Recent Developments

The Assistant Treasurer announced on Wednesday afternoon further changes to the proposed new regime for taxing employee shares and options. This is the Government’s third announcement on the subject, and it has in large part now reverted back to the pre-budget tax arrangements, although with some very important qualifications. Sale restrictions are to be reinstated as a deferral mechanism – but with important limitations. The Government has also elaborated on what will constitute real risk of forfeiture. Rights and options will generally remain taxable when they vest, rather than later upon exercise. The start date remains 1 July 2009. 

A summary of selected tax developments for the week ending 26 June 2009.

A summary of selected tax developments for the week ending 19 June 2009

In its recent decision in Bamford v Commissioner of Taxation [2009] FCAFC 66, the Full Federal Court has settled (at least at the level of the Federal Court) two issues in relation to the taxation of trusts that have been the source of debate between taxpayers and the ATO, especially in recent times when the ATO has been developing views partly at odds with the general professional understanding.

A summary of selected tax developments for the week ending 12 June 2009

In the May 2009 Budget, the Government announced that it had accepted one of the interim recommendations made by the Board of Taxation as part of its current review of the tax arrangements applying to managed investments trusts – namely, that MITs would be able to elect to apply capital gains tax treatment exclusively to gains and losses made on certain types of trust assets.  Treasury has released a brief Discussion Paper giving some further detail on the Budget announcement and identifying the issues on which it is seeking submissions.  This Tax Brief examines the design features of the new proposal and the kinds of qualifications that are going to constrain its scope and operation.  This is a very welcome policy development, but as will be seen, the promise of implementing it in a regime that would prove to be simple, neat and elegant is now looking less likely.

The Government released last Friday afternoon its revised proposal for the taxation of employee shares, options & rights. The Government has conceded a number of key stakeholder complaints – significantly, there will not be taxation before vesting. But the revised proposal will still very significantly restrict the way that many plans have been operating in Australia. Deferral of tax on fully vested benefits has been a mainstay of long term employee share ownership in the past. It is now to be scrapped, as initially proposed by the budget announcement. The start date has been delayed briefly until 1 July 2009, and further submissions are due by this coming Friday, 12 June.

A summary of selected tax developments for the week ending 5 June 2009

In an earlier Tax Brief [available at http://www.gf.com.au/477_634.htm ] we reported on a case denying St George Bank a deduction for interest paid on a subordinated loan issue.  The Full Federal Court recently heard the taxpayer’s appeal in this case and unanimously confirmed that the interest expense was not deductible.  In this Tax Brief we review the Court’s reasoning and the ongoing significance of this case.

A summary of selected tax developments for the week ending 29 May 2009