Username:
Password:
Forgot Password?

Chartered Accountants Tax Bulletin Edition 13 - 16 April 2007
Print this article Print this article
Email this Article



Edition 13/2007
16 April 2007
    HEADLINES
  1. Institute's Tax Counsel attended Board of Taxation meeting
  2. Small business CGT concessions changes passed as law


    3. INSTITUTE NEWS
  3. Conduct of ATO Litigation in Courts and Tribunals - Draft Practice Statement
  4. NTLG-GST Subcommittee meeting - call for agenda items
  5. Accounting Working Group meeting - call for agenda items
  6. Lodgment Working Party meeting - call for agenda items


    7. CASES
  7. Accountants' concession and 'exceptional circumstances' - White Industries Aust Ltd v Commissioner of Taxation [2007] FCA 511 (11 April 2007)
  8. Appeals news


    9. RULINGS
  9. Draft Taxation Determination
  10. Draft Taxation Ruling
  11. Draft Fuel Tax Ruling
  12. Sales Tax Rulings - Withdrawals
  13. Class Rulings
  14. Product Rulings


    15. LEGISLATION
  15. Legislation update
  16. Legislative instruments


    17. ATO PUBLICATIONS

  17. Recent ATO publications


    18. OTHER NEWS
  18. Agreement between the OECD and the United Arab Emirates to strengthen tax co-operation
  19. Discussion draft on revised commentary on Article 7 of the OECD Model Tax Convention released
  20. Public Accounts and Audit Committee's public hearing with the Commissioner
  21. Tax concessions for primary producers
TRAINING AND DEVELOPMENT

YOUR INPUT


HEADLINES

1. Institute's Tax Counsel attended Board of Taxation meeting

On 12 April 2007, Ali Noroozi (the Institute's Tax Counsel) and Mark Jones (the Institute's General Manager SA/NT) attended a confidential Board of Taxation meeting in Adelaide. Issues discussed at the meeting included:
  • Review of the anti-tax deferral regimes
  • Review of the taxation treatment of off-market share buybacks
  • Small business tax compliance cost scoping study
  • Consultation process around policies and legislation development.
Top

2. Small business CGT concessions changes passed as law

Tax Laws Amendment (2006 Measures No 7) Bill 2006 received Royal Assent on 12 April 2007. Members will recall that Schedule 2 of this Bill (which contained proposed changes to the interest withholding exemptions) was removed but the other amendments remained. These amendments include a number of small business CGT concessions changes, such as the significant individual 20 per cent test, changes to the maximum net asset value test and the active asset test.

As noted previously, the Institute, with the help from its members, lodged a submission with the Board of Taxation in February 2006 in relation to the small business CGT concessions. The amendments in this Bill were in response to the Board of Taxation's recommendations. The Institute was also actively involved in the Treasury consultation over the proposed amendments and lodged a number of confidential submissions during this process.
Top

INSTITUTE NEWS

3. Conduct of ATO Litigation in Courts and Tribunals - Draft Practice Statement

The Institute lodged a submission with the ATO on 13 April 2007 on a draft practice statement on 'Conduct of ATO Litigation in Courts and Tribunals' released to NTLG members for comment. Members requiring more information can contact the Tax Group.
Top

4. NTLG-GST Subcommittee meeting - call for agenda items

The next meeting of the NTLG-GST Subcommittee is on 14 May 2007. This subcommittee deals with matters that relate to technical interpretative issues pertaining to GST, Luxury Car Tax and Wine Equalisation Tax.

If members have any issues that they would like the Institute to consider raising at the meeting, please send them to Tax Group by COB 30 April 2007. To assist members in preparing potential agenda items, please note that proposed agenda items need to be technical issues which have been researched and there is an issue identified with the ATO's interpretation.
Top

5. Accounting Working Group meeting - call for agenda items

The next meeting of the Accounting Working Group is on 27 April 2007. This is a subcommittee of the ATO Tax Practitioners Forum (ATPF) and is an ATO consultative forum for tax practitioners and professional bodies to raise issues and provide feedback to the ATO on tax administration issues (in relation to running balance accounts).

