On 1 October 2008, the Assistant Treasurer released another Exposure Draft Bill and Explanatory Material for the proposed regime for the taxation of financial arrangements (TOFA Stages 3 and 4).

In a Tax Brief in July this year [available at http://www.gf.com.au/477_672.htm] we outlined measures which the Assistant Treasurer had just released proposing amendments to Division 6C of Part III of the Income Tax Assessment Act 1936 (Cth).  The proposed amendments were a milestone in the ongoing consultations being conducted by Treasury on ‘interim measures’ to improve the operation of Division 6C, pending the more complete review of Division 6C being undertaken by the Board of Taxation [see our earlier Tax Brief available at http://www.gf.com.au/477_624.htm].

A summary of selected tax developments for the week ending 3 October 2008

A summary of selected tax developments for the week ending 26 September 2008

A summary of selected tax developments for the week ending 19 September 2008

A summary of selected tax developments for the week ending 12 September 2008

A summary of selected tax developments for the week ending 5 September 2008

A summary of selected tax developments for the week ending 29 August 2008

A summary of selected tax developments for the week ending 22 August 2008

A summary of selected tax developments for the week ending 15 August 2008

We have already noted the long and difficult gestation of the project to reform the taxation of financial arrangements (‘TOFA’) – at least 15 years so far, and counting.  This Tax Brief examines two recent developments along the long road to TOFA:
• the announcement by the Assistant Treasurer of a firm start date; and
• recent work on the interaction between TOFA and the consolidation regime.

A summary of selected tax developments for the week ending 8 August 2008

The proposal for a ‘root and branch’ review of Australia’s tax system first emerged from the Prime Minister’s ‘2020 Summit’ in April, and was then re-announced in the May Budget.  The committee selected by the Treasurer to undertake this review, now called Australia’s Future Tax System Review (‘the Review’), released its first paper yesterday.  The paper is a weighty work – it is well over 300 pages – and so this Tax Brief examines its main focus and broad thrust.

A summary of selected tax developments for the week ending 1 August 2008

A summary of selected tax developments for the week ending 25 July 2008

The Assistant Treasurer released a draft of proposed amendments to Division 6C of Part III of the Income Tax Assessment Act 1936 (Cth) for public comment on Wednesday 23 July.  This Tax Brief examines the scope and operation of the draft amendments.

Greenwoods & Freehills is pleased to host a visiting Professor from New York University Law School, Professor H David Rosenbloom. 

A summary of selected tax developments for the week ending 18 July 2008

A summary of selected tax developments for the week ending 11 July 2008

Historically, the issue of rights to acquire shares or units by companies and trusts to their shareholders and unit holders has been treated as not giving rise to any assessable income or capital gain for the shareholders or unit holders. However, last year the High Court handed down its decision in the case of Commissioner of Taxation v McNeil [2007] HCA 5 (‘McNeil’) which rather unexpectedly changed this situation and engendered considerable uncertainty in the process.
 
This Tax Brief examines the new rules proposed by the Government to try to clarify the post-McNeil situation, and in particular some of the difficulties these new rules create, as well as the areas they leave untouched.

The Directors of Greenwoods & Freehills Pty Limited (G&F) are delighted to announce the appointment of Andy Hirst (Sydney) and Rhys Penning (Melbourne) as directors of G&F with effect from 1 July 2008.

A summary of selected tax developments for the week ending 4 July 2008

A summary of selected tax developments for the week ending 27 June 2008

A summary of selected tax developments for the week ending 20 June 2008

A summary of selected tax developments for the week ending 13 June 2008

A summary of selected tax developments for the week ending 6 June 2008

A summary of selected tax developments for the week ending 30 May 2008

As promised in its March 2008 Position Paper (see our Tax Brief at http://www.gf.com.au/477_628.htm), the Board of Taxation has now released five Issues Papers to give more details on proposals in relation to reform of the CFC and FIF regimes. The Board has been working on this topic for sometime, having released a Discussion Paper in mid 2007 (see our Tax Brief at http://www.gf.com.au/477_556.htm) and conducted a first round of consultations and submissions then. 

The first GST case has been decided by the High Court of Australia. By unanimous judgement delivered on 22 May 2008 in Commissioner of Taxation v Reliance Carpet Co Pty Limited [2008] HCA 22, the Court found for the Commissioner that GST was payable where a deposit held by a vendor for the sale of commercial property was forfeited.

Greenwoods & Freehills is pleased to host Professor Malcolm Gammie QC, a leading tax practitioner from the UK, with the University of Sydney Law School on 21-27 May 2008.

A summary of selected tax developments for the week ending 23 May 2008

The Government has made further progress toward delivering one of its election promises, repeated in last week’s Budget – to change the regime for taxing distributions to foreign residents who invest in Australian managed funds.  This Tax Brief examines the recently released Exposure Draft of the provisions to accomplish this measure.  This will be very significant for the managed funds industry, especially listed property trusts, although wholesale funds and funds in sectors other than property will need to monitor their exposure.  In addition, any distributions from the property sector will now have to be carefully monitored if they flow through several trusts before leaving Australia.

