Greenwoods and Freehills Weekly Tax Highlights 22.2.08 - 29.2.08

ATO Documents

Released 27.2.08

Draft Taxation Determination
TD 2008/D2: Income tax: Division 7A of Part III of the Income Tax Assessment Act 1936 - what is the meaning of 'because' in the context of the expression 'because the entity has been such a shareholder or associate at some time' in relation to payments, loans and debt forgiveness with former shareholders of a private company? 
Draft Goods and Services Tax Ruling
GSTR 2008/D1: Goods and services tax: registered agricultural managed investment schemes
Product Ruling
PR 2008/15: Income tax: Mediterranean Olives Project 2008 - (Joint Venture Growers) 
PR 2008/16: Income tax: Alpine Meadows Olive & Walnut Project No. 1 
PR 2008/17: Income tax: Moora Citrus Project - 2008 Growers 
PR 2008/18: Income tax: Tasmanian Premium Cherries Project 
PR 2008/19: Income tax: Heathcote Ridge Vineyard Project No. 2 
Addendum
Goods and Services Tax Ruling
GSTR 2001/7: Goods and services tax: meaning of GST turnover, including the effect of section 188-25 on projected GST turnover 
Income Tax Ruling
IT 2345: Income tax: trust schemes with non-resident beneficiaries: assessing guidelines: determination of objections: settlement guidelines 
IT 2534: Income tax: taxation treatment of directors fees, bonuses, etc
IT 2668:  Income tax: barter and countertrade transactions 
Notice of Withdrawal
Taxation Determination
TD 94/6: Income tax: abnormal income of artists, sportspersons etc: can eligible taxable income be a negative amount for the purposes of Division 16A of Part III of the Income Tax Assessment Act 1936, so that a loss can be recognised from eligible activities and used to reduce average eligible taxable income? 
Interpretative Decision
ATO ID 2008/37: GST and hotel managed investment schemes and sale of a new accommodation suite

Released 28.2.08

Law Administration Practice Statements
PS LA 2008/3: Provision of advice and guidance by the Tax Office
PS LA 2008/4: Publication of edited versions of written binding advice
PS LA 2008/5: Written binding advice (private) - requests for further information, notification of assumptions and intended use of information from sources other than the applicant

Released 29.2.08

Interpretative Decision
ATO ID 2008/38: PSO: entitlement for a PSO benefit where category 5 oil is not used as a burner fuel
Withdrawn Interpretative Decisions
ATO ID 2002/791: Excise - Payments - Product Stewardship (Oil) Scheme - Eligibility for a benefit
ATO ID 2004/832: GST and reimbursement of towing fees by an insurer
ATO ID 2004/872: GST and Compulsory Third Party Insurance arranged by motor vehicle dealerships

The Assistant Treasurer has announced that the Government intends to provide relief from CGT for policyholders of health insurers who receive shares when their health insurer demutualises. The Government will also provide a legislative framework for issued shares to be held on trust for "lost policyholders".  Legislation giving effect to this measure will be introduced as soon as possible following consultation on the design and a discussion paper will be released shortly.

The Tax Commissioner has announced that national tax administrations, comprising member countries of the OECD's Forum on Tax Administration (FTA), are working together concerning Liechtenstein accounts being used for tax avoidance and evasion. The ATO has  issued notices to produce information and conducted unannounced access visits with Australians who have suspected links to Liechtenstein accounts or legal entities. The Commissioner said the ATO has already received 425 submissions disclosing $17.5m in income from offshore activities.

Summers and FCT,  [2008] AATA 152, 26 February 2008: The Administrative Appeals Tribunal has granted a taxpayer occupying a shed a partial main residence exemption. The taxpayer occupied the shed on her land after the contract to build a house on the land fell through.  The shed had originally been built on the land by a builder for the purpose of carrying out his work. The taxpayer could not obtain a full exemption as she did not occupy the shed 'as soon as practicable' after its completion.

KAP Motors Pty Ltd v FCT [2008] FCA 159, Federal Court, Emmett J, 28 February 2008: The Federal Court has held that 2 taxpayers who mistakenly remitted money as "GST payments" to the Tax Office were entitled to refunds on those amounts as no supply had been made. The  taxpayers had entered into arrangements with various motor vehicle distributors which resulted in the latter paying them what was commonly referred to as holdback payments. The taxpayers then remitted money to the ATO on the payments in the mistaken belief that the payments were taxable supplies and therefore liable to GST. The Commissioner argued that section 105-65 of the Taxation Administration Act operated to make a refund unnecessary. The Court disagreed finding that the section operated only when a supply was not a taxable supply and that in these circumstances no supply had been made. The Commissioner's alternative line of argument, that a refund should not be issued unless the company provided an undertaking to reimburse the amounts to the relevant distributors, was deemed irrelevant to the proceedings.