Greenwoods and Freehills Weekly Tax Highlights - Week Ended 1.8.08

ATO Documents

Released 30.7.08

Taxation Determination
TD 2008/21: Income tax: is a Deferred Purchase Agreement warrant, an investment product offered by financial institutions, a traditional security for the purposes of sections 26BB and 70B of the Income Tax Assessment Act 1936?
TD 2008/22: Income tax: capital gains: does CGT event C2 happen as a result of the satisfaction of an investor's rights under a Deferred Purchase Agreement warrant, an investment product offered by financial institutions, by the delivery of the Delivery Assets?
Class Ruling
CR 2008/51: Income tax: Off Market Share Buy-Back: Portman Limited
Notices of Withdrawal
Product Ruling
PR 2008/14: Income tax: Capricorn Timber Indian Sandalwood Project
Superannuation Guarantee Ruling
SGR 94/1: Superannuation guarantee: Earnings bases
Addendum
TR 96/14: Income tax: traditional securities

Released 29.7.08

DIS  Frisch v Commissioner of Taxation:  The Tribunal had found for the taxpayer in this case. The matter concerned whether or not expenditure incurred by a taxpayer with a disability in employing an assistant to assist and attend to the taxpayer while the taxpayer carries out their employment duties is deductible under s 8-1. The Commissioner has stated that he accepts the Tribunal's decision, but that due to the unique circumstances of the case there would be no ongoing ramifications to the ATO's administration of the law.

Tax Cases

WR Carpenter Holdings Pty Ltd & Anor v FCT HCA 33, 31 July 2008: The High Court has dismissed the taxpayers' appeal. The Court unanimously upheld the previous decision by the Full Federal Court which rejected the taxpayers' request for further information concerning the Commissioner's making of determinations under the transfer pricing provisions. The High Court found that the provisions do not require the Commissioner of Taxation to take into account any of the factors upon which the taxpayers had relied. These were fairness and reasonableness to them, the absence of a tax avoidance purpose and the absence of a profit sharing motive.

FCT v Futuris Corporation Ltd [2008] HCA 32, 31 July 2008: The High Court has unanimously upheld the Commissioner's appeal. The Full Federal Court had previously declared that a Pt IVA amendment assessment issued to the taxpayer was invalid. The Court had reasoned that the Commissioner had deliberately included a capital gain of $20m that had already been included in the taxpayer's assessable income under the value shifting provisions and that this, therefore, rendered the assessment invalid. The High Court disagreed with this reasoning as the manner in which the assessment was issued was not tantamount to a deliberate failure to comply with the provisions of the tax law. Furthermore the High Court reasoned that, even if the Commissioner had erred, in exercising the powers available to him,  it was not an error which warranted invalidation on the grounds of bad faith.

Progress of Legislation