A summary of selected tax developments for the week ending 16 May 2008

Few expected the new Government’s first Budget would contain many tax surprises.  On the one hand, the Government has been keen to re-assure voters that it would implement all the promises made during last year’s election campaign.  On the other, during the last 3 weeks we have seen the carefully staged release of various Budget proposals that the Government wanted to accelerate.

As far as business tax was concerned, the Budget contained only a few new measures.  The Government followed the example of its predecessor and took the opportunity to re-announce many business tax measures.  Indeed, it even decided to re-announce measures which the previous Government had released.  Consequently, many of the measures will look quite familiar.  One very welcome innovation was the declaration by the Government of its position on the long list of measures that the previous Government had announced but not yet enacted.

A summary of selected tax developments for the week ending 9 May 2008

In a move that will reverberate through the corporate tax industry in Australia, two of the country's most highly awarded tax firms, Greenwoods & Freehills and Shaddick & Spence, will merge on 1 June 2008. The merger will create the largest specialist tax firm in Australia with over 60 tax professionals under the Greenwoods & Freehills banner.

A summary of selected tax developments for the week ending 2 May 2008

It is now 5 years since the promoter penalty regime was first mooted by the former government and 2 years since it commenced operation.  The regime was enacted in large part as a response to the embarrassment caused to the government and the Australian Taxation Office (“ATO”) by the proliferation of “mass-marketed tax schemes” in the late 1990s and the public revelations in the ensuing Senate inquiry.

A summary of selected tax developments for the week ending 25 April 2008

In a recent decision, the Federal Court has again ventured into the troubled area of the debt-equity distinction, again with surprising and concerning results.  The case concerned the deductibility of over AUD$250m of interest paid by St George Bank in 5 income years under a US$350m subordinated debenture it had issued.  The Court held the interest non-deductible on the basis that it was capital in nature.

A summary of selected tax developments for the week ending 18 April 2008

A summary of selected tax developments for the week ending 11 April 2008

Over the last 15 years there has been a noticeable discrepancy between word and deed.  On the one hand, the Australian Taxation Office (“the ATO”) has devoted enormous amounts of time and effort to transfer pricing – releasing Rulings and booklets, delivering speeches, making announcements and generally trying to get taxpayers’ attention.  The work in Australia was matched by an equally voluminous output from the OECD, not to mention the extensive work of the tax authorities of other countries, especially the US.

A summary of selected tax developments for the week ending 4 April 2008

A summary of selected tax developments for the week ending 28 March 2008

A summary of selected tax developments for the week ending 22 March 2008

On 12 March 2008, the Assistant Treasurer Chris Bowen released the Board of Taxation’s Position Paper on the Review of Foreign Source Income Anti-Tax-Deferral Regimes – that is, the reform of the controlled foreign company (CFC), foreign investment fund (FIF) and transferor trusts measures. It is significant that the Press Release places the Position Paper in the context of making Australia an Asian financial hub. The same theme runs through the recently announced review of the taxation of managed funds. This link suggests that the Labor Government is giving some priority to the Board’s work in this area. We may have considerable rollback of foreign source income anti-deferral measures in the relatively near future.

A summary of selected tax developments for the week ending 14 March 2008

A summary of selected tax developments for the week ending 7 March 2008

Consistent with the election commitment from the Labor Government “to make Australia the financial services hub of Asia”, the Assistant Treasurer, Minister for Competition Policy and Consumer Affairs, the Hon Chris Bowen MP, made an announcement on Friday, 22 February 2008, that the Government has asked the Board of Taxation (Board) to review the taxation arrangements that apply to managed funds.

A summary of selected tax developments for the week ending 29 February 2008

A summary of selected tax developments for the week ending 22 February 2008

On 18 February 2008, the Federal Court of Australia released the decision of Brady King Pty Ltd v Commissioner of Taxation [2008] FCA 81 relating to a taxpayer’s entitlement to adopt the “valuation method” under the margin scheme. The case is important, and of particular relevance to property developers, as it establishes some interesting views on the margin scheme provisions which are inconsistent with the Full Federal Court’s earlier statements in the Sterling Guardian case.On 18 February 2008, the Federal Court of Australia released the decision of Brady King Pty Ltd v Commissioner of Taxation [2008] FCA 81 relating to a taxpayer’s entitlement to adopt the “valuation method” under the margin scheme. The case is important, and of particular relevance to property developers, as it establishes some interesting views on the margin scheme provisions which are inconsistent with the Full Federal Court’s earlier statements in the Sterling Guardian case.

A summary of selected tax developments for the week ending 15 February 2008

A summary of selected tax developments for the week ending 1 February 2008

Presentations given by the speakers at the Infrastructure Tax Conference hosted by Greenwoods & Freehills.

A summary of selected tax developments for the week ending 1 February 2008

A summary of selected tax developments for the week ending 25 January 2008

A summary of selected tax developments for the week ending 18 January 2008

Following on from the success of our 2007 International Property Tax Conference we are pleased to advise that we are hosting another International Conference in Sydney in early February 2008. This year’s sessions will have a focus on the key area of infrastructure. As ever, the concepts will largely be relevant to the more "traditional" property space.

