Greenwoods & Freehills Weekly Tax Highlights - Week Ended 24.9.10

ATO Documents

Released 22.9.10

Taxation Rulings
TR 2010/5: Income tax: the relevance of 'economic compulsion' in deciding whether an issuer of a financing arrangement has an 'effectively non-contingent obligation' for the purposes of section 974-135 of the Income Tax Assessment Act 1997
TR 2010/6: Income tax: Pay As You Go Withholding and fringe benefits tax: tax consequences on the issue, holding and redemption of bonus units as part of an employee benefits trust arrangement
Addendum
Taxation Determinations
TD 2005/2: Income tax: does a resident of a country with which Australia has a Tax Treaty, have a permanent establishment solely from the sale of trading stock through an internet website hosted by an Australian resident internet service provider?
 
Released 24.9.10

Interpretative Decisions
ATO ID 2010/166: Taxation of Financial Arrangements: applicable functional currency election, application of the special rule about translation and particular gains and losses under Subdivision 230-B of the Income Tax Assessment Act 1997
ATO ID 2010/167: Taxation of Financial Arrangements: identification of arrangement - facility agreement
ATO ID 2010/168: Taxation of Financial Arrangements: hierarchy of provisions and the balancing adjustment in Subdivision 230-G
ATO ID 2010/173: Taxation of Financial Arrangements: gain made in gaining or producing non-assessable non-exempt income
ATO ID 2010/174: Taxation of Financial Arrangements: loss made in gaining or producing non-assessable non-exempt income

RCI appeals Part IVA decision

RCI  Pty Ltd v Commissioner of Taxation [2010] FCA 939 (1 September 2010): The taxpayer has appealed to the Full Federal Court. The Federal Court at first instance (Stone J) found that Part IVA applied to a scheme which reduced the taxpayer's capital gain derived from the disposal of its shares in James Hardie Holdings Inc. The Court agreed with the Commissioner that a tax benefit arose under a scheme involving a s.23AJ non-assessable non-exempt dividend being paid to the taxpayer which reduced the value of the shares and therefore the capital gain the taxpayer made on their subsequent disposal. The Court then found that the taxpayer had entered into or carried out the scheme for the dominant purpose of obtaining that tax benefit.

ATO wins Amex GST appeal

Commissioner of Taxation v American Express Wholesale Currency Services Pty Limited [2010] FCAFC 122 (17 September 2010): A majority of the Full Federal Court has allowed the Commissioner’s appeal and held that default fees received from cardholders were revenue from financial supplies for GST purposes (which are input taxed supplies). The taxpayer had treated the fees as not being revenue derived from input taxed supplies for the purposes of determining its input tax credits entitlement for the relevant period.

Parliament resumes today, 28 September 2010. The fate of the Bills that lapsed before the Federal election was called (as noted in the table below) will need to be decided.

As At 24.9.10