Greenwoods & Freehills Weekly Tax Highlights - Week Ended 10.7.09

ATO Documents

Released 8.7.09

Final Class Ruling
CR 2009/34: Income tax: demutualisation of Australian Health Management Group Pty Limited

Draft Self Managed Superannuation Fund Ruling
SMSFR 2009/D1: Self Managed Superannuation Funds: the scope and operation of subparagraph 17A(3)(b)(ii) of the Superannuation Industry (Supervision) Act 1993

Draft Taxation Determinations
TD 2009/D3: Income tax: does a taker in default of trust capital have an 'interest in the trust capital' for the purposes of CGT event E8 in section 104-90 of the Income Tax Assessment Act 1997?
TD 2009/D4: Income tax: consolidation: capital gains: does paragraph 40-880(5)(f) of the Income Tax Assessment Act 1997 prevent the deduction, under section 40-880 of that Act, of incidental costs described in subsection 110-35(2) of that Act that the head company of a consolidated group or MEC group incurs, in disposing of shares in a subsidiary member to a non-group entity, before the member leaves the group?

Notices
IT 227W - Withdrawal: Forced disposal of livestock
FTR 2008/1A2 - Addendum: Fuel tax: vehicle's travel on a public road that is incidental to the vehicle's main use and the road user charge

Released 10.7.09

Final Interpretative Decisions
ATO ID 2009/52: Microbrewery - legally and economically independent
ATO ID 2009/53: Derivation of an amount received on the cash settlement of an exercised option
ATO ID 2009/54: Deductibility of an amount paid on the cash settlement of an exercised option
ATO ID 2009/55: Deductibility of premiums payable on the acquisition of options
ATO ID 2009/56: Assessability of premiums receivable on the sale of options
ATO ID 2009/57: Exchange Traded Options: derivation of premiums receivable
ATO ID 2009/58: Exchange Traded Options: deductibility of premiums payable
ATO ID 2009/59: Shares acquired and disposed of in an options trading business: trading stock
ATO ID 2009/60: Capital Allowances: carbon sink forest - cost of land
ATO ID 2009/61: Fuel Tax Credits: refrigerated trailers
ATO ID 2009/62: Converting excess franking offsets of a Pooled Development Fund to a tax loss
ATO ID 2009/63: Assessable Income: securitisation arrangement - profit emerging basis of returning assessable income
ATO ID 2009/64: Consolidation: single entity rule and issue of non-share equity
ATO ID 2009/65: Consolidation: single entity rule and payment of non-share dividends

ATO administrative treatment updates
The ATO has provided details of its administrative treatment of the proposed amendments to provide CGT relief for policy holders of friendly societies (including joint health and life insurers) which demutualise to for-profit entities. The amendments are contained in the Tax Laws Amendment (2009 Measures No. 4) Bill 2009, which was introduced into Parliament on 25 June 2009.

The ATO has also provided details of its administrative treatment regarding the Government’s announcement to provide an optional CGT roll-over, effective from 14 December 2008, for capital losses arising from CGT events happening under a complying superannuation fund’s merger with an ARPA regulated superannuation fund with at least five members before 1 July 2011.  

Tax Case
Pape v Commissioner of Taxation [2009] HCA 23 (7 July 2009). The High Court has released its written judgement following its decision on 3 April 2009 that the legislation for making the “tax bonus” payments was valid law. A six to one majority of the High Court held that the legislation was supported by one or more expressed or implied heads of legislative power under the Constitution.

Appeals update
Gloxinia Investments Limited as Trustee for Gloxinia Unit Trust v Commissioner of Taxation [2009] FCA 641. The ATO has appealed to the Full Federal Court against the decision of Emmett J that a taxpayer’s proposed assignment of leases of residential units would constitute input taxed supplies under Subdivision 40-C of the GST Act.

Commissioner of Taxation v Bargwanna [2009] FCA 620. The taxpayer has appealed to the Full Federal Court against the decision of Edmonds J to set aside a decision of the AAT in which it found that a fund was entitled to be endorsed as tax exempt under Subdivision 50-B.

Progress of Legislation
As at 8.7.09