Greenwoods and Freehills Weekly Tax Highlights 25.1.08 - 1.2.08

ATO Documents

Released 23.1.08
Class Ruling
CR 2008/4: Income tax: MMC Contrarian Limited - proposed return of capital to shareholders
Product Ruling
PR 2008/6: Income tax: tax consequences of investing in the UBS Protected Geared Investment - 2007 Product Disclosure Statement 

Released 25.1.08

Withdrawn Interpretative Decisions
ATO ID 2001/236: International tax - United Kingdom pension
ATO ID 2001/300: Non-resident beneficiary - Australian sourced trust income
ATO ID 2001/751: Payment of Superannuation Benefit to Dependant
ATO ID 2001/769: Assessability of UK Police Pension - first payable prior to 1 July 1983
ATO ID 2001/776: Assessability of UK annuity income received by Australian resident
ATO ID 2002/62: Assessability of UK disability pension - first payable after 1 July 1983
ATO ID 2002/155: Superannuation retirement & employment termination: Eligible termination payment (ETP) and ETP death benefit deceased estates 
ATO ID 2002/324: Assessability of Australian sourced worker's compensation pension paid to a resident of the United Kingdom
ATO ID 2002/588: Superannuation, retirement & employment termination: Eligible termination payment (ETP) rebate to a deceased estate
ATO ID 2002/591: Resident of the UK in receipt of Australian employment income - present in Australia for a period not exceeding 183 days
ATO ID 2002/667: Withholding Tax - UK resident receiving Australian sourced royalties 
ATO ID 2002/763: Assessability of Orphan Pension
ATO ID 2002/898:  Exempt income - employment in the United Kingdom 
ATO ID 2004/363: Capital Allowances: balancing adjustment events - car expense methods and the Simplified Tax System (STS) 
ATO ID 2005/15: Product Stewardship Oil: is re-refined transformer oil a re-refined base oil? 

Released  1.2.08

It has been announced that Australia and Japan have signed a new tax treaty to replace the existing treaty which was signed in 1969. The new treaty was signed on 31 January 2008 by the Minister for Foreign Affairs and the Japanese Minister for Foreign Affairs in Tokyo. The new treaty will broadly update and streamline the taxation arrangements between Australia and Japan. This includes broadly aligning CGT treatment with OECD practice and providing for improved integrity measures. The treaty will substantially reduce withholding tax on certain dividend, interest and royalty payments. The new treaty will enter into force 30 days after both countries advise that they have completed their domestic requirements. Legislation for this purpose will be introduced in the Australian Parliament as soon as practicable.

Tax Cases

Taxpayer v FCT, AAT Case [2008] AATA 64, 24 January 2008: The AAT has held that a  redundancy payment took into account the taxpayer's service in both Australia and Japan and could not, therefore, be classified as an "exempt non-resident foreign termination payment". The taxpayer had been seconded to a bank in Tokyo when his Australian employment was terminated.  

McDonald's Australia Ltd v FCT [2008] FCA 37, January 2008: The Federal Court has found that the taxpayer failed to discharge the burden of proof  after requesting that the Court exercise summary judgement against the Commissioner. The Commissioner had disallowed objections relating to a GST assessment. The taxpayer had argued that an initial GST assessment and the objection decision lodged against the assessment were superseded by an amended assessment that was issued subsequently. The amended assessment was issued by the Commissioner on the grounds that the taxpayer had obtained a GST benefit. However, the Court found that the taxpayer had not discharged the burden of proving that the Commissioner's assessments were incorrect. The trial judge also stated that "an application for summary judgment by a party which bears the burden of proof can be properly described as ambitious, particularly where the proceeding is at an early stage - no evidence has been filed, there has been no discovery, no subpoenas have been issued and where there are no formal pleadings".