Greenwoods and Freehills Weekly Tax Highlights - Week Ended 6.3.09

ATO Documents

Released 4.3.09

Class Rulings
CR 2009/8: Income tax: assessable income: Football Umpires: Combined Southern Leagues Football Umpires Panel Incorporated
CR 2009/9: Income tax: distributions from the sale of land held by the Underbank Country Club Incorporated (in liquidation)
CR 2009/10: Income tax: scrip for scrip roll-over: exchange of shares in Select Design Technologies Limited for shares in International Innovations Limited
CR 2009/11: Fringe benefits tax: RewardsCorp Holiday Options Vouchers provided by RewardsCorp Trading Pty Limited clients to their own employees or to the employees of third party employers 
CR 2009/12: Fringe benefits tax: RewardsCorp Resort Rewards Certificates provided by RewardsCorp Trading Pty Limited clients to their own employees or to the employees of third party employers
CR 2009/13: Income tax: Victorian Public Health Training Scheme Scholarships
Product Rulings
PR 2009/5: Income tax: TFS Sandalwood Project 2009
PR 2009/6: Income tax: Goulburn Valley Orchards 2000 Project (8 March 2000 - 5 December 2000)
PR 2009/7: Income tax: Goulburn Valley Orchards 2000 Project (6 December 2000 - 5 June 2001)
PR 2009/8: Income tax: Goulburn Valley Orchards Project
Notices of Withdrawal
Income Tax Ruling
IT 2592: Income tax: cost of mains electricity connections
Miscellaneous Tax Ruling
MT 2049: Petroleum resource rent tax: calculation of PRRT instalments 
Class Ruling
CR 2006/27: Income tax: La Trobe University - Victorian Public Health Training Scheme Scholarships 

Announced 25.2.09

The Australian and New Zealand Prime Ministers have announced that, in order to strengthen ties between the countries, a new Double Taxation Agreement (DTA) will be drawn up. The DTA will aim to further reduce tax barriers between the two countries and improve certainty for Trans-Tasman business transactions.

Tax Cases

FCT v Star City Pty Limited [2009] FCAFC 19, 27 February 2009: The Full Federal Court has found that the taxpayer was not entitled to a deduction for the prepayment of rent. The Federal Court had previously held that the taxpayer was entitled to the deduction as the expense was an outgoing of a revenue nature. The Full Federal Court found that the outgoing was, in fact, of a capital nature. The payment was in order to secure an exclusive license to operate a Casino. The Court has also stated that Part IVA should apply to the scheme as it was entered into for the dominant purpose of acquiring a tax benefit.

Lilyvale Hotel Pty Ltd v FCT [2009] FCAFC 21, 6 March 2009:  The Full Federal Court has unanimously allowed the taxpayer's appeal and allowed deductions for prior year losses. The Court found that the taxpayer had satisfied the same business test. The taxpayer had used a management company to run the daily operations of a hotel and the Commissioner of Taxation had argued that this represented a discontinuity after the change of ownership and that this meant a different business was being carried on. 

ConnectEast Management Ltd v FCT (2009) FCAFC 22, 5 March 2009: The Full Federal Court confirmed that the taxpayer had not acquired the status of a "listed widely held trust"for the purpose of the trust loss measures. The Court found that the taxpayer, being a trust collectively owned by a group of other trusts, did not fit the criteria which requires that the trust be wholly owned by each of one or more trusts.