Greenwoods and Freehills Weekly Tax Highlights 12.10.07-2.11.07

Print Version

ATO Documents

Released 31.10.07

Class Rulings
CR 2007/99: Income tax: treatment of payments received by members of the Tobacco Co operative of Victoria Limited for the termination of Grower's Agreements
CR 2007/100: Income tax: scrip for scrip: acquisition of HPAL Limited by Salmat Limited 
CR 2007/101: Income tax: treatment of payments received under the Securing our Fishing Future package:
Onshore Business Exit Assistance 
Business Advice Assistance
Product Rulings
PR 2007/90: Income tax: Oak Valley Truffle Project 2007 (post 30 June 2007 Growers)
PR 2007/91: Income tax: deductibility of interest incurred on borrowings in relation to the Macquarie Fusion Funds - November 2007 Offer

Released 24.10.07

Class Rulings
CR 2007/96: Income tax: assessable income: football umpires, umpire coaches and umpire trainers: receipts from the Sale Umpires Association Incorporated
CR 2007/97: Income tax: return of capital: Deep Sea Fisheries Limited
CR 2007/98: Income tax: Villa World Limited merger with MFS Diversified Limited
Product Rulings
PR 2007/87: Income tax: Rewards Group Sandalwood Project 2007 (2008 Growers) 
PR 2007/88: Income tax: Ginseng Australia Project No. 1 (Late Growers) 
PR 2007/89: Income tax: Gunns Plantations Walnut Project No. 2 - Late Growers 

Released 17.10.07

Taxation Determination
TD 2007/27: Income tax: consolidation: is the cost base of the goodwill referred to in subsection 711-25(2) of the Income Tax Assessment Act 1997 limited to the cost base of goodwill previously identified under subsection 705-35(3) of that Act? 
TD 2007/28: Income tax: what is a 'present legal obligation' of a private company for the purposes of subsection 109Y(2) of Division 7A of Part III of the Income Tax Assessment Act 1936? 
Draft Self Managed Superannuation Fund Determination
SMSFD 2007/D2: Superannuation: can an investment made by a self managed superannuation fund in a related company or unit trust be excluded from being an in-house asset of the fund even though an event in subregulation 13.22D(1) of the Superannuation Industry (Supervision) Regulations 1994 has happened which means investments by the fund in a different related company or unit trust are in-house assets of the fund? 
Draft Taxation Determination
TD 2007/D17: Income tax: if a private company provides trade credit to a shareholder (or their associate) on the usual terms it gives to parties at arm's length, will a failure by the shareholder (or their associate) to repay the amount within the agreed payment term prevent section 109M of the Income Tax Assessment Act 1936 from applying? 
Class Rulings
CR 2007/94: Income tax: payment of interim and special dividend by HPAL Limited 
CR 2007/95: Income tax: proposed return of capital: Hostworks Group Limited 
Product Ruling
PR 2007/86: Income tax: APT Eucalypt Project 2001 
Taxation Ruling
TR 2007/8: Income tax: registered agricultural managed investment schemes 

Released 2.11.07

Interpretative Decisions
ATO ID 2007/195: Government co-contributions: do trust beneficiaries have business income?
ATO ID 2007/196: Foreign exchange losses: loss incurred upon closing forward contract?
ATO ID 2007/197: Deductions and expenses: cost of shares not yet acquired in a short selling process
ATO ID 2007/198: Trading stock: short selling of shares
ATO ID 2007/199: Superannuation guarantee: existing employee elections after 30 June 2007
Withdrawn Interpretative Decision
ATO ID 2001/6: Superannuation: Contributions Deductions
ATO ID 2002/288: Superannuation contributions - deductions and rebates: Contributions for spouse of controlling shareholder 
ATO ID 2003/678: Superannuation: deduction for personal contributions - section 82AAT notice 
ATO ID 2004/340: Personal superannuation contributions made by member over age 70
ATO ID 2006/134: Deduction for personal superannuation contributions - 'eligible person' in relation to a year of income 
ATO ID 2006/303: Superannuation: deductions for contributions made for eligible employees 
ATO ID 2006/304: Employer superannuation contributions: controlling interest 