A summary of selected tax developments for the week ending 14 December 2007

A summary of selected tax developments for the week ending 7 December 2007

A summary of selected tax developments for the week ending 30 November 2007

Elections are, quite understandably, fought on issues that will grab the voters’ imagination, and so far as tax is concerned, that usually means personal tax matters will receive the most attention – income tax cuts, child care tax rebates, education tax rebates and so on. Labor’s business tax proposals might not have captured the headlines but there is some important material that clients will need to factor into their forward planning and dealings with the new Labor Government. This Tax Brief principally examines the implications for business of Labor’s tax policies, with a few details included on some of the personal and superannuation changes.

A summary of selected tax developments for the week ending 23 November 2007

A summary of selected tax developments for the week ending 16 November 2007

A summary of selected tax developments for the week ending 9 November 2007

A summary of selected tax developments for the week ending 2 November 2007

On 17 October 2007, the Australian Taxation Office (the “ATO”) released a new Draft Taxation Ruling (the “Draft Ruling”) on the tax treatment of “earn out arrangements” – where, on the sale of a business or asset, some part of the agreed price is contingent on future economic performance.

They did not have the same headline-grabbing power as announcing a $34b tax cut, but the Assistant Treasurer recently released two important Press Releases on the interaction between the tax consolidation system and capital gains tax (“CGT”) rollovers which deserve careful attention.

A summary of selected tax developments for the week ending 12 October 2007

A summary of selected tax developments for the week ending 5 October 2007

A summary of selected tax developments for the week ending 28 September 2007

On 20 September 2007, the Government finally introduced into Parliament a Bill to enact the final stages of the proposed general regime for the taxation of financial arrangements (“TOFA”). As we have written on many occasions, TOFA has been a long and difficult project but after almost 16 years of work, we have now reached a major milestone – most of the previous Exposure Drafts of legislation circulated to taxpayers and the profession for comment have been superseded by a Bill presented to Parliament.

A summary of selected tax developments for the week ending 21 September 2007

Following is the presentation from today's seminar on Division 250 and Division 6C : a practical perspective aimed at the property and infrastructure sectors.

A summary of selected tax developments for the week ending 14 September 2007

A summary of selected tax developments for the week ending 7 September 2007

On 16 August 2007, the Government introduced into Parliament the Tax Laws Amendment (2007 Measures No. 5) Bill 2007 (“the Bill”).  The Bill contains two sets of measures that affect stapled entities and trusts – one that helps stapled groups to restructure without triggering adverse tax outcomes, and a second designed to permit Australian trusts to expand offshore.  Both measures have been introduced principally to facilitate the offshore expansion of Australian Listed Property Trusts (“LPT”) and have been driven by the recognition that Australian tax law needs to be flexible and accommodate the effects of tax rules in other countries.

A summary of selected tax developments for the week ending 31 August 2007

A summary of selected tax developments for the week ending 24 August 2007

On 16 August 2007, the Government introduced into Parliament the Tax Laws Amendment (2007 Measures No. 5) Bill 2007 (“the Bill”).  It contains new measures addressing the tax consequences of property and infrastructure projects that involve both private sector and tax exempt or non-resident participants and terminates the operation of the current draconian provisions.

A summary of selected tax developments for the week ending 10 August 2007

A summary of selected tax developments for the week ending 10 August 2007

A summary of selected tax developments for the week ending 3 August 2007

A summary of selected tax developments for the week ending 27 July 2007

A summary of selected tax developments for the week ending 20 July 2007

Greenwoods & Freehills is pleased to host a visiting Professor from New York University Law School, Professor H David Rosenbloom. 

A summary of selected tax developments for the week ending 13 July 2007

One of the more welcome announcements in the May 2005 Budget was the decision to remove the rules which limit the utilisation of foreign losses and which require the allocation of foreign tax credits against separate classes of income.  The tax community has waited with growing impatience to see this announcement turned into legislative form.  After more than 2 years delay, the Government introduced a Bill (“the Bill”) to give effect to this announcement on 21 June, the last sitting day of the Winter session.  The tax community will have to wait a little longer for the new rules to commence  –  the new measures will not start until 1 July 2008 at the earliest.

Presentation on Japanese fund structures seminar

A summary of selected tax developments for the week ending 6 July 2007

A summary of selected tax developments for the week ending 29 June 2007

We will soon welcome a new secondee, Max Severens, from the Loyens & Loeff Tokyo office where he has been for the last 3 years.  To introduce Max, we are holding sessions looking at equity and real property investments in Japan using TK’s, TMK’s and J-REIT’s.

 

In a very welcome development, the Assistant Treasurer announced today that the Government will amend the tax legislation to ensure that the value of rights issues is not subject to tax at the time of issue.

A summary of selected tax developments for the week ending 22 June 2007

In October 2006, the Treasurer requested the Board of Taxation to review Australia’s foreign source income anti tax-deferral regimes – that is, Australia’s regimes that seek to prevent taxpayers deferring Australian tax by storing foreign source income in offshore entities.

A summary of selected tax developments for the week ending 15 June 2007

A summary of selected tax developments for the week ending 8 June 2007

Our Tax Brief of 24 January 2007 outlined the second Exposure Draft for the remaining stages of the taxation of financial arrangements (“TOFA”) reforms.  In late May, Treasury released two further pieces of the TOFA jigsaw.