If members have any issues that they would like the Institute to consider raising at the meeting, please send them to Tax Group by COB 18 April 2007.
Top

6. Lodgment Working Party meeting - call for agenda items

The next meeting of the Lodgment Working Party (LWP) is on 3 May 2007. This subcommittee deals with issues concerning the tax agent lodgment program, including the continuing development and design of the lodgment program, identifying and examining systemic issues that have a broader impact on lodgment or related functions over a longer term and input into the development of support mechanisms such as the tax agent portal.

Members are encouraged to send any issues that they would like the Institute to consider raising at the LWP meeting to Tax Group by COB 24 April 2007.
Top

CASES

7. Accountants' concession and 'exceptional circumstances' - White Industries Aust Ltd v Commissioner of Taxation [2007] FCA 511 (11 April 2007

The case raised the matter of the so-called "accountants' concession" set out in Chapter 7 of the ATO's Access Manual entitled Access to Professional Accounting Advisors' Papers.

As set out at para 7.1.1, this concession concerns the following:
While recognising that the Commissioner has the legislative power to request access to most documents, it is accepted that there is a class of documents which should, in all but exceptional circumstances, remain within the confidence of taxpayers and their professional accounting advisors. In respect of such documents the ATO acknowledges that taxpayers should be able to consult with their professional accounting advisors on a confidential basis to enable full and frank discussion in respect of their rights and obligations under taxation laws to take place and for advice to be communicated on that basis.
The proceedings related to "restricted source documents" (advice documents shedding light on transactions) and "non-source documents" (being documents that are not merely records of transactions). In appeals under Part IVC of the Taxation Administration Act 1953, the taxpayers gave discovery, and claimed that certain documents discovered were covered by the "accountants' concession". An ATO officer decided that there were exceptional circumstances, and approved the access to the documents but a different ATO officer caused a notice to produce the documents to issue to the taxpayers.

The taxpayers challenged the ATO officer's decision allowing access, under section 5 of the Administrative Decisions (Judicial Review) Act 1977 ("AD(JR) Act") and under subsections 39B(1) and (1A) of the Judiciary Act 1903 ("Judiciary Act"). In relation to the latter, the taxpayers claimed that the decision by the ATO officer was an improper exercise of the power and involved an error or errors of law.

The Federal Court (Lindgren J) dismissed the taxpayers' application in relation to the claim based on the AD(JR) Act, but not in relation to that under the Judiciary Act. His Honour then stated that the proceedings would be listed for directions with a view to progressing the matter for hearing of the claim under the Judiciary Act.
Top

8. Appeals news

The taxpayer has filed a notice of appeal to the Full Federal Court against the single judge's decision in Price Street Professional Centre Pty Ltd v Commissioner of Taxation [2007] FCA 345.

For a summary of the Federal Court's decision, go here.
Top

RULINGS

9. Draft Taxation Determination

The ATO has issued the following Draft Taxation Determination:

TD 2007/D5 - Income tax: consolidation: does the single entity rule in section 701-1 of the Income Tax Assessment Act 1997 apply in determining whether distributions by the liquidator of a head company represent 'income derived' by the head company for the purposes of section 47 of the Income Tax Assessment Act 1936?

The Institute will be preparing or co-ordinating the preparation of a submission to the ATO in respect of this Draft Taxation Determination. If you have any comments please e-mail them to us at Tax Group by 1 May 2007.
Top

10. Draft Taxation Ruling

The ATO has issued the following Draft Taxation Ruling:

TR 2007/D2 - Income tax: registered agricultural managed investment schemes

It is proposed that the final ruling will apply to losses or outgoings incurred, and amounts included in assessable income, in relation to schemes begun to be carried on and after 1 July 2008. However, if a test case is finalised prior to 30 June 2008 and confirms the ATO's view, product rulings will not issue past the date of the decision.

In a media release dated 11 April 2007 advising of the issue of TR 2007/D2, the Commissioner noted that the ATO's reconsidered view is that investor contributions to registered agricultural managed investments schemes are capital expenditure and therefore not deductible. The ATO is also seeking to identify a test case to clarify this reconsidered view and is allowing transitional relief in the interim.