Released 26.10.07

Interpretative Decisions
ATO ID 2007/191: Fuel tax credits: technical dissolution of a family partnership and entitlement to receive early payments
ATO ID 2007/192: The product of distillation
ATO ID 2007/193: Excise: Licensing conditions - restrictions on production of excisable goods for the protection of the revenue.
ATO ID 2007/194: Employee share scheme: definition of 'fringe benefit'- benefit provided to employees 'generally'
Withdrawn Interpretative Decision
ATO ID 2002/638: Assessability of Australian sourced Eligible Termination Payment paid to a resident of the United States of America
ATO ID 2003/860: Assessability of a lump sum withdrawal payment received by resident from a Japanese superannuation fund
ATO ID 2003/1032: Assessability of Australian sourced Eligible Termination Payment paid to resident of the Czech Republic: undeducted contributions
ATO ID 2003/1155: Assessability of an Eligible Termination Payment received by a resident of Papua New Guinea
ATO ID 2004/591: Assessability of termination payment received by resident from employment in Italy
ATO ID 2007/189: Medical expenses: tax offset - payments for attendant assisting in employment duties

Released 16.10.07

Changes to Market Value Substitution Rule for Widely Held Entities: The Assistant Treasurer has announced that the market value substitution rule will be amended.  The changes to the law will apply to CGT events that occur during the 2006-07 income year and later income years. The amendments will change the rule so that it no longer applies when CGT event C2 (about cancellations and similar endings) occurs in relation to interests in widely held entities. The rule replaces the capital proceeds actually received with the market value of the asset that has to come to an end, where the capital proceeds are more or less than the asset's market value.

Released 22.10.07

Enhancing Small Business Capital Gains Tax Concessions: The Assistant Treasurer has announced that the Government will amend the tax law to allow related entities and partners in partnerships to have improved access to the small business CGT concessions via the small business entity test. These amendments will take effect from the 2007-08 income year.  The concessions do not currently extend to CGT assets which are utilised by partnerships or related entities. To ensure that larger businesses cannot use these structures to gain access to the concessions, the aggregated turnover test of $2m per annum will be applied to the asset owning entity, its affiliates and connected entities (including the business entity).

The ALP has now released its tax policy. The proposed measures include:  
Supporting the tax cuts outlined in the 2007-08 Budget.
Tax cuts of equal value to those proposed by the Government for individuals earning up to $180,000pa.
Deferral of the Government's proposed tax cuts for those individuals earning more than $180,000pa.
A personal tax rate scale of 15%, 30% and 40% by 2013-14.
A 50% Education Tax Refund for those families eligible for Family Tax Benefit (Part A).
The effective tax-free threshold would increase from $11,000 to $16,000 through an increase in the Low Income Tax Offset by 2010-11 and then to $20,000 by 2012-13.
Reductions in the FBT rate would reflect reductions in the top marginal tax rate.

Released 1.11.07 

The Australian National Audit Office has released its performance audit report of the Tax Office entitled "Administration of High Risk Income Tax Refunds in the Individuals and Micro Enterprises Market Segments". The report said the Tax Office, in recent years, has identified as high risk and consequently reviewed prior to payment, income tax refund claims that are equal in total value to more than half of the value of all income tax refunds paid. Following review or verification, the Tax Office has historically adjusted only 3 to 6% of income tax refunds that it has classified as high risk. The report made four recommendations which focus on strengthening the Tax Office's management arrangements and risk identification processes.  These recommendations are aimed at ensuring the ATO refines its strategy for classifying high risk investments and moves away from merely identifying all high value returns as high risk. The final recommendation relates to improving the Tax Office's information technology controls supporting the ongoing operation of its income tax refund Risk Assessment Profiling Tools which are key systems used to identify and assess high risk income tax refunds.

Tax Cases

AGR Joint Venture and FCT, AAT Case [2007] AATA 1870, 18 October 2007:  The AAT has held that contracts for the supply of coin blanks involved a supply that attracted GST. The issue in this case was whether the transactions in relation to coin blanks were subject to GST on the gold or silver component of the blanks. The Tribunal concluded that although the transactions may have involved a number of steps, the AAT said there was in each case only one supply and that supply attracted GST.

Regina v Bates [2007] NSWCCA 297,  22 October 2007: The NSW Court of Criminal Appeal has held that the acquittal of a taxpayer for not lodging a tax return should stand, but also that the primary judge's decision should not stand as a precedent. The taxpayer had been convicted in the Local Court of failing to lodge a tax return but had that conviction quashed on appeal. The Court found that while overruling the acquittal could not be justified on the facts presented the reasoning of the Judge at the District Court level contained several errors of law.