A summary of selected tax developments for the week ending 1 June 2007

The Government introduced the Tax Laws Amendment (2007 Measures No 3) Bill 2007 (“the Bill”) into Parliament on Thursday 10 May.  The Bill contains a collection of diverse legislative amendments designed to give effect to various announcements and Press Releases – including proposals which had been announced in the Budget only 2 days before.  The Bill was referred to the Senate Economics Committee for a report by 6 June.  It is not clear whether that process will lead to any significant changes.

A summary of selected tax developments for the week ending 25 May 2007

A summary of selected tax developments for the week ending 18 May 2007

A summary of selected tax developments for the week ending 11 May 2007

After the many detailed leaks in the last few days and the obvious political imperatives of an election year, this year’s Budget held few surprises for business.

A summary of selected tax developments for the week ending 4 May 2007

Greenwoods & Freehills is pleased to host Professor Malcolm Gammie QC, a leading tax practitioner from the UK, with the University of Sydney Law School on 20-30 May 2007.

A summary of selected tax developments for the week ending 27 April 2007

A summary of selected tax developments for the week ending 20 April 2007

A summary of selected tax developments for the week ending 13 April 2007

A summary of selected tax developments for the week ending 6 April 2007

A summary of selected tax developments for the week ending 30 March 2007

A summary of selected tax developments for the week ending 23 March 2007

A summary of selected tax developments for the week ending 16 March 2007

A summary of selected tax developments for the week ending 9 March 2007

Greenwoods & Freehills welcomes our latest secondment, Jeroen van Mourik to our Sydney office from Benelux based law firm, Loyens & Loeff.

A summary of selected tax developments for the week ending 2 March 2007

Since December 2006, the Superannuation and Financial Services industry has been inundated with approximately 700 pages of Bills and Explanatory Memoranda in relation to the Government’s announced “simplification” of the taxation of superannuation.  We recently held a seminar on these reforms.  A copy of the presentation can be found here.

A summary of selected tax developments for the week ending 23 February 2007

A summary of selected tax developments for the week ending 16 February 2007

A summary of selected tax developments for the week ending 9 February 2007

We recently hosted a 2 day Real Estate Investment Trust (REIT) conference for clients on 5-6 February 2007. 

Speakers from international advisory firms were invited to discuss the impacts of REIT structures in their respective jurisdictions.  A copy of their presentations is available in this article.

A summary of selected tax developments for the week ending 2 February 2007

A summary of selected tax developments for the week ending 26 January 2006

The Assistant Treasurer has released a second Exposure Draft of legislation for the taxation of financial arrangements.  The new version fills in some of the gaps evident in the last version and changes some of the policy and legislative detail.

A summary of selected tax developments for the week ending 19 January 2006

A summary of selected tax developments for the week ending 12 January 2006

On 3 January 2007, the Assistant Treasurer released a second Exposure Draft and Explanatory Memorandum (“2007 ED”) of the Taxation of Financial Arrangements (“TOFA”) legislation, generally referred to as “TOFA Stages 3 and 4.” The 2007 ED now addresses some of the issues raised during the extensive consultations that occurred in the year since the first Exposure Draft (“2005 ED”) was released in December 2005.

A summary of selected tax developments for the week ending 22 December 2006

A summary of selected tax developments for the week ending 15 December 2006

The extensive changes (mostly concessional) to Australian capital gains tax (“CGT”) for non-residents first announced in the 2005-06 Budget, are now law.  The Bill to enact this announcement, introduced into Parliament in June this year, received the Royal Assent on 12 December after a troubled passage through the Parliament.

A summary of selected tax developments for the week ending 8 December 2006

A summary of selected tax developments for the week ending 1 December 2006

A summary of selected tax developments for the week ending 24 November 2006

A summary of selected tax developments for the week ending 17 November 2006

A summary of selected tax developments for the week ending 10 November 2006

Greenwoods & Freehills appoints Andrew Mills, Ernest Chang, Simon Clark and Adrian O'Shannessy to the Management Committee.

A summary of selected tax developments for the week ending 3 November 2006

Greenwoods & Freehills is pleased to host a 2 day Real Estate Investment Trust (REIT) conference for clients in February 2007.

A summary of selected tax developments for the week ending 27 October 2006

A summary of selected tax developments for the week ending 20 October 2006

A summary of selected tax developments for the week ending 13 October 2006

A summary of selected tax developments for the week ending 06 October 2006

In FCT v CityLink Melbourne Ltd the High Court held that annual concession fees payable by CityLink to the State government are deductible as they accrue. Greenwoods & Freehills and Freehills acted for CityLink Melbourne Limited in relation to the Melbourne City Link project and this litigation.

A summary of selected tax developments for the week ending 29 September 2006

Greenwoods & Freehills (G&F) will host European tax specialist, Peter Moons from Benelux based law firm, Loyens & Loeff next month.

A summary of selected tax developments for the week ending 22 September 2006

A summary of selected tax developments for the week ending 15 September 2006

A summary of selected tax developments for the week ending 8 September 2006

A summary of selected tax developments for the week ending 25 August 2006

A summary of selected tax developments for the week ending 25 August 2006

Our Melbourne office has a new Director. On the appointment, Toby Eggleston says he feels “excitement and a sense of relief mixed with a small amount of trepidation”. Toby explains, “It will take a little while to adjust to but we have significant resources to draw on and I am looking forward to the challenge of taking on a leadership role in the development of the Melbourne practice”.
 

