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1. JCPAA report on tax administration tabled into Parliament
On 26 June, the Joint Committee of Public Accounts and Audit (the JCPAA) issued a media release on its Report on Tax Administration (Report 410) which was tabled in the Federal Parliament that day.
According to the JCPAA, Government in Australia should consult more with relevant stakeholders in the early stages of developing tax policy.
The report says that complex tax law produces a complex tax administration, thereby undermining the integrity of self assessment. The JCPAA’s preferred approach is for Treasury, Government and stakeholders to work together to develop clear, simple tax policy. To this end, it saw the Government’s new review, Australia’s Future Tax System, as a vehicle through which to achieve this.
The report also recommends that the ATO accept court decisions, either at first instance or on appeal. The recommendation arises out of the Essenbourne case, decided in the Federal Court in late 2002 which the ATO neither appealed nor accepted, but stated that it would bring another test case to determine if Essenbourne was correct.
Another important initiative from this inquiry, as noted by the Chair of the Committee, Sharon Grierson MP, is the agreement of the Commissioner of Taxation to appear before the Committee twice each year, to answer questions about developments in tax law administration. Members may recall that the JCPAA’s last biannual meeting with the Commissioner was held on 30 April, which was reported in Edition16 /2008 of the Tax Bulletin.
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2. Update of review into Australia’s tax treaty negotiation policy and program
On 26 June, the Assistant Treasurer, the Hon Chris Bowen MP, issued a press release providing an update on submissions received as part of the Government’s review of Australia’s tax treaty negotiation policy and program, as announced on 25 January 2008. The Institute lodged a submission on 26 March in response to that announcement.
The Assistant Treasurer said that the review was well received by industry, professional associations and the public. He thanked everyone involved in the consultation process, including the Tax Treaties Advisory Panel (TTAP), where the Institute is represented by Christian Holle (PwC) and Karen Smith of the Institute.
Mr Bowen noted that the Government is currently considering the community’s response and will advise the outcomes of the review as soon as practicable.
Per the attachment to the press release, key themes from submissions that were also reflected in the Institute's March submission included:
- Priority should be given to treaty negotiations with emerging economies (such as China and India), elsewhere in the Asian region and countries with which Australia has most favoured nation (MFN) obligations
- A more residence based approach, as per recent treaties, should be adopted
- The Government should continue to seek low royalty and dividend withholding tax rates, such as those negotiated in Australia’s 2008 treaty with Japan, in future treaties
- Australia should continue to align with the OECD position on capital gains tax
- Australia’s tax treaties should include time limits on when tax authorities can commence transfer pricing audits in future tax treaties, as is the case under the Japan tax treaty.
Submissions also recommended that Australia seek to ensure that benefits under tax treaties be available as soon as possible after signature.
Institute News
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3. Meeting with ATO and Treasury on recent GST discussion papers
On Friday, 27 June 2008, Michael Evans (KPMG), Stephen Baxter (Indirect Tax Consulting), John Haig (Haig Fitzgerald) and Norman Kang from the Institute met with representatives from ATO and Treasury to discuss the following issues:
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4. Joint submission on draft determinations/rulings
The Institute has lodged a joint submission, available on the Institute website, on the following draft Goods and Services Tax Determination.
GSTD 2008/D1 - Goods and services tax: are supplies of food known as breakfast bars GST-free?
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5. Applicant entitled to use valuation method to calculate margin on stratum units - Brady King Pty Ltd v Commissioner of Taxation [2008] FCAFC 118
The Full Federal Court (Heerey, Goldberg and Dowsett JJ) has allowed the taxpayer’s appeal, finding that the margin for the supply of the strata units should be calculated under section 75-10(3) of A New Tax System (Goods and Services Tax) Act 1999 on the basis that item 1 or item 3 of the table to section 75-10(3) applies.
In May 2000, the applicant entered into a contract to purchase an office building in Melbourne. Upon paying the deposit, the applicant was granted an exclusive licence to carry out certain works and marketing which the applicant commenced prior to 30 June 2000, with planning approval for the construction of a number of units on the property granted on 26 June 2000. Settlement of the purchase contract occurred in October 2000, with the transfer registered in early November 2000. The applicant redeveloped the building into 158 stratum units. Most of these were sold ‘off the plan’ between April and November 2001.
The primary judge found against the appellant on the basis that it had not “held” or “acquired” the necessary interest in the strata units before 1 July 2000 within the meaning of items 1 or 3 because what was supplied to the purchasers of the apartments had to be identical in juridical terms to that which it acquired. In rejecting this view, the Full Federal Court stated that ‘the beneficial purpose of the margin scheme would be frustrated if such a commonplace transaction as the present one were held to be outside section 75-10(3).’ Rather it considered that ‘Before 1 July 2000, the appellant acquired or held each stratum unit in the sense that it held the property … from which that unit was later carved out. Reading the Act in this way gives it a practical and fair business operation.’ [para 24]
Although in agreement with the above, the Commissioner argued that the appellant did not hold or acquire the “parent” property by 1 July 2000. To this, the FFC stated that ‘… in our view, once the “precise juridical identity” approach is rejected and a more practical construction adopted, it is not possible to ring fence the interest the appellant acquired under the contract from the stratum unit which it later supplied to its customer.’ [para 26].
The court also noted that ‘While Reliance Carpet is not directly in point, the reasoning of the High Court is in our respectful opinion more consistent with the appellant’s case