Greenwoods & Freehills Weekly Tax Highlights - Week Ended 13.8.10
ATO Documents
Released 11.8.10
Class Rulings
CR 2010/38: Income tax: return of capital: Customers Limited
CR 2010/39: Income tax: proposed return of capital: Ramelius Resources Limited
CR 2010/40: Income tax: payments from Redundancy Payment Central Fund No 2 and Redundancy Payment Approved Worker Entitlement Fund 2
CR 2010/41: Income tax: return of capital: in specie distribution of shares by Trafford Resources Limited
Addendum
TD 93/29: Income tax: if an employee incurs legal expenses recovering wages paid by a dishonoured cheque, are these legal expenses an allowable deduction under subsection 51(1) of the Income Tax Assessment Act 1936?
Released 12.8.10
Decision Impact Statement
164 of 2008; 165 of 2008: Commissioner of Taxation v Tasman Group Services Pty Ltd
Released 13.8.10
New Interpretative Decisions
ATO ID 2010/143: United States real estate investment trusts and managed investment trusts
ATO ID 2010/144: GST and tax invoice for multiple recipients
ATO ID 2010/145: GST and dip with biscuits
ATO ID 2010/146: GST and tax invoices issued by another entity on behalf of a supplier
Withdrawn Interpretative Decisions
ATO ID 2001/245: GST and tax invoice for multiple recipients
ATO ID 2002/154: Eligible termination payments: Norfolk Island resident
ATO ID 2002/684: GST and dip with biscuits
ATO ID 2003/1148: Restructure/resettlement of superannuation fund (from statute to deed based) - application of CGT Event A1
ATO ID 2003/1149: Restructure/resettlement of superannuation fund (from statute to deed based) - application of CGT Event E1
ATO ID 2003/1150: Restructure/resettlement of superannuation fund (from statute to deed based) - application of CGT Event E2
ATO ID 2004/280: Assessability of worker's compensation received by resident in substitution of exempt foreign employment income
ATO ID 2006/110: GST and tax invoices issued by another entity on behalf of a supplier
Appeals Update
Orica Ltd v Commissioner of Taxation [2010] FCA 197 (10 March 2010): The taxpayer’s appeal and the Commissioner's cross appeal to the Full Federal Court have been withdrawn. The Federal Court (Sundberg J) held that a 1998 tax year amended assessment which was issued to the taxpayer for a net capital gain of $264.5m from the disposal of distribution rights was excessive. On the basis of expert testimony, the Court held that the market value consideration for the disposal (or release) of the rights was considerably less than the figure arrived at by the Commissioner.
Tax Case
Citigroup Pty Limited v Commissioner of Taxation [2010] FCA 826 (9 August 2010): The Federal Court (Edmonds J) has found that Part IVA applied to deny foreign tax credits in Australia for the Hong Kong profits tax paid on the gross proceeds of stripping and selling the interest coupons on bonds immediately after they were acquired. The foreign tax credits were considerably greater than the Australian tax payable on the foreign income in the relevant years, as a result of Hong Kong taxing the profits on a gross basis upfront whereas a net basis of taxation applied in Australia.
The Court’s finding that the dominant purpose of the transactions was to obtain the foreign tax credits was reached taking into account, amongst other things, two key findings of fact: (i) that the transactions were loss-making for the Australian taxpayer absent foreign tax credit relief; and (ii) that, after the payment of Australian and Hong Kong tax, the taxpayer would have expected to have sufficient other foreign source income for the relevant years in order to utilise the excess foreign tax credits upfront.
Progress of legislation
A Federal Election has been called for 21 August 2010. Those Bills which had not passed through both Houses of Parliament as at 17 July have now lapsed. The lapsed Bills are noted in the table below. Bill Explanatory Memorandum Intro House Passed House Intro Senate Passed Senate Date of Royal assent / Act Number Description Tax Laws Amendment (Confidentiality of Taxpayer Information) Bill 2009 19.11.09 Lapsed Disclosure and Secrecy Provisions Tax Laws Amendment (2010 GST Administration Measures No. 1) Bill 2010 10.2.10 10.3.10 10.3.10 11.3.10 24.3.10/21 GST 17.2.10 13.5.10 13.5.10 17.6.10 28.6.10/75 Division 7A, TFN, Carbon Technology exemptions, DGR Tax Laws Amendment (2010 GST Administration Measures No. 2) Bill 2010 18.2.10 13.5.10 13.5.10 17.6.10 28.6.10/74 GST 17.2.10 13.6.10 15.6.10 17.6.10 29.6.10/79 Tax Law Rewrite Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 13.5.10 23.6.10 23.6.10 24.6.10 14.7.10/114 Repeal of the FIF Provisions Tax Laws Amendment (Medicare Levy and Medicare Levy Surcharge) 2010 13.5.10 1.6.10 15.6.10 17.6.10 29.6.10/78 Medicare Levy and Medicare Levy Surcharge 13.5.10 17.6.10 21.6.10 Lapsed Refundable R&D Tax Offsets 26.5.10 23.6.10 23.6.10 24.6.10 29.6.10/90 Managed Investment Trust, Thin Cap, Super Co-contribution Tax Laws Amendment (2010 GST Administration Measures No. 3) Bill 2010 26.5.10 21.6.10 22.6.10 23.6.10 29.6.10/78 GST 26.5.10 23.6.10 24.6.10 24.6.10 6.7.10/100 25.5.10 Lapsed CGT, TOFA, Debt Equity, Foreign Currency Gains and Losses, GST, Managed Investment Trusts and DGR 25.6.10 Lapsed Protocol to the Singapore Treaty 24.6.10 Lapsed Superannuation
As At 13.8.10
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