A summary of selected tax developments for the week ending 18 August 2006

A summary of selected tax developments for the week ending 4 August 2006

Following an established career with Greenwoods & Freehills (G&F), Mark Ferrier, a founding member of the firm, is taking on his next challenge as an Executive Director in the Investment Banking Group at Macquarie Bank. 

A summary of selected tax developments for the week ending 28 July 2006

A summary of selected tax developments for the week ending 7 July 2006

One of the more unexpected announcements in the May 2005 Budget was the Government’s proposal to limit “the application of CGT [capital gains tax] to non-residents’ real property, and the business assets of Australian branches of a non-resident rather than the current wide range of assets.”  This measure, it was said, would “bring Australia’s … CGT rules and tax treaty practice into line with international standards.”  The ongoing cost of the measure was projected to be less than $65m per year, another surprising aspect of the announcement.

A summary of selected tax developments for the week ending 2 June 2006

The Government has finally acted to re-instate legislation dealing with the tax consequences of share capital tainting – a new Bill was introduced into Parliament on 25 May 2006 and is expected to pass without delay or difficulty.  This Tax Brief examines the kind of transactions that are labelled “share capital tainting” and the tax consequences that follow. 

Greenwoods & Freehills (G&F) will strengthen its relationship with Benelux based law firm, Loyens & Loeff hosting practitioners Bart Rubbens and Matthijs Vogel next month.

A summary of selected tax developments for the week ending 26 May 2006

A summary of selected tax developments for the week ending 19 May 2006

Every year there is frenzied speculation about the likely content of the upcoming Budget.  And, as is usually the case, some of the speculation proved to be close to the mark; other guesses proved to be misinformed. 

This Tax Brief examines the recently-enacted amendments to the definition of cost and cost base which accompanied the blackhole amendments. 

The Government and the Australian Taxation Office (“ATO”) were clearly embarrassed by the proliferation of so-called “mass-marketed tax schemes” in the late 1990s and the large number of citizens who found themselves under the unwelcome scrutiny of the ATO. So, in December 2003, the Government announced that it would enact measures to try to redress what it saw as an unfair balance – to expose the promoters of tax schemes to the same kinds of penalties that their clients faced, when the promoters’ claims turned out to be incorrect and the clients found themselves exposed to ATO penalties.  The Government released an Exposure Draft displaying its preferred approach in August 2005; the Act was passed by Parliament on 28 March 2006.

A summary of selected tax developments for the week ending 24 March 2006

A summary of selected tax developments for the week ending 17 March 2006

A summary of selected tax developments for the week ending 24 February 2006

A summary of selected tax developments for the week ending 10 February 2006

A summary of selected tax developments for the week ending 3 February 2006

A summary of selected tax developments for the week ending 23 December 2005

A summary of selected tax developments for the week ending 16 December 2005

On Friday 16 December, the Government released the Exposure Draft and Explanatory Memorandum of additional provisions governing the taxation of financial arrangements, generally referred to in the industry as “TOFA Stages 3 and 4.”  This Tax Brief outlines the main impacts that the Exposure Draft legislation will have if it is enacted in something like its current form.

The tax consolidation rules provide for many elections of a transitional nature. Originally, these elections were irrevocable but the Government amended the law in early 2004 to allow a number of elections to be made or revoked by the end of 31 December 2004. On 20 December 2004, the Government announced that this period would be finally extended to 31 December 2005.

The Act giving effect to this extension, Tax Laws Amendment (2005 Measures No 5) Act 2005 completed passage through Parliament last week. Although further changes to consolidation retrospective to 1 July 2002 were announced by the Government on 1 December 2005, no mention was made of any further extension of the transitional elections. On 9 December 2005, the Minister for Revenue announced that the extension to 31 December 2005 had passed through the Parliament. We can assume that no further general extension will be forthcoming.

A summary of selected tax developments for the week ending 9 December 2005

A summary of selected tax developments for the week ending 2 December 2005

The second instalment of legislation to give effect to the recommendations in Treasury’s review of the self-assessment system for income tax was introduced into Parliament on 10 November.  A draft of this legislation had been released earlier in the year, but the final version contains several important changes.

Boutique tax firm Greenwoods & Freehills (G&F) celebrates 20 years of business in December, with the anniversary marking two decades of continued growth and development.

A summary of selected tax developments for the week ending 25 November 2005

A summary of selected tax developments for the week ending 18 November 2005

Every so often, the High Court issues a judgment with difficult and potentially far-reaching implications which, one fears, were not fully explored in the case.  The recent judgment in CPT Custodian Pty Ltd is one such case.

The issue in the case involved a narrow and quite precise land tax question – whether the holder of some or all of the units in a unit trust which holds land is the “owner” of the land for land tax purposes.  The High Court concluded that the answer was no – the unitholder was not the owner in either case.

However, in the course of reaching this unremarkable conclusion, the High Court made observations which cast doubt on some of the trust law and practice that underpins current views about the way a variety of other tax provisions operate in the presence of a trust.

