Greenwoods & Freehills Weekly Tax Highlights - Week Ended 25.6.10

ATO documents

Released 23.6.10

Taxation Ruling
TR 2010/2: Income tax: effective life of depreciating assets (applicable from 1 July 2010)
Product Ruling
PR 2010/16: Income tax: deductibility of interest in relation to investment in Macquarie Flexi 100 Trust June 2010 Offer (Class H to P Units) - full recourse borrowings
Addendum
TD 95/48: Income tax: Are demonstrators 'trading stock' of the wholesaler for the purposes of subsection 6(1) and 'trading stock on hand' of the wholesaler for the purposes of subsection 28(1) of the Income Tax Assessment Act 1936 (the Act)?
Notices of Withdrawal
TD 93/5: Income tax: in which circumstances is the construction cost of an access road incurred by a person carrying on timber operations for the purpose of gaining or producing assessable income an allowable deduction? 
IT 2054: Interest withholding tax: Treasury Notes and Commonwealth Bonds 
IT 2247:  Income tax: income derived from commercial advertising by visiting sportsmen
IT 2544: Income tax: application of section 254 and 255
TR 2009/4: Income tax: effective life of depreciating assets (applicable from 1 July 2009)
PR 2010/8: Income tax: Rewards Group Premium Timber Project 2010 
Goods and Services Tax Advice
GSTA TPP 36: Who is liable for GST if a principal makes a taxable supply through an agent?
GSTA TPP 37: Who issues the tax invoice if an agent enters into an arrangement under Subdivision 153-B of the GST Act?
GSTA TPP 38: Will a supply that is taken to be made by the principal to the agent under subsection 153-55(2) of the GST Act be GST-free if the supply would have been GST-free if made by the principal through the agent to a third party?
GSTA TPP 39: Do expenses incurred by an agent on behalf of the principal fall under subsection 153-60(2) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
GSTA TPP 41: Which name and address or ABN is recorded on a tax invoice for a taxable supply made by a principal through an agent to a third party?
GSTA TPP 91: Is an arrangement under Subdivision 153-B of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) possible if the agent merely pays accounts received on behalf of the principal? 

Released 25.6.10

Interpretative Decisions
ATO ID 2010/132: Capital allowances: business related costs - expenditure in relation to a proposed business
Withdrawn Interpretative Decisions
ATO ID 2003/460: Deemed Dividend: no dividend in future year where private company makes a payment and company has nil distributable surplus in year payment made
ATO ID 2005/52: Assessable Income: Exit Assistance Program grant

Released 25.6.10

Treasury has released a discussion paper (Improvements to the calculation and collection of income tax liabilities from consolidated groups) seeking submissions on a number of proposed amendments to the tax consolidation rules that were announced in the 2010 Federal Budget. The proposed amendments are largely technical and/or merely for the purposes of clarification. Amongst other things, the amendments concern the rules relating to a “clear exit” from a consolidated or MEC group, and the interaction of the PAYG and consolidation rules.

Tax exemption for sovereign investments – consultation paper

Released 23.6.10

Treasury has released a consultation paper (Greater Certainty for Sovereign Investments) ) on the Government’s proposal to codify the ATO’s existing administrative practice (said to be contained in ATO ID 2002/45) of exempting certain income derived by foreign governments and sovereign funds from Australian tax on the basis of the common law doctrine of sovereign immunity.

TLAB (2010 Measures No. 4): scrip-for-scrip, TOFA, debt/equity and Upper Tier 2 instruments

Released 23.6.10

The Government has introduced the Tax Laws Amendment (2010 Measures No. 4) Bill 2010 (and explanatory memorandum) into Parliament. Amongst other things, the Bill proposes:
-to extend the debt/equity transitional period to 1 July 2010 for Upper Tier 2 instruments issued before 1 July 2001;
-to make it easier for takeovers and mergers governed by the Corporations Act 2001 to qualify for CGT scrip-for-scrip rollover; and
-a series of amendments to the TOFA rules in Division 230 (which Treasury announced in September 2009), including a change to the scope of the term “cash settlable” (relevant to the TOFA treatment of deferred purchase agreements), clarifying that dividends on non-equity shares can be deductible under TOFA, and allowing a hedging financial arrangement to hedge risks with respect to multiple hedged items.

Singapore treaty: second protocol

Released 23.6.10

The Government has introduced the International Tax Agreements Amendment Bill (No. 2) 2010 (and explanatory memorandum) into Parliament. The Bill proposes to bring the second protocol to the Australia/Singapore tax treaty into force under Australian law. The second protocol was signed on 8 September 2009 and replaces the existing exchange of information article in the treaty with the current international standard article.