Greenwoods & Freehills Weekly Tax Highlights 24.8.07-31.8.07

Print Version

ATO Documents

Released 29.8.07

Draft Taxation Determination
TD 2007/D13: Income tax: holding period rule: is an embedded share option a position in relation to the share if it is exercisable by or against a party other than the issuer of the share? 
Class Rulings
CR 2007/80: Income tax: payment of dividend - CCI Holdings Limited 
CR 2007/81: Fringe benefits tax: health services provided by Peak Health Management 
CR 2007/82: Income tax: subscriptions paid by employees of Queensland Ambulance Service to the Emergency Medical Service Protection Association Incorporated 
Notices of Withdrawal
Taxation Determination
TD 95/32: Income tax: will a subsidiary be allowed to adopt a substituted accounting period with a different balance date from that of its foreign parent in order to facilitate the consolidation of group accounts? 
Income Tax Rulings
IT 2497: Income tax: substituted accounting periods: large investment or property (unit) trusts
IT 2360: Income tax: substituted accounting periods
Product Ruling
PR 2007/28: Income tax: PCM Shared Equity Contract 
Law Administration Practice Statements
PS LA 2007/20: Exercise of the Commissioner's discretion under section 109RB of Division 7A of Part III the Income Tax Assessment Act 1936 to disregard a deemed dividend in respect of the 2001-02 to 2006-07 income years.

Variation to the rate of withholding for certain superannuation income stream beneficiaries who turn 60 during the financial year

Released 24.8.07

A Legislative Instrument and accompanying Explanatory Statement has been released which prescribes reduced rates of withholding for payments from a taxed source to a superannuation beneficiary who has turned 60 years of age. The instrument also revokes the previously issued LI and applies from 1.9.07.

Tax Cases

Coal Developments (German Creek) Pty Ltd v FCT [2007] FCA 1324, 28 August 2007: The Federal Court has held that a taxpayer was not entitled to a deduction of carry-forward losses because it did not satisfy the same business test following the sale of its interest in a joint venture.  The court found that activities occuring after this date were not incidents of a continuing business.

 Keitac Pty Ltd atf McNamara Property Development Trust and FCT, AAT Case [2007] AATA 1206, 4 April 2007: The AAT haas dismissed the Taxpayer's argument against a shortfall penalty. The penalty was imposed in relation to incorrectly claiming a GST input tax credit on a land purchase. The Tribunal did rule that the penalty imposed should be reduced in view of the negative contributions by his Real Estate and Tax Agents.

Barnes v FCT [2007] FCAFC 88, Full Federal Court, 22 August 2007: The Full Federal Court partly allowed the claim of the taxpayers for legal professional privilege. The Court found 25 of the 111 documents in question were privileged. The Federal court had previously ruled that as the documents were copies none of them were subject to professional Privilege.  

Epov v FCT [2007] FCAFC 139, Full Federal Court, Heerey, Lindgren and Gordon JJ, 27 August 2007: The Full Federal Court has confirmed that payments of over $3m made by a company in which the taxpayer was the managing director and a shareholder to an overseas company (in which the taxpayer also held an interest), were deemed dividends. Importantly, some of the payments in question were found to have been on-paid to a related family trust. The Court noted that the tax laws applied to payments made for the benefit of a shareholder "or an associate" and that it was not necessary that the payment be actually made to an "associated person", as long as they were made on behalf of that person.