The Federal Government has released the 2008-2009 Federal Budget. The Budget contained a significant number of tax measures. Greenwoods & Freehills has prepared a detailed analysis of the Budget which can be accessed by clicking here.

ATO Documents

Released 7.5.08

Taxation Ruling
TR 2008/2: Income tax: various income tax issues relating to the horse industry; including whether racing, training and breeding activities (carried out as stand-alone activities or in combination) amount to the carrying on of a business
Class Rulings
CR 2008/35: Income tax: share buy-back: Boral Limited
CR 2008/36: Income tax: INVESCO PLC - corporate reorganisation - Employee Share Schemes
Draft Miscellaneous Tax Ruling
MT 2008/D1: Penalty relating to statements: meaning of reasonable care, recklessness and intentional disregard
MT 2008/D2: Shortfall penalties: administrative penalty for taking a position that is not reasonably arguable
MT 2008/D3: Shortfall penalties: voluntary disclosures
Addenda
Income Tax Ruling
IT 2484: Income tax: capital gains: time of acquisition of patent
Taxation Determination
TD 93/86: Income tax: capital gains: are the totality of rights under a contract considered to be the one asset, or is each right considered to be a separate asset for CGT purposes?
Erratum
Taxation Determination
TD 2008/9: Income tax: are amounts mistakenly paid as salary or wages to employees (or as income support payments or worker's compensation amounts to persons), to which they are not beneficially entitled, but are obliged to repay, 'ordinary income' under section 6-5 of the Income Tax Assessment Act 1997?
Notices of Withdrawal
Taxation Ruling
TR 94/4: Income tax: tax shortfall penalties: reasonable care, recklessness and intentional disregard
TR 94/5: Income tax: tax shortfall penalties: reasonably arguable
TR 94/6: Income tax: tax shortfall penalties: voluntary disclosures

Released 15.5.08

Law Administration Practice Statement
PS LA 2008/10: Application of section 45B of the Income Tax Assessment Act 1936 to share capital reductions

Released 16.5.08

Interpretative Decision
ATO ID 2008/70: Offshore Banking Units: Application of paragraph 128AE(2)(d) to the head company of a consolidated group
Withdrawn Interpretative Decision
ATO ID 2003/383: Annuity payments received by a Netherlands resident from an Australian resident insurer

Inquiry into the Tax System

The Treasurer has announced that the Government will conduct a comprehensive inquiry into the tax system. The review will examine Federal, State and local government taxes. The review will be chaired by Dr Ken Henry. The Treasurer also indicated that the Government had ruled out any broadening of the GST base or any increase in the GST rate, or any change to tax-free superannuation. The Review is expected to take until at least late 2009.

Legislative Update

Tax Laws Amendment (2008 Measures No 2) Bill 2008 passed through the House of Representatives on 15.5.08. The Government proposed a number of amendments. These include tax free superannuation lump sums for terminally ill patients, deductions for capital expenditure in carbon sink forests and several other minor amendments.

Appeals Update

Released 6.5.08

Hastie Group Limited & Ors v FCT [2008] FCA 444: The taxpayer has appealed to the Full Federal Court. The Federal Court had held that the taxpayer company could not access franking credits accumulated during a period in which it was owned by non-residents.

Tax Cases

Drysdale v FCT AAT Case [2008] AATA 393, 14 May 2008: The AAT has agreed with the Commissioner and denied a taxpayer's claim for an input tax credit. The taxpayer had bought a yacht and claimed that he intended to sell similar yachts to earn commission. Although a dealer was appointed, no further yachts were sold. The Tribunal found that the taxpayer had not acquired the yacht for the purpose of carrying on an enterprise.

Progress of Legislation

As at 16.5.08

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	15.5.08		.		CGT, Misappropriated amounts, Superannuation Guarantee, Deductible Gift Recipients

These notes are in summary form designed to alert clients to tax developments of general interest. They are not comprehensive , they are not offered as advice and should not be used to formulate business or other fiscal decisions.

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