThe duty of trustees to invest ..................618

Stamos, PMember Profile .........................................184

Symon, HIs a “statutory fiction” necessarily a horror story for taxpayers? ................... 203

T

TaxCounsel Pty LtdTax Tips

– 1 = 2 ....................................................10 – Are you going by the Code? ............177 – CGT: incidental costs....................... 532 – CGT choices: some points ..............123 – Discretionary trusts: beneficiary issues ................................................ 353

– GST: “plus GST” or no GST .............476 – “Reasonably arguable” .......................62 – State taxes and amended assessments .....................................420

– Tax law partnerships: some points ................................................ 290

– What is in the constitution? ..............242 – What is land “used for”? .................. 596

Taxing Issues - what happened in tax? – June 2016 ..............................................7 – July 2016 .............................................58 – August 2016 ......................................118 – September 2016 ...............................174 – October 2016 ................................... 238 – November 2016 ................................286 – December 2016 ............................... 348 – February 2017 ...................................416 – March 2017 .......................................472 – April 2017 ..........................................528 – May 2017 .......................................... 592

Toth, SMid Market Focus

– Company tax rates: consider the total tax liability ..................................245

Trewhella, MEarly stage innovation companies – a deeper dive ..........................................427

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Van, AAlternative Assets Insights

– Thin capitalisation and unit trusts ... 269

Van der Velde, JMember Profile ........................................ 540

Vines, EA Matter of Trusts

– What is a “unit trust”? .......................624

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Warnock, RMNAV test: asset and liability issues ......................................................133

Wheelahan, EContemporary issues in construing tax legislation ..........................................197

Wickramasuriya, TTax Counsel’s Report

– Diverting the diverters ........................57

Woodland, SHurdles anyone? Setting aside judgments in the Commissioner’s favour .........................................................29

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Young, AAlternative Assets Insights

– The future of stapled structures ......................................... 635

Yuan, HMid Market Focus

– The sharing economy and taxation ............................................. 293


The Tax Institute would like to thank the following presenters from our May CPD sessions. All of our presenters are volunteers, and we recognise the time that they have taken to prepare for the paper and/or presentation, and greatly appreciate their contribution to educating tax professionals around Australia.

Paul Abbey

Darren Anderson

James Beeston

Cameron Blackwood, ATI

Malcolm Brennan

Richard Buchanan, CTA

Vivian Chang, CTA

Louise Clarke

Bryan Cooke

Bruce Cooper

Graeme Cooper, CTA

Stuart Dall, ATI

Minh Dao, CTA

Kathryn Davy, CTA

Bob Deutsch, CTA

Sarah Dewar

Dennis Eagles, CTA

Alison Feather, CTA

Peter Feros, CTA

Michael Flynn, QC, CTA (Life)

Lyn Formica

Nick Gangemi, CTA

Laura Hanrahan

Scott Hay-Bartlem, CTA

Steve Healey, CTA

Fletch Heinemann, CTA

Frank Hinoporos, CTA

Jeremy Hirschhorn, CTA

Denise Honey, CTA

David Hughes, CTA

Andy Hutt, ATI

Jade Isaacs

Clinton Jackson

Rob Jeremiah, CTA

Muhunthan Kanagaratnam, CTA

John King, FTI

Tim Kyle, CTA

Celia Long

Gordon Mackenzie, CTA

Peter Maher

Gina Maio

Rhys Manley

Danielle Mawer

Paul McNab, CTA

Judy Morris

Michele Picciotta

Tim Poli, ATI

Wendy Rae

Stephen Reid

Andrew Rider, CTA

Patricia Sampathy

Jemma Sanderson, CTA

Daniel Smedley, CTA

Andrew Sommer, CTA

Ben Spargo

Linda Tapiolas, CTA

Ellen Thomas, ATI

Katie Timms

Scott Treatt, CTA

Baden U’ren

Peter Walmsley

Chris Wyeth, CTA

Belinda Yip, CTA

Giving back to the profession …National CouncilPresidentMatthew Pawson, CTA

Vice PresidentTracey Rens, CTA

TreasurerPeter Godber, CTA

National CouncillorsStuart Glasgow, CTAStephen Heath, CTALen Hertzman, CTAMarg Marshall, CTATim Neilson, CTAJerome Tse, CTATodd Want, CTA

National OfficeCEO: Noel RowlandLevel 10, 175 Pitt Street Sydney, NSW 2000

Tel: 02 8223 0000 Fax: 02 8223 0099Email: [email protected]

State DivisionsNew South Wales and ACTChair: Scott McGill, CTA Manager: Philippa Cardigan Level 10, 175 Pitt Street Sydney, NSW 2000

Tel: 02 8223 0031Fax: 02 8223 0077 Email: [email protected]

Victoria Chair: Leanne Connor, CTAManager: Ruth WhiteLevel 15, 350 Collins StreetMelbourne, VIC 3000

Tel: 03 9603 2000 Fax: 03 9603 2050 Email: [email protected]

QueenslandChair: Paul Banister, CTA Manager: Paula Quirk RussoLevel 11, Emirates Building167 Eagle StreetBrisbane, QLD 4000

Tel: 07 3225 5200 Fax: 07 3225 5222 Email: [email protected]

Western Australia Chair: Rick Hopkins, CTAManager: Brian Martin Level 10, Parmelia House 191 St Georges Terrace Perth, WA 6000

Tel: 08 6165 6600Fax: 08 6165 6699 Email: [email protected]

South Australia and Northern TerritoryChair: Ben Wilson, CTA Manager: Craig Spurr Ground Floor 5-7 King William Road Unley, SA 5061


TasmaniaChair: Darren Sheen, CTAManager: Ruth WhiteLevel 15, 350 Collins StreetMelbourne, VIC 3000


Contacts

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