Greenwoods and Freehills Weekly Tax Highlights - Week Ended 5.6.09

ATO Documents

Released 3.6.09

Draft Taxation Ruling
TR 2009/D3: Income tax: superannuation contributions  
Class Rulings
CR 2009/28: Income tax: tax treatment of payments to members of the Australian Construction Industry Redundancy Trust
CR 2009/29: Fringe benefits tax: Tyack Corporate Health program
Product Rulings
PR 2009/39: Income tax: AgriWealth 2009 Softwood Timber Project
Taxation Determination
TD 2009/12: Income tax: capital gains: what is the improvement threshold for the 2009-10 income year under section 108-85 of the Income Tax Assessment Act 1997? 
Errata
PR 2009/23: Income tax: FEA Plantations Project 2009 - Woodlot Option 1
PR 2009/24: Income tax: FEA Plantations Project 2009 - Woodlot Option 2
PR 2009/25: Income tax: FEA Plantations Project 2009 - Woodlot Option 3 
PR 2009/26: Income tax: FEA Plantations Project 2009 - Woodlot Option 4
PR 2009/27: Income tax: FEA Plantations Project 2009 - Woodlot Unit 5

Released 4.06.09

Taxpayer Alert
TA 2009/15: Payment of inflated insurance premiums to a related party

Released 5.06.09

Interpretative Decisions
ATO ID 2009/38: Wine Equalisation Tax: cider manufacture
ATO ID 2009/39: Capital Allowances: business related costs - capital expenditure
Withdrawn Interpretative Decisions
ATO ID 2009/14: Wine Equalisation Tax: cider manufacture - the combining of apple juice condensate, apple juice concentrate and water to produce apple juice for fermentation

Treasury has released several discussion papers on various subjects.

Released 1.6.09

Discussion Paper: Managed Investment Trusts - Capital Account Treatment: The discussion paper seeks comment on the design and implementation details of the changes to give effect to the Government's 2009 Federal Budget announcement that MITs will be allowed to elect capital account treatment for gains and losses on disposal of their investments.

Discussion Paper: Improving the taxation treatment of off-market share buybacks: The discussion paper is designed to facilitate consultation on the Government's 2009 Federal Budget announcement that it will implement the recommendations made by the Board of Taxation to improve the tax treatment of off-market share buybacks. Under the proposal, the share buyback rules contained in Div 16K of Pt III of the ITAA 1936 will be transferred to the ITAA 1997. Modifications will be made to implement the recommendations of the Board of Taxation. The changes that are discused in the paper are proposed to apply to off-market share buybacks undertaken after the date of Royal Assent of the amending legislation.

Released 5.6.09

Discussion Paper and Exposure Draft: Reform of the Taxation of Employee Share Schemes: The discussion paper and exposure draft released for comment contain the Government's proposed changes to the tax treatment of employee share schemes. In light of the overwhelmingly negative public reaction to the measures announced on Budget night, the Government has indicated that it will modify the reform process to provide concessional tax treatment for particular schemes. The concessions are in the form of a tax exemption, or a tax deferral in limited circumstances. To provide certainty to employers and employees currently participating in employee share schemes, the Government proposes that the new arrangements commence on 1 July 2009. In the interim, the existing law will apply to all shares and rights acquired before 1 July 2009.

Discussion Paper: Improving Fairness and Integrity in the Tax System - Tightening the Non-Commercial Loan Rules in Division 7A of the Income Tax Assessment Act 1936: The discussion paper outlines a range of technical amendments to strengthen Div 7A, including changes to ensure that corporate limited partnerships cannot be used to circumvent its operation. In addition, a number of other technical amendments will be made to improve the operation of Div 7A and to address certain anomalous outcomes.

Federal Court in Anstis v FCT [2009] FCA 286: The Commissioner has lodged an appeal to the Full Federal Court. The Federal Court had held that self-education expenses claimed by a taxpayer were deductible as they were incurred in the course of deriving assessable income (Youth Allowance). Until the matter is resolved the ATO has said that it will continue to appy its view that education expenses cannot be claimed against amounts received under Commonwealth educational assistance schemes.   

Watson v DCT [2008] FCA 1173: The taxpayer has sought an extension of time to lodge an appeal to the Full Federal Court. The Federal Court had dismissed the taxpayer's appeal against the Commissioner's decision to exclude protection insurance payments from the assessable income of the taxpayer's financial planning business.

Vidler and FCT, [2009] AATA 395, AAT, 1 June 2009: The AAT has confirmed that the sale of two blocks of vacant land by a taxpayer constituted taxable supplies and therefore the taxpayer was liable to remit GST on those sales. The AAT also affirmed the Commissioner's decision that the taxpayer had a GST shortfall in respect of the sale of grazing land. The AAT disagreed with the taxpayer's contention that the sales of the vacant land were input taxed supplies as the land was predominantly for residential accommodation. The AAT also decided that compensation received from an earlier termination of a contract to sell the land should have been included when calculating the taxpayer's GST liability.

Bamford & Ors v FCT [2009] FCAFC 66, 3 June 2009: The Full Federal Court has unanimously upheld the AAT's decision to apply the "proportionate view" rather than the "quantum view" in a case in which the net income of a trust for tax purposes exceeded its accounting income for the relevant year. The Court disagreed however that a capital gain distributed as trust income should not be treated as income for tax purposes. Under the "proportionate view", a beneficiary presently entitled to trust income in an income year is assessable on the proportion of the trust's net income equal to the proportion that the trust law income to which the beneficiary is presently entitled bears to the income that has been distributed during the year, or remains to be distributed at the end of the year.

Futuris Corporation Limited (ACN 004 336 636) v Commissioner of Taxation [2009] FCA 600, 4 June 2009: The Federal Court has denied the taxpayer's application for further and better particulars of events that may have been reasonably expected to occur if the taxpayer had not entered into a scheme to produce a tax benefit under Part IVA. The Court found that the taxpayer, who is alleged by the Commissioner to have entered into a scheme for the sole purpose of obtaining a tax benefit, was sufficiently informed of the nature of the Commissioner's arguments and that the Commissioner had no responsibility to provide the taxpayer with alternative courses of action outside entering into the scheme.  

Tax Laws Amendment (Medicare Levy and Medicare Levy Surcharge) Bill 2009 was passed by the House of Representatives on 4.6.2009 without amendment and now moves to the Senate. 

Carbon Pollution Reduction Scheme (Consequential Amendments) Bill 2009 was passed by the House of Representatives on 4.6.2009 with two Government amendments relating to the mandatory audit of emissions reports and records before the report is lodged with the Australian Climate Change Regulatory Authority.