Greenwoods and Freehills Weekly Tax Highlights - Fortnight Ended 5.12.08

Tax Laws Amendment (Taxation of Financial Arrangements) Bill 2008

Introduced 4.12.08

Tax Laws Amendment (Taxation of Financial Arrangements) Bill 2008 and the accompanying EM have been introduced into the House of Representatives. The Bill inserts a new Division 230 into the ITAA 1997. This Division represents Stages 3 and 4 (final stges) of TOFA. For comments on the Bill please refer to the relevant G&F tax brief .

Tax Laws Amendment (2008 Measures No. 6) Bill 2008

ATO Documents

Released 26.11.08

Class Rulings
CR 2008/79: Income tax: Australia and New Zealand Banking Group Limited - allotment of convertible preference shares
CR 2008/80:  Income tax: Selective Capital Reduction: CITIC Australia Trading Limited
CR 2008/81:  Income tax: Peplin Group Restructure - Employee Share Scheme - treatment of unlisted options
CR 2008/82:  Income tax: scrip for scrip roll-over: exchange of shares and options in Peplin Limited (Australia) for shares and options in Peplin Incorporated (USA)
Notice of withdrawal
Taxation Ruling
TR 2000/12: Income tax: deductible gift recipients - the gift fund requirement

Released 27.11.08

Law Administration Practice Statements
PS LA 2008/17: Obtaining legal services
PS LA 2008/18: Interaction between Subdivisions 284-B and 284-C of Schedule 1 to the Taxation Administration Act 1953

Released 28.11.08

Interpretative Decisions 
ATO ID 2008/150: Assessable income: South African double tax agreement - trust income
ATO ID 2008/151: Assessable income: United Kingdom double tax agreement - trust income
ATO ID 2008/152: Assessable income: United States double tax agreement - trust income
ATO ID 2008/153: Withholding tax: lump sum amount payable by the Administrator of an Australian resident company to non-resident Note holders
ATO ID 2008/154: Excise: naturally occurring stabilised crude petroleum oil

Released 3.11.08

Taxation Determination
TD 2008/27: Income tax: is the deductibility of compound interest determined according to the same principles as the deductibility of other interest?
Class Ruling
CR 2008/83: Fringe benefits tax: contributions to an approved worker entitlement fund: Australian Construction Industry Redundancy Trust
CR 2008/84: Income tax: Wesfarmers Limited - Employee Share Ownership Plan
CR 2008/85: Income tax: off-market share buy-back: MMC Contrarian Limited
CR 2008/86: Fringe benefits tax: employers who use the SG Fleet Australia Pty Limited telematics system 

Released 5.11.08

Interpretative Decisions
ATO ID 2008/155: Operation of section 99B: trust income included in the assessable income of the beneficiary by section 97 but not declared in the beneficiary's income tax return 
ATO ID 2008/156: Operation of section 99B: FIF income included in the beneficiary's assessable income by section 529 but not declared in the beneficiary's income tax return
ATO ID 2008/157: Capital gains tax: first home owners grant - cost base
ATO ID 2008/158: Exempt benefits: work related items - portable electronic device - upgrades made at the time of purchase
ATO ID 2008/159: Exempt benefits: work related items - expense payment made earlier in an FBT year
ATO ID 2008/160: Exempt benefits: work related items - loan arrangements
Withdrawn Interpretative Decisions
ATO ID 2001/201: GST and meat supplied as pet food
ATO ID 2001/348: GST and Fruit and Nut Mix 
ATO ID 2001/468: GST and coffee whitener 
ATO ID 2001/473: GST and raw/unprocessed olives 
ATO ID 2001/499: GST and food hampers 
ATO ID 2001/675: GST and unfilled vol-au-vent cases 
ATO ID 2001/676: GST and unfilled tartlet shells 
ATO ID 2002/129: GST and psyllium husks 
ATO ID 2002/539: GST and the supply of miso paste 
ATO ID 2002/685: GST and syrup for flavouring coffee
ATO ID 2005/68: Exempt Benefits: laptop computers - loan arrangements
ATO ID 2005/149: Exempt Benefits: laptop or similar portable computer - expense payment made earlier in the FBT year 
ATO ID 2006/237: Exempt benefits: work related items - laptop computer or similar portable computer - computer upgrades 
ATO ID 2008/42: Shared Equity Agreement: Division 16E of the Income Tax Assessment Act 1936 

Tavco Group Pty Ltd and Commissioner of Taxation: The Tax Office has accepted the decision of the Tribunal in this case which concerned whether an administrative penalty at the rate of 50% for recklessness was correctly assessed and when an invoice is issued for GST purposes. The Tax Office accepted that the decision to further remit the penalty by 10% was open to the Tribunal in the circumstances of this case.  The Tax Office also agreed with the Tribunal's conclusion that an invoice is issued when it is sent to the intended recipient. That is consistent with the paragraph 33 of GSTR 2000/34 which remains the Tax Office view.

Handbury Holdings Pty Ltd v Commissioner of Taxation [2008] FCA 1787 (28 November 2008):  The Federal Court has ruled that the calculation of a head company's tax cost setting amount for shares held in a leaving subsidiary takes into account liabilities of the subsidiary "just before the leaving time", not liabilities "at the leaving time".

AXA Asia Pacific Holdings Limited v Commissioner of Taxation [2008] FCA 1834 (3 December 2008): The Federal Court has rejected the taxpayer's argument that the acquisition of units in a unit trust did not constitute financial supplies. The Commissioner contended that a subsidiary within a GST group, of which the taxpayer was the representative, was making input tax supplies in relation to the acquisitions in the unit trust. Consequently, these input tax supplies would not be eligible for an input tax credit. The Court agreed with the Commissioner's view and found that the taxpayer was not entitled to full input tax credits.

Barcia Pty Ltd (as Trustee for Barcia Trust) and Commissioner of Taxation [2008] AATA 1073 (24 November 2008): The AAT has found that the taxpayer had incorrectly calculated an entitlement to input tax credits relating to the purchase of two properties. In doing so the Tribunal rejected that taxpayer's argument that that it did not fully understand the implications of the margin scheme when it entered the contract to buy the property.

Hornsby Shire Council and Commissioner of Taxation [2008] AATA 1060 (26 November 2008): The AAT has allowed the taxpayer's claim for an input tax credit. The taxpayer had compulsorily acquired a quarry from CSR after CSR issued a notice to the taxpayer that this should occur. The taxpayer then placed a notice of this action in the NSW Government Gazette. The Tribunal found that CSR had acquired legal obligations after issuing the notice and that under the definitions provided by the GST Act this amounted to the making of a supply. 

Goldberg and Anor and Commissioner of Taxation [2008] AATA 1045 (20 November 2008): The AAT has found that insufficient evidence existed to prove that two taxpayers were carrying on an enterprise. The Tribunal therefore agreed that they were not entitled to input tax credits. The taxpayers were involved in a publishing venture but could not produce any evidence, such as business records, business plans or market analyses.  

As at 5.12.08