A summary of selected tax developments for the week ending 11 November 2005

A summary of selected tax developments for the week ending 4 November 2005

A summary of selected tax developments for the week ending 28 October 2005

A summary of selected tax developments for the week ending 20 September 2005

A summary of selected tax developments for the week ending 14 September 2005

Given the volume of cases, legislative change and new or revised rulings relating to GST & property that have issued or been enacted since our last GST & property-related Tax Brief in March 2005, we are issuing this Update as a summary of all the major developments regarding GST & property.

Greenwoods & Freehills (G&F), has been recognised as one of Australia’s top firms, based on the recently released ‘World Tax 2006’ rankings published by International Tax Review.

A summary of selected tax developments for the week ending 7 September 2005

After extended consultation and some modest re-drafting, legislation to enact proposed amendments to the corporate loss rules was introduced into Parliament on 14 September.  The gestation of these measures has been protracted: the original proposal was outlined in our Tax Brief on the Assistant Treasurer’s announcement in April 2004 and draft legislation was released for comment in February 2005.  This Tax Brief details the main effects of the new legislative regime.  The new rules will significantly affect the ability of companies to utilise their tax losses and some other tax attributes on an ongoing basis. 

A summary of selected tax developments for the week ending 30 September 2005

A summary of selected tax developments for the week ending 23 September 2005

In one of the more perplexing decisions to come out of the Full Federal Court in recent times, the Court has by majority upheld the decision of Hill J. that “interest” payable on notes issued by one company and stapled to preference shares issued by another was not deductible under s.8-1 of the Income Tax Assessment Act 1997.

In an important decision handed down today, 16 September, the Full Federal Court has dismissed, by a 2-1 majority, the appeal by Macquarie Finance Limited (“MFL”) in relation to a case on the deductibility of interest. The case is also of relevance as regards the general anti-avoidance provisions in Part IVA of the Income Tax Assessment Act 1936. In particular, and although MFL lost on the prima facie deductibility of the interest expense, two of the three judges were of the view that Part IVA would not have been applicable.

A summary of selected tax developments for the week ending 16 September 2005

A summary of selected tax developments for the week ending 9 September 2005

Commissioner of Taxation v McNeil [2005] FCAFC 147

The decision of the Full Federal Court in Commissioner of Taxation v McNeil [2005] FCAFC 147 was handed down on 8 August 2005.  This was a test case funded by the Commissioner and involved Mrs. Helen McNeil, a widowed pensioner 90 years of age.  Despite the disparity between the two protagonists, the case raises some interesting tax issues which may have implications in characterising certain distributions made by a company to its shareholders for the purposes of s.6-5 of the Income Tax Assessment Act 1997 (“the 1997 Act”).  The decision is also a first in interpreting certain terms of s.104-155 of the 1997 Act (CGT event H2).

A summary of selected tax developments for the week ending 2 September 2005

A summary of selected tax developments for the week ending 26 August 2005

A summary of selected tax developments for the week ending 19 August 2005

A summary of selected tax developments for the week ending 12 August 2005

A summary of selected tax developments for the week ending 5 August 2005

HP Mercantile Pty Ltd v Commissioner of Taxation [2005] FCAFC 126

The Full Court of the Federal Court of Australia (Hill, Stone & Allsop JJ) in its decision on the appeal to the AAT Recoveries Trust case (H P Mercantile Pty Ltd v Commissioner of Taxation [2005] FCAFC 126) has now given strong judicial guidance on the core GST concept of whether an acquisition is made for a “creditable purpose” such that the taxpayer is entitled to claim an input tax credit.

A summary of selected tax developments for the week ending 29 July 2005

A summary of selected tax developments for the week ending 22 July 2005

On 17 June 2005 the Government released draft legislation and explanatory notes on “Conduit Foreign Income”, one of the remaining items of business from the 2003 Budget response to the Review of International Taxation. There are still several outstanding items from the announcement of the reforms, as well as a promised more general review of the FIF regime. The rest of this tax brief deals with the recently released draft legislation and its place in the overall treatment of conduit income.

A summary of selected tax developments for the week ending 15 July 2005

A summary of selected tax developments for the week ending 08 July 2005

A summary of selected tax developments for the week ending 01 July 2005

In a series of Tax Briefs in December 2004 and January 2005 we detailed the recommendations of Treasury’s report to the Government on aspects of the self assessment system (“the Report”) released on 16 December 2004. Legislation to give effect to the Report’s recommendations is now gradually being produced.  Three instalments have been released so far.  This Tax Brief outlines the provisions of the three instalments:  the first Bill which was released in March 2005 (“the Bill”), an Exposure Draft Bill released in May for public comment (“May Draft”), and a further Exposure Draft Bill released in June also for public comment (“June Draft”).  The Bill has passed both Houses of Parliament and received Royal Assent yesterday.  The Drafts will presumably become Bills and be introduced into Parliament once the public consultation process has concluded.

Commissioner of Taxation v BCD Technologies Pty Ltd [2005] FCA 708

The Federal Court has upheld the Commissioner’s appeal in Commissioner of Taxation v BCD Technologies Pty Ltd against the AAT decision that a company tax return lodged with no tax payable (often called a nil assessment) was an assessment by virtue of the deeming provisions of s 166A of the Income Tax Assessment Act 1936 (“the Act”).

