Greenwoods & Freehills Weekly Tax Highlights 27.04.07-4.05.07

4 May 2007

ATO Documents

Released 25.4.07

Taxation Determination
TD 2007/12: Income tax: consolidation: subsidiary in liquidation - for the purposes of subsection 711-45(1) of the Income Tax Assessment Act 1997, is the amount of an unsatisfied liability owed to another member of the consolidated group ('intra-group liability') by a subsidiary member at the time it is deregistered equal to the market value of the corresponding asset of that other member?
TD 2007/13: Income tax: consolidation: can a head company make a capital gain under CGT event L5 (section 104-520 of the Income Tax Assessment Act 1997) when a subsidiary member of the group is deregistered after liquidation?
Draft Taxation Determination
TD 2007/D7: Income tax: are bees kept for use in a honey production business trading stock as defined in section 70-10 of the Income Tax Assessment Act 1997?
Class Rulings
CR 2007/32: Income tax: tax treatment of payments to members of the South Australian Building Industry Redundancy Scheme Trust
CR 2007/33: Income tax: scrip for scrip roll-over: acquisition of UNiTAB Limited by Tattersall's Limited
CR 2007/34: Income tax: off market share buy-back: Foster's Group Limited
Product Rulings
PR 2007/40: Income tax: Rewards Group Tropical Fruits Project 2007
PR 2007/41: Income tax: Gunns Plantations Walnut Project No. 2 - Early Growers
Erratum
Product Ruling
PR 2007/33: Income tax: Olive Growers Australia Project 2007 - Applicant Group 1
Notices of Withdrawal
Sales Tax Ruling
ST 2295: Sales tax: two part epoxy resin sealant for use in the building industry
ST 2296: Sales tax: industrial floor coverings
ST 2297: Sales tax: digital diary, an electronic logging device
ST 2298: Sales tax: walking sticks
ST 2299: Sales tax: servicing and construction equipment
ST 2300: Sales tax: legal stationery
ST 2302: Sales tax: hand tools
ST 2303: Sales tax: drawings, sketches and artwork for use in the production of printing blocks or plates
ST 2306: Sales tax: Seuster-Roll-Fast-Door and associated drive motor, control box and optional controls
ST 2307: Sales tax: savoury snacks - dried meat products
ST 2308: Sales tax: chemical air and dust filters
ST 2310: Sales tax: water signals
ST 2311: Sales tax: sailboard harnesses
ST 2312: Sales tax: blueprints and plans and sensitized paper for use by architects and drafting personnel to produce blueprints and plans for use on construction sites
ST 2313: Sales tax: video tapes, films and sound recordings for use for religious purposes
ST 2314: Sales tax: air conditioning and ventilating duct work, fittings accessories and attachments
ST 2315: Sales tax: poker machine stands
ST 2316: Sales tax: Budget shower transporter and plastic shower sleeves
ST 2317: Sales tax: safety sides for hospital beds
ST 2318: Sales tax: tapestries

Released 4.5.07

Interpretative decisions
ATO ID 2007/79: Fuel Tax Credits: omitted fuel tax credits - choice between revising the original BAS to claim credits and claiming credits in a later BAS
ATO ID 2007/80: Fuel tax credits: Road user charge - incidental issue as defined in section 8 of the Energy Grant (Credits) Scheme Act 2003
ATO ID 2007/81: Cleaner Fuels Grants: reductions resulting from refunds of duty
ATO ID 2007/82: Fuel Tax Credits: requirement for tax invoice to claim fuel tax credit entitlements
ATO ID 2007/83: Fuel Tax: Transitional - energy grants claimed under the Fuel Tax Act 2006 and adjustments
ATO ID 2007/84: Capital Allowances: starting to hold a depreciating asset previously held by an exempt entity
ATO ID 2007/85: Depreciating assets previously held by an exempt entity: reasonable attribution of pre-existing audited book value
ATO ID 2007/86: Depreciating assets previously held by an exempt entity: availability of pre-existing audited book value to partially completed assets which are work in progress
ATO ID 2007/87: Capital allowances: business related costs - in relation to your business
ATO ID 2007/88: Capital allowances: business related costs - limitation to deduction - cost of depreciating asset
ATO ID 2007/89: Capital allowances: business related costs - limitation to deduction - taken into account for capital gains tax (CGT) purposes.
ATO ID 2007/90: Trust Losses: unlisted very widely held trust - all of the trust's units must carry the same rights under paragraph 272-120(1)(c) of Schedule 2F to the ITAA 1936
ATO ID 2007/91: Capital Allowances: business related costs - in relation to your business ATO ID 2007/92 Capital Allowances: business related costs - in relation to a business that used to be carried on
ATO ID 2007/93: Capital Allowances: business related costs - limitation of deduction - lease or other legal or equitable right
ATO ID 2007/94: Capital allowances: business related costs - in relation to a business proposed to be carried on
ATO ID 2007/95: Capital allowances: business related costs - limitation of deduction - business of another entity
Withdrawn Interpretative Decisions
ATO ID 2001/124: GST and supply of in vitro fertilisation embryo freezing services
ATO ID 2001/125: GST and supply of tubal reversal services
ATO ID 2001/196: GST and Supply of patient records under a subpoena
ATO ID 2001/352: GST and residential care services
ATO ID 2001/482: GST and maintenance of laser surgery equipment
ATO ID 2001/495: GST and travel subsidy form completed by a medical practitioner
ATO ID 2001/511: GST and privately funded community care
ATO ID 2001/523: GST and radiographer's services to medical specialists
ATO ID 2001/686: GST and services supplied by a government funded residential care provider to disabled persons
ATO ID 2002/383: GST and chelation therapy that is not for the treatment of heavy metal poisoning
ATO ID 2002/996: GST and supply of testing services to detect a medical condition
ATO ID 2003/974: GST and supplies from a partnership to its partners for which there is no expectation of profit

Superannuation Regulations

Released 27.4.07

The Government hass released the following Regulations which prescribe when an allocation from a superannuation fund reserve will be counted against a member's concessional contributions cap:
Income Tax Assessment Amendment Regulations 2007 (No 3) (Select Legislative Instrument 2007 No 103) and Explanatory Memorandum;
Superannuation Industry (Supervision) Amendment Regulations 2007 (No 2) (Select Legislative Instrument 2007 No 105) and Explanatory Memorandum.

