Legal Insights
Lessons From Stojic: It Is Better To Under Promise And Over Deliver When Negotiating Payment Arrangements With The ATO
The Commissioner of Taxation (Commissioner) has power pursuant to section 255-15(1) of Schedule 1 to the Taxation Administration Act 1953 (TAA) to permit a taxpayer to pay off its tax debts by instalments in accordance with a payment arrangement. The recent Federal Court decision of Stojic v Deputy Commissioner of Taxation [2018] FCA 483 (Stojic), which dismissed an application by the sole director and shareholder of the taxpayer company to review a decision by the Commissioner to decline to exercise that power, provides two important lessons.
GST Withholding: Draft ATO Guidance At Odds With Explanatory Memorandum
On 29 March 2018 the Treasury Laws Amendment (2018 Measures No. 1) Act amending the Taxation Administration Act 1953 (the Act) received Royal Assent.
Key-Tax-Changes-in-the-Federal Budget
A key focus of the Federal Budget was on personal income tax cuts, and measures aimed at large companies and the black economy.
Access To CGT Concessions To Be Tightened For Ownership Interests In Companies And Trusts From 1 July 2017
On 8 February 2018, the Government released for public consultation exposure draft legislation to implement the 2017 Budget announcement to improve the integrity of the small business capital gains tax (CGT) concessions.
What is “market value” for the purpose of the MNAV test
In Commissioner of Taxation v Miley, the Federal Court overturned a decision of the Administrative Appeals Tribunal (AAT) concerning the method for valuing shares in applying the maximum net asset value (MNAV) test in s 152-15 of the Income Tax Assessment Act 1997.
Court Rules On Private Rulings Involving Assumptions About Future Events
The recent case of FCT v Hacon illustrates the practical difficulties in obtaining a private ruling that depends on assumptions about future events - in particular, in the context of the application of the anti-avoidance provisions in Part IVA of the Income Tax Assessment Act 1936.
New GST withholding regime for purchasers of new residential premises and new subdivisions of potential residential land
From 1 July 2018 purchasers of new residential premises or of new subdivisions of potential residential land that are taxable supplies will be required to pay 1/11th of the purchase price directly to the Australian Taxation Office (ATO) at settlement, if the exposure draft legislation released by the Government on 6 November 2017 passes in its current form. Subject to limited exceptions under proposed transitional rules, the new GST withholding obligation will apply even if a vendor applies the GST margin scheme.
Eligibility for the lower company tax rate and access to imputation credits clarified
Uncertainty had arisen earlier this year as to whether companies with passive investments (including ‘bucket’ companies) would be eligible for the lower company tax rate of 27.5% based on the requirement in section 23AA of the Income Tax Rates Act 1986 that they were “carrying on a business.”
ATO provides a “safe harbour” for fixed trusts
The Australian Taxation Office (ATO) published the final version of the Practical Compliance Guidelines (PCG) 2016/16, which provides guidance in relation to what will be considered by the Commissioner when exercising his discretion to treat an interest in the income or capital of a trust as being a fixed entitlement, and by extension whether a trust is a fixed trust for most tax law purposes.
GST on the sale of residential property – a lesson from the Sebel Manly Beach Hotel
In the case of MSAUS v FC of T the Administrative Appeals Tribunal (AAT) recently held that Division 135 of the A New Tax System \Goods and Services Tax Act (GST Act) did not apply to impose an increasing adjustment (an amount of GST on an otherwise GST-free transaction) to the sale of leased residential apartments.
Legislation passed to cut corporate tax rate and increase turnover threshold for small business entities
As previously reported here, the Government introduced a Bill into Parliament to increase the aggregated turnover threshold for small business entities seeking to access small business tax concessions to less than $10 million and to reduce the corporate tax rate for small business entities to 27.5% from the 2016/17 income years.
Partner is denied access to partnership’s carried forward tax losses
In RGGW and Commissioner of Taxation [2017] AATA 238, the Administrative Appeals Tribunal (AAT) held that tax losses were not available to a corporate partner in a property development partnership due to poor evidence to support its claim for losses.
Commissioner is under no duty to issue amended land tax assessments
The High Court of Australia has recently allowed an appeal against a decision of the Victorian Court of Appeal and found that the Commissioner of State Revenue (Commissioner) was not under a duty to issue amended assessments and refund an excess amount of land tax that was erroneously been paid by a taxpayer.
Capital Gains Tax (CGT) small business concessions barred - income from incidental activity of associated entity counted toward determining aggregated annual turnover
The Full Federal Court of Australia denied the application of the CGT small business 50% active asset reduction on the basis that an unusual activity carried on by an associated entity to the taxpayer contributed to the aggregated annual turnover of the taxpayer and associated entity to be more than $2,000,000.
Deadline looming for rectification of non-commercial LRBA loans - get in quick!
As set out in our previous article, the deadline for ensuring non-commercial related party limited recourse borrowing arrangement (LRBA) loans are rectified to reflect commercial terms is 31 January 2017. This date is fast approaching and SMSF trustees must take immediate action to ensure compliance with the ATO’s guidelines set out in PCG 2016/5.
Proposed amendments to “aggregate schemes” under the debt-equity rules
On 10 October 2016, the Federal Government released an Exposure Draft to amend the debt and equity rules in Division 974 of Income Tax Assessment Act 1997 for the purpose of implementing recommendations made by the Board of Taxation in its April 2015 report Review of the Debt and Equity Tax Rules.
Small Business Restructure Roll-over – aggregated turnover test to be increased to $10 million
The Government has confirmed that the proposed increase of the aggregated turnover threshold for small business entities of $10 million will apply to the Small Business Restructure Roll-over relief provisions available from 1 July 2016.
Innovation and the R&D Tax Incentives
One of the many ways in which the government is encouraging innovation is through a series of Research and Development tax incentives, in particular the R & D Tax Incentive Program.
Profit from the development and sale of a commercial property by a private family group found to be on capital account
The Administrative Appeals Tribunal (AAT) recently held in FLZY and Commissioner of Taxation that profit arising from the sale of a building by a family trust that was part of a privately held family group (Group) gave rise to a discount capital gain despite the wider property building, development and investment activities undertaken by the Group. The decision demonstrates the importance of considering a taxpayer’s purpose and intention when acquiring and developing real estate within the broader factual context of the activities undertaken by a taxpayer and any related entities.
Wine Equalisation Tax Rebate
In light of the 2016-2017 Federal Budget handed down on 3 May, participants in the wine industry have expressed significant concerns regarding the Federal Government’s proposal to reform the Wine Equalisation Tax Rebate (WET Rebate) and the related eligibility criteria.