Greenwoods and Freehills Weekly Tax Highlights - Week Ended 6.6.08

Legislative Update

The Government has introduced a series of Bills which deal with Managed Investment Trusts. The Bills were released on 4.6.2008 and consist of Tax Laws Amendment (Election Commitments No 1) Bill 2008, Income Tax (Managed Investment Trust Withholding Tax) Bill 2008, and Income Tax (Managed Investment Trust Transitional) Bill 2008.
The Bills will replace the existing 30% non-final withholding regime applying to fund payments from Australian managed investment trusts with a new withholding regime. An entity may have an obligation to withhold an amount from a payment of these distributions to an overseas person. The rate of withholding tax under the new regime will depend on the residency of the foreign investor.
The main Bill also amends the ITAA 1997 to exempt from income tax the Prime Minister's Literary Award.

Tax Laws Amendment (2008 Measures No 3) Bill 2008 passed through the House of Representatives. The Bill now moves to the Senate. The Bill received amendments which removed the two schedules dealing with Rent Assistance and the Carer Adjustment Payment.

For the current status of Bills relating to taxation please refer to the table at the bottom of the page.

ATO Documents

Released 4.6.08

Product Ruling
PR 2008/55: Income tax: deductibility of interest incurred on borrowings related to the Merrill Lynch Structured Equity Loan
Draft Taxation Ruling
TR 2008/D5: Income tax: meaning of 'Australian superannuation fund' in subsection 295-95(2) of the Income Tax Assessment Act 1997
Addenda
Product Rulings
PR 2007/70: Income tax: Great Southern 2008 High Value Timber Project
PR 2007/102: Income tax: Great Southern 2008 Almond Income Project
PR 2008/17: Income tax: Moora Citrus Project - 2008 Growers

Released 6.6.08

New Interpretative Decisions
ATO ID 2008/81: GST and sale by an Owners Corporation of a new residential lot created out of common property
ATO ID 2008/82: GST and subdivision of common property to create a new residential lot
ATO ID 2008/83: Non-Resident Insurers: principal office or branch in Australia
ATO ID 2008/84: PSO: accredited laboratory and appropriate facilities, resources and expertise
ATO ID 2008/85: PSO: non accredited laboratory and appropriate facilities, resources and expertise 
Taxpayer Alerts
TA 2008/11: Land Impairment Trust Arrangement

Released 4.6.08

Commissioner of Taxation v Reliance Carpet Co Pty Ltd: The Tax Office has today released a Decision Impact Statement (DIS) on the High Court decision in FCT v Reliance Carpet Co Pty Limited. The High Court decided that the forfeiture of a deposit, under a standard land contract is consideration for a supply made by the taxpayer for the purposes of the GST Act. In light of the High Court decision, the ATO will be requiring taxpayers who followed the view of the Full Federal Court to amend relevant activity statements and  pay any additional GST liability. Taxpayers have three months from the date of issue of the DIS to make the amendments without attracting any additional penalties.

Harvey and FCT [2008] AATA 457 3 June 2008: The AAT has confirmed that a taxpayer was not entitled to a deduction for expenses claimed for the management of tax affairs. The taxpayer had failed to establish a basis for apportioning fees paid to his adviser for the management of his tax affairs. The Tribunal could not distinguish between those fees paid for management of tax affairs and those paid for activities unrelated to managing his tax affairs.