Tax Cases

Long and FCT, [2007] AATA 1269, 30 April 2007: The AAT has held that a payment made to a director/employee of a subcontracting business qualified as a tax-free bona fide redundancy payment. The taxpayer, together with her husband and son, were directors and employees of the corporate trustee of a family trust. The Commissioner had argued that the termination of the taxpayer's employment was not a "dismissal" as it was made voluntarily due to her involvement in the decision to terminate her own employment. However, the Tribunal ruled that the taxpayer had not freely consented to her termination of employment as it had been forced upon her following the loss of a key contract.

Basten and Ors and FCT [2007] AATA 1128, Re , Pascoe SM, 13 March 2007: The AAT has found for the Commissioner dismissing deductions claimed by several taxpayers in relation to expenditure incurred in a tax effective investment scheme. The outgoings were incurred in relation to the planting, cultivation and maintenance of a tea-tree farm. However the AAT determined that the taxpayers were entitled to a deduction for actual cash outlays.

AAT Case [2007] AATA 1228, 12 April 2007: A claim for deductions as a franchisee of a firewood distribution business has been disallowed by the AAT. . The AAT decided that there was an insufficient connection between the outgoings and any income earning activity for the outgoings to be deductible. At best, the payment was an outgoing of capital which secured the taxpayer a share of the firewood distribution business.

Progress of Legislation

As at 04.5.07

Bill	Intro House	Passed House	Intro Senate	Passed Senate	Date of Royal assent / Act Number	Description
Tax Laws Amendment (2006 Measures No 7) Bill 2006	7.12.06	7.2.07	7.2.07	28.3.07 .	13.4.07/55	Small Business CGT, Capital Protected Borrowings, Effective Life of Tractors, DGRs
Tax Laws Amendment (Simplified Superannuation) Bill 2006	7.12.06	13.2.07	26.2.07	27.2.07	15.3.07/9	Simplified Benefits Tax, Anti-avoidance, Employer ETPs, Concessional and Non-concessional contributions, TFNs, SMSFs, Asset Tests.
Superannuation (Departing Australia Superannuation Payments Tax)	7.12.06	13.2.07	26.2.07	27.2.07	15.3.07/10	.
Superannuation (Excess Concessional Contributions Tax) 2006	7.12.06	13.2.07	26.2.07	27.2.07	15.3.07/11	.
Superannuation (Excess Non -Concessional Contributions Tax) 2006	7.12.06	13.2.07	26.2.07	27.2.07	15.3.07/12	.
Superannuation (Self Managed Superannuation Funds) Supervisory Levy Amendment 2006	7.12.06	13.2.07	26.2.07	27.2.07	15.3.07/13	.
Superannuation (Excess Untaxed Roll-over Amounts Tax) 2006	7.12.06	13.2.07	26.2.07	27.2.07	15.3.07/14	.
Superannuation Legislation Amendment (Simplification) Bill 2007	7.2.07	13.2.07	26.2.07	27.2.07	15.3.07/15	Contributions rules, benefit payments and ETPs, foreign superannuation scheme, taxation of superannuation entities, unclaimed superannuation monies
Income Tax (Former Complying Superannuation Funds) Amendment Bill 2007	7.2.07	13.2.07	26.2.07	27.2.07	15.3.07/16	.
Income Tax Amendment Bill 2007	7.2.07	13.2.07	26.2.07	27.2.07	15.3.07/17	.
Income Tax (Former Non-resident Superannuation Funds) Amendment Bill 2007	7.2.07	13.2.07	26.2.07	27.2.07	15.3.07/18	.
Tax Laws Amendment (2007 Measures No 1) Bill 2007	15.2.07	28.2.2007	1.3.07	28.3.07	12.4.07/56	Taxpayer Information disclosures, Employee share scheme extension, Superannuation disclosure
Superannuation (Excess Concessional Contributions Tax) 2006	7.12.06	13.2.07	26.2.07	27.2.07	15.3.07/11	.
Superannuation (Excess Non -Concessional Contributions Tax) 2006	7.12.06	13.2.07	26.2.07	27.2.07	15.3.07/12	.
Tax Laws Amendment (2007 Measures No 2) Bill 2007	29.3.07					Taxpayer Information disclosures, Employee share scheme extension, Superannuation diasclosure Effective life, taxation treatment of boating activities, venture capital, R&D concessions, refundable R&D tax offset, deductible gift reci ients (DGRs)
International Tax Agreements Amendment Bill (No 1) 2007	29.3.07					Treaties with France and Norway

These notes are in summary form designed to alert clients to tax developments of general interest. They are not comprehensive , they are not offered as advice and should not be used to formulate business or other fiscal decisions.

Liability limited by a scheme approved under Professional Standards Legislation.