The Institute will be preparing or co-ordinating the preparation of a submission to the ATO in respect of this Draft Taxation Ruling. If you have any comments please e-mail them to us at Tax Group by 15 May 2007.
Top

11. Draft Fuel Tax Ruling

The ATO has issued the following Draft Fuel Tax Ruling:

FTR 2007/D1 - Fuel tax: the meaning of 'acquire', 'manufacture' and 'import' in the expression 'taxable fuel that you acquire or manufacture in, or import into, Australia to the extent that you do so for use in carrying on your enterprise' in the Fuel Tax Act 2006

When the final ruling is released, it will explain the Commissioner's view of the law as it applies from 1 July 2006.
Top

12. Sales Tax Rulings - Withdrawal

The ATO has withdrawn the following Sales Tax Rulings:

ST 2241W - Notice of Withdrawal - Sales tax: therapeutic lounge/recliner chairs

ST 2243W - Notice of Withdrawal - Sales tax: Keyboard WristRest

ST 2244W - Notice of Withdrawal - Sales tax: air ionizers and purifiers

ST 2246W - Notice of Withdrawal - Sales tax: aeroplanes and parts etc

ST 2247W - Notice of Withdrawal - Sales tax: section 12D, Sales Tax Procedure Act

ST 2248W - Notice of Withdrawal - Sales tax: swim/spa pool liners

ST 2249W - Notice of Withdrawal - Sales tax: clay - casting slip

ST 2252W - Notice of Withdrawal - Sales tax: tonic wines

ST 2253W - Notice of Withdrawal - Sales tax: Surge Safe; Volt Guard, Continuous Power Filter

ST 2256W - Notice of Withdrawal - Sales tax: jurisdiction of a court to review disputes in actions for the recovery of sales tax where a default assessment has issued

ST 2257W - Notice of Withdrawal - Sales tax: circular letters and circular notices

ST 2258W - Notice of Withdrawal - Sales tax: video surveillance equipment used by banks, building societies, retailers, etc

ST 2260W - Notice of Withdrawal - Sales tax: radio transceivers for use in conjunction with the Royal Flying Doctor Service

ST 2261W - Notice of Withdrawal - Sales tax: drawing and drafting equipment for use in universities and schools

ST 2264W - Notice of Withdrawal - Sales tax: imported second-hand engines, auto parts and body panels

ST 2265W - Notice of Withdrawal - Sales tax: omnibuses

ST 2266W - Notice of Withdrawal - Sales tax: goods purchased by universities and schools

ST 2268W - Notice of Withdrawal - Sales tax: sale value of air conditioning duct work

ST 2269W - Notice of Withdrawal - Sales tax: shooting of 'wild reels' for television stations
Top

13. Class Rulings

The ATO has released the following Class Rulings:

CR 2007/26 - Income tax: Leave - Deferred Salary Scheme - employees of Lutheran Schools and Kindergartens in the Northern Territory

CR 2007/27 - Income tax: share buy-back: BHP Billiton Limited
Top

14. Product Rulings

The ATO has released the following Product Rulings:

PR 2007/31 - Income tax: Early Season Apple Project - Early Growers

PR 2007/32 - Income tax: Barossa Vines Project 2007 - Applicant Group 1

PR 2007/33 - Income tax: Olive Growers Australia Project 2007 - Applicant Group 1

PR 2007/34 - Income tax: Great Southern 2007 Almond Income Project
Top

LEGISLATION

15. Legislation update

The following bills received Royal Assent on 12 April 2007:
  • Tax Laws Amendment (2006 Measures No 7) Bill 2006
  • Tax Laws Amendment (2007 Measures No 1) Bill 2007

Top

16. Legislative instruments

During the past week, the following legislative instruments were released:
  • A New Tax System (Goods and Services Tax) Waiver of Tax Invoice Requirement Determination 2003 - members of AMERICAN EXPRESS INTERNATIONAL

    This Determination is available at: http://www.frli.gov.au/

  • Income Tax Amendment Regulations 2007 (No. 1) (Fed)

    These Regulations amend the Income Tax Regulations 1936 which are no longer required as a result of the Simplified Superannuation reforms.