A summary of selected tax developments for the week ending 24 June 2005

A summary of selected tax developments for the week ending 17 June 2005

A summary of selected tax developments for the week ending 10 June 2005

A summary of selected tax developments for the week ending 3 June 2005

Commissioner of Taxation v Linter Textiles Australia Ltd (In Liquidation) [2005] HCA 20 (26 April 2005)

On 26 April 2005, the High Court unanimously allowed the Commissioner’s appeal from the decision of the Full Federal Court in FCT v Linter Textiles Australia (in liq) (2003) 52 ATR 502.  The Commissioner won on a ground which had not been considered in the Courts below, but agreed to pay the costs of the appeal.

A summary of selected tax developments for the week ending 27 May 2005

A summary of selected tax developments for the week ending 20 May 2005.

A summary of selected tax developments for the week ending 13 May 2005.

Apart from the headline-grabbing personal tax cuts and the abolition of the superannuation surcharge, the 2005 Budget tax measures cover a broad range of issues – more than was expected.  The Government is making a determined effort to clean up the remaining tax agenda from the past and many of the measures finally lay to rest issues that have been around since tax reform was announced in 1998. In the international area in particular there are new reforms that by Australian standards are quite refreshing because they do away with existing tax barriers to investment – the abolition of foreign loss quarantining and the removal of capital gains tax on non-residents except for land and business assets of a branch in Australia. This Tax Brief covers the more important new announcements in tonight’s Budget.

On 27 April 2005, the Government amended the Regulations to the Income Tax Assessment Act 1997 to give effect to an announcement in August 2004 by the Assistant Treasurer that regulations would be made elaborating the operation of the foreign exchange (“forex”) legislation.  The Regulations are (with some exceptions) backdated to operate from 1 July 2003, the date on which the forex legislation became operative.  They are designed to facilitate translating foreign currency into either Australian dollars or into a taxpayer’s functional currency by permitting taxpayers to adopt exchange rates and computational methods which are not strictly in accordance with the dictates of the legislation.

Pearson v Commissioner of Taxation [2005] FCA 250

On 16 March 2005, Justice Spender of the Federal Court of Australia handed down the decision of Pearson v Commissioner of Taxation. This judgement considers the operation of Division 6 in circumstances where the net income of a trust is increased subsequent to the conclusion of an income year. This is another in a series of cases where the ATO has delved in detail into the terms and procedures of trusts deeds to determine tax liabilities in relation to trust income, much to the alarm of the taxpayer.

While we all wait with baited breath for the latest Budget tax announcements, bear in mind that there can be a long while from announcement to delivery of new measures. We may be holding our breath for a very long time if the fourth bill to implement the New International Tax Arrangements announced in the 2003 Budget is any guide.

A summary of selected tax developments for the week ending 6 May 2005.

ACP Publishing Pty Ltd v FCT [2004] FCA 874

By a 2 to 1 majority, the Full Federal Court has upheld the conclusion of Dowsett J in the Federal Court in ACP Publishing Pty Ltd v FCT [2004] FCA 874 that the sale of a magazine business in accordance with the terms of a deed executed in 1980 was GST-free under section 13 of the A New Tax System (Goods and Service Tax Transition Act) 1999 (“the Transition Act”) even though it allowed the parties to determine the price for a supply after 1 July 2000.

A summary of selected tax developments for the week ending 29 April 2005.

We are pleased to announce that from 1 May 2005 Greenwoods & Freehills Pty Limited (G&F) will commence operations as a law firm in Melbourne, practising exclusively in taxation. G&F will be an Incorporated Legal Practice regulated by the Law Society of New South Wales.

A summary of selected tax developments for the week ending 22 April 2005.

A summary of selected tax developments for the week ending 15 April 2005.

A summary of selected tax developments for the week ending 8 April 2005.

A summary of selected tax developments for the week ending 1 April 2005.

This Tax Brief reports the concluded view of the Australian Taxation Office [“ATO”] on the exemption from withholding tax for interest paid by Australian residents to banks and other financial institutions resident in the US and the UK.  The concluded view is expressed in Taxation Ruling TR 2005/5 released on 16 March 2005.  Our Tax Brief of 8 September 2004 [http://www.gf.com.au/articles_319.htm] outlined the main provisions and some of the implications of the Draft version of the Ruling.  This Tax Brief reports what has changed (and touches on a few important matters that have remained unaffected) through the consultation process.

A summary of selected tax developments for the week ending 25 March 2005.

Some nine months after it was introduced into Parliament, the New International Tax Arrangements (Managed Funds and Other Measures) Act 2005 received Royal Assent and became law on 21 March 2005. The bill was originally introduced in the middle of 2004 and lapsed when the election was called. This is the third Act dealing with the 2003 budget announcements on international tax (with more to come) and the Act also includes measures on interest withholding tax announced on 4 March 2004.

A summary of selected tax developments for the week ending 18 March 2005.

Proposed amendments aimed at closing “unintended outcomes” in the use of the GST margin scheme may impact the profitability of current property development projects. 

A summary of selected tax developments for the week ending 11 March 2005.

A summary of selected tax developments for the week ending 4 March 2005.

Chief Commissioner of State Revenue v Dick Smith Electronics Holdings Pty Ltd [2005] HCA 3

Whilst the High Court decision in Chief Commissioner of State Revenue v Dick Smith Electronics Holdings Pty Ltd (“Dick Smith”) involves NSW stamp duty, it is interesting to also consider whether it has any implications for the interpretation of the capital gains tax provisions of the Income Tax Assessment Act, 1997.

Pridecraft Pty Ltd v Commissioner of Taxation [2004] FCAFC 339

The Full Federal Court has dismissed an appeal by the taxpayer in Pridecraft Pty Ltd v Commissioner of Taxation [2004] FCAFC 339, upholding the decision of Merkel J at first instance and confirming the Commissioner’s  stance against what he viewed as a harmful tax scheme cloaked as an employee rewards system. This is one of a number of cases dealing with employee benefit schemes that have been in the courts in recent years.

A summary of selected tax developments for the week ending 25 February 2005.

A summary of selected tax developments for the week ending 18 February 2005.

A summary of selected tax developments for the week ending 11 February 2005.

AAT case [2005] AATA 47

Participants in joint venture arrangements should be aware that termination payments may not be capital in nature but may be assessable to the participant as ordinary income in the year of receipt.

A summary of selected tax developments for the week ending 4 February 2005.

G Cassegrain & Co Pty Ltd v Commissioner of Taxation [2005] AATA 72

Senior Member Lindsay of the Administrative Appeals Tribunal (the “AAT”) has held in AAT Case [2005] AATA 72, Re G Cassegrain & Co Pty Ltd and C of T that a $9.5 million settlement payment made to the taxpayer, a family company, was assessable as a capital gain. The case raises some intricate and fundamental issues of the operation of the CGT in the context of settlement of actions.

The Recoveries Trust v Commissioner of Taxation [2004] AATA 1075

This AAT decision examines one of the key concepts in the A New Tax System (Goods and Services Tax) Act 1999 (all legislative references are to this GST Act), namely that of whether an acquisition is made for a “creditable purpose” pursuant to section 11-15 such that an input tax credit can be claimed.

This is the last of our Tax Briefs on Treasury’s report to the Government on aspects of the self assessment system (“the Report”) released on 16 December 2004. In this Tax Brief we focus on the recommendations dealing with changes to the powers to re-assess tax liabilities, and with proposed changes to the rules concerning the imposition and remission of penalties and interest.

This is the second of three Tax Briefs on Treasury’s report to the Government on aspects of the self assessment system (“the Report”) which was released on 16 December 2004.  In this Tax Brief we focus on the recommendations designed to improve “the framework, reliability, accessibility, accuracy and timeliness of ATO advice.”  These recommendations should go some way to addressing some of the many criticisms about the way the Australian Taxation Office (“ATO”) has administered the self-assessment system.

The ATO has released a Practice Statement (Practice Statement) setting out its access policy for company board papers relating to taxation risk. The Practice Statement considers advice to the Board that addresses tax risks associated with both specific transactions and internal compliance systems. The Practice Statement was released on 23 December 2004 during the December season of desk clearing announcements by the ATO and Treasury before the employees involved take their break for summer holiday. Which leaves those affected by the announcements to take any necessary action during their holidays.

On 16 December 2004, the Treasurer released Treasury’s report to the Government on aspects of the self assessment system (“the Report”), and the Government’s response to the Report, accepting all of the recommendations.  The Review of Aspects of Income Tax Self-Assessment had originally been announced by the Treasurer in November 2003. 

Marana Holdings Pty Ltd v Commissioner of Taxation [2004] FCAFC 307

The Full Federal Court has upheld in Marana Holdings Pty Ltd v Commissioner of Taxation (“Marana”) the decision of Beaumont J that the sale of a unit that had been converted from a motel room was not input taxed for the purposes of the A New Tax System (Goods and Services Tax) Act 1999 (“the GST Act”). The decision provides guidance on the definition of ‘residential premises’ and ‘commercial residential premises’ for the purposes of the GST Act.

It has taken just under 20 years, but the Australian Taxation Office [“ATO”] has finally released a Draft Ruling outlining its interpretation of one of the pivotal concepts in the capital gains tax [“CGT”] rules for trusts. 

 

STOP PRESS - 20 DECEMBER 2004

On Monday 20 September 2004, the Minister for Revenue and Assistant Treasurer announced that a further extension until 31 December 2005 would be allowed for making the elections referred to in our Tax Brief of 15 December 2004.

 

The tax consolidation rules provide for many elections of a transitional nature. Originally, these elections were irrevocable but the Government amended the law in early 2004 to allow a number of elections to be made or revoked by the end of 31 December 2004.

City Link Melbourne Limited v FCT [2004] FCAFC 272 (12 October 2004)

On 12 October 2004, the Full Federal Court upheld the taxpayer’s appeal against the judgement of Merkel J in Transurban City Link Limited v FCT.  The issue before the Federal Court and on appeal was whether annual Concession Fees of $31.25 million in the 1996 year of income and $95.6 million in each of the 1997 and 1998 years of income were allowable deductions to Transurban City Link Limited (“Transurban”).

Commissioner of Taxation v Amway of Australia Limited [2004] FCAFC 273

The Full Federal Court has allowed the taxpayer’s appeal in Commissioner of Taxation v Amway of Australia Limited [2004] FCAFC 273. The taxpayer, Am