Greenwoods and Freehills Weekly Tax Highlights 15.2.08 - 22.2.08

ATO Documents

Released 20.2.08

Self Managed Superannuation Fund Determination
SMSFD 2008/1: Self Managed Superannuation Funds: how does the happening of an event in subregulation 13.22D(1) of the Superannuation Industry (Supervision) Regulations 1994 affect whether a self managed superannuation fund's investments in related companies or unit trusts are in-house assets of the fund? 
Draft Taxation Ruling
TR 2008/D2: Petroleum resource rent tax and income tax: treatment of geosequestration expenditure and receipts 
Class Ruling
CR 2008/8: Income tax: assessable income: payments received under the Redress Scheme for former residents of Queensland children's institutions 
CR 2008/9: Income tax and fringe benefits tax: Brookfield Asset Management Inc - 2007 Management Share Option Plan 
CR 2008/10: Income tax: off-market share buy-back: Coca-Cola Amatil Limited 
CR 2008/11: Income tax: off-market share buy-back: Sunraysia Television Limited 
CR 2008/12: Income tax: Selective Capital Reduction: Avatar Industries Limited 
CR 2008/13: Income tax: Panbio Limited - Employee Share Scheme - proposed takeover by Inverness Medical Innovations Inc 
CR 2008/14: Income tax: scrip for scrip roll-over: exchange of units in Convertible Adjusting Rate Security Trust for Transurban Securities 
Product Ruling
PR 2008/14: Income tax: Capricorn Timber Indian Sandalwood Project 
Addendum
GSTR 2001/7: Goods and services tax: meaning of annual turnover, including the effect of section 188-25 on projected annual turnover 

Released 22.2.08

Interpretative Decisions
ATO ID 2008/33: Consolidation: membership - transitional foreign-held subsidiary acquires a wholly-owned subsidiary after formation
ATO ID 2008/34: Notice under the former subsection 82AAT(1C) of the Income Tax Assessment Act 1936: predecessor fund
ATO ID 2008/35: Notice under the former subsection 82AAT(1C) of the Income Tax Assessment Act 1936: successor fund
ATO ID 2008/36: Individual Retirement Accounts and Foreign Investment Fund measures
Withdrawn Interpretative Decisions
ATO ID 2004/408: GST and 'instalment deposit' provided by an insured as an initial instalment for annual insurance policy premium 

Released 22.2.08

The Assistant Treasurer announced that the Government has asked the Board of Taxation to review the taxation arrangements that apply to managed funds. The Board's final report to the Government should be available around the middle of 2009. The Government is asking the Board to examine four particular areas of concern, these being:

Tax Laws Amendment (2008 Measures No 1) Bill 2008 passed through the House of Representatives on 21.2.08. The Bill passed through the House without amendment and now moves on to the Senate. To view the current status of tax legislation before Parliament please refer to the table at the bottom of this newsletter.

The Federal Court of Australia has released the decision of  Brady King Pty Ltd v FCT [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. If the ATO applied this judgement literally it would mean many taxpayers who used the margin scheme on strata titled building on land either held at or acquired after 1 July 2000 (as freehold) will have underpaid GST – the margin scheme would not be available.

Fortunately, in the Decision Impact Statement which was issued on 20 February 2008, the ATO has indicated that its current rulings allowing the margin scheme to apply will continue to be applied at least until an appeal is lodged. To view a detailed analysis of the Brady King case please click here to access our Greenwoods & Freehills Tax Brief.