    The Regulations are available at: http://www.frli.gov.au/

    The Explanatory Statement is available at: http://www.frli.gov.au/

  • Income Tax Assessment Amendment Regulations 2007 (No. 2) (Fed)

    These Regulations amend the Income Tax Assessment Regulations 1997 and supports the Simplified Superannuation reforms.

    The Regulations are available at: http://www.frli.gov.au/

    The Explanatory Statement is available at: http://www.frli.gov.au/
Top

ATO PUBLICATIONS

17. Recent ATO publications

Administration

eLink 13/07 - Bulletin to inform tax practitioners of the most recent updates to ato.gov.au including a lead article titled Simpler super - changes for SMSFs - 11 April 2007.

eLink 12/07 - Bulletin to inform tax practitioners of the most recent updates to ato.gov.au including a lead article titled Simpler super and tax file numbers - 4 April 2007.

Activity statement processing statistics - Activity statement statistics.

Minutes of Meeting

NTLG Superannuation Technical Sub-committee minutes - Minutes of the National Tax Liaison Group (NTLG) Superannuation Technical Sub-committee held on 5 March 2007.

PAYG

2008 PAYG income tax withholding variation (ITWV) application - This application should be used when the payee wants to reduce their PAYG withholding rate for the year ending 30 June 2008. If the payee has business income or non-commercial business losses, the 2008 PAYG ITWV supplement NAT 5423 must be completed. NAT 2036

2008 PAYG income tax withholding variation (ITWV) application senior Australian tax offset - This application should be used when the payee wants to reduce their PAYG withholding rate for the year ending 30 June 2008, wants to claim the senior Australian tax offset (SATO), or is receiving payments from multiple payers. NAT 5424

2008 PAYG income tax withholding variation (ITWV) short application - This application should be used when the payee wants to reduce their PAYG withholding rate on their allowances, director's fees, HELP/SFSS overpayments or HELP/SFSS deferral. NAT 5425

2008 PAYG income tax withholding variation (ITWV) supplement - This is a supplement to the 2008 PAYG (ITWV) application NAT 2036-03-2007 This supplement should be used if the payee has business income or non-commercial business losses. The supplement must be lodged with a completed NAT 2036. NAT 5423

PAYG withholding - varying your PAYG withholding - You may be able to vary the amount of tax withheld by your employer to best meet your end of year liability.

Superannuation

Simpler super - defined benefit funds - This Simple Super fact sheet will give you information about the transitional arrangements relating to defined benefit funds.

Miscellaneous

Removing the part-year tax-free threshold for taxpayers who have ceased to be full-time students - The Government announced in the 2006-07 Federal Budget that it would remove the part-year tax-free threshold for taxpayers ceasing full-time education for the first time, with effect from the 2006-07 income year. The Bill received Royal Assent on 23 October 2006.
Top

OTHER NEWS

18. Agreement between the OECD and the United Arab Emirates to strengthen tax co-operation

On 5 April 2007, the OECD announced that an agreement had been signed between the OECD and the United Arab Emirates (UAE) which aimed to strengthen tax co-operation between the countries of the Middle East and North Africa (MENA) and between these countries and OECD countries.

Under the agreement, the OECD and the UAE will work together to establish a regional dialogue on the negotiation and application of tax treaties, and produce an official Arabic version of the OECD Model Tax Convention.

Further information on the agreement is available on the OECD website.
Top

19. Draft revised commentary on Article 7 (Business Profits) of the OECD Model Tax Convention released

On 10 April 2007, the OECD released draft revised commentary on Article 7 (Business Profits) of the OECD Model Tax Convention for comments.

The revised commentary was prepared following the release of the new versions of Parts I, II and III of the Committee on Fiscal Affairs' report on the Attribution of Profits to Permanent Establishments in December 2006.

For more information on the revised commentary, visit the OECD website.
Top

20. Public Accounts and Audit Committee's public hearing with the Commissioner

Federal Parliament's Public Accounts and Audit Committee will be holding the first biannual public hearing with the Commissioner of Taxation and other ATO officers on 20 April 2007.

This hearing is a result of the agreement between the Committee and the Commissioner in November 2006 to hold biannual public he