Greenwoods and Freehills Weekly Tax Highlights - Week Ended 11.4.08

ATO Documents

Released 9.4.08

Draft Taxation Determination
TD 2008/D7: Income tax: is an exceptional circumstances relief payment paid to a farmer under the Farm Household Support Act 1992 'assessable primary production income' under subsection 392-80(2) of the Income Tax Assessment Act 1997?
Class Rulings
CR 2008/27: Income tax: tax treatment of payments received from the sale of produced seed into a seed pool under an agreement with Seed Technology & Marketing Pty Limited 
CR 2008/28: Income tax: statutory licence roll-over for the replacement of bore licences with aquifer access licences and treatment of payments received under the Achieving Sustainable Groundwater Entitlements Program
CR 2008/29: Income tax: early retirement scheme - Melbourne Convention & Exhibition Trust 
Product Rulings
PR 2008/35: Income tax: Babcock and Brown Property Instalment Plan  
PR 2008/36: Income tax: Olive Growers Australia Project 2007 - Applicant Group 2 
PR 2008/37: Income tax: Olive Growers Australia Project 2007 - Applicant Group 2 (using finance from Olive Growers Australia Limited) 
Draft Taxation Ruling
TR 2008/D3: Income tax: the taxation treatment of ship and aircraft leasing profits under the ships and aircraft articles of Australia's tax treaties
Fuel Tax Ruling
FTR 2008/1: Fuel tax: vehicle's travel on a public road that is incidental to the vehicle's main use and the road user charge
Notices of Withdrawal
Product Ruling
PR 2007/42: Income tax: real Dairy Project No. 1 9 April 2008
Draft Taxation Ruling
TR 1999/D13: Income tax: advance payments made under swap agreements

Released 10.4.08

Taxpayer Alert
TA 2008/6: Claiming tax deductions for debts from a previous tax planning scheme that are forgiven or where repayments are refunded

Released 11.4.08

New Interpretative Decisions
ATO ID 2008/53: Capital Allowances: hold - fixtures on land subject to sale contract
ATO ID 2008/54: Capital Allowances: depreciating asset - fixtures on land subject to sale contract - identification of assets held
ATO ID 2008/55: Capital Allowances: decline in value - taxable purpose - hobby of prospecting
ATO ID 2008/56: Fuel Tax: transitional - rate applicable in determining fuel tax credit entitlement

The Treasurer has confirmed that the Government will amend the income tax law to restore the long-standing taxation treatment of call options issued by companies. The Treasurer said the amendments will provide certainty for taxpayers. The amendments will restore the taxation treatment of call options that existed before the decision of the High Court in FCT v McNeil  and will apply from the 2001-02 income year. 

Released 15.4.08

The Assistant Treasurer has announced that the Government will retain the office of the Inspector-General of Taxation (IGOT) as a separate independent statutory office. There had been speculation that the Inspector General's office would be abolished.

St George Bank Limited v FCT, [2008] FCA 453, 11 April 2008: The Federal Court has ruled in favour of the Commissioner, finding interest payments paid under a debenture were capital in nature. The interest payments were made to a US subsidiary company. The Court rejected the taxpayer's argument and ruled that the payments had been made in order to create and maintain a business capital structure. The Court also decided that the debt/equity provisions of Division 974 had not been invoked as a valid election had not been made under the transitional provisions.

Princi & Ors v FCT [2008] FCA 441, 4 April 2008:  The Federal Court has dismissed the appeals of several taxpayers on the grounds that their arguments concerned not questions of law but questions of fact and that these facts had already been fully argued before the AAT. The Court also refused the taxpayers permission to restate their applications as questions of law. The AAT had found that Part IVA applied to investments in a tax effective investment scheme.

FCT v Lenzo [2008] FCAFC 50, Full Federal Court, 3 April 2008: The Full Federal Court has unanimously allowed the Commissioner's appeal from the decision  in which it was held that Pt IVA did not apply to the deductions claimed by a taxpayer in relation to his investment in a sandalwood plantation project in Western Australia. The Full Federal Court found that, in the previous decision, the decision had placed too much emphasis on the genuine commercial nature of the project and did not give appropriate consideration to whether there was also a dominant purpose of obtaining a tax benefit. The Full Federal Court held that the structure of the scheme intended only to maximise and bring forward tax benefits.

Player and Ors and FCT, AAT Case [2008] AATA 273 4 April 2008: The AAT has concluded Part IVA applied to deductions claimed by several franchisees of a investment planning scheme. The Tribunal found that the franchisees had carried out the investment planning scheme for the dominant purpose of obtaining tax benefits.    

Gorton and FCT,  AAT Case [2008] AATA 280, 9 April 2008: A lump sum payment received by a former medical practitioner has been held to be assessable income. The taxpayer had been paid a lump sum on the termination of his insurance policy. This lump sum was included in the taxpayer's assessable income by the Commissioner. The Tribunal decided that, based on previous case law, the lump sum payment made to the taxpayer comprised ordinary income and was therefore assessable.  

Progress of Legislation

As at 11.4.08

Bill	Intro House	Passed House	Intro Senate	Passed Senate	Date of Royal assent / Act Number	Description
Tax Laws Amendment (2008 Measures No 1) Bill 2008	13.2.08	21.2.08	11.3.08	.		Carbon Sink Forests, Grants to Tobacco Growers, Deductible Gift Recipients, Equine Workers Hardship Supplement, Gifts to political parties.
The Financial Sector Legislation Amendment (Review of Prudential Decisions) Bill 2008	11.3.08		13.2.08	11.3.08 .		Overhaul of rules for operation of financial sector entities.
Tax Laws Amendment (Personal Income Tax Reduction) Bill 2008	14.2.08	12.3.08	13.3.08	.		Personal Income Tax Cuts
Tax Laws Amendment (2008 Measures No 2) Bill 2008	20.3.08			.		CGT, Misappropriated amounts, Superannuation Guarantee, Deductible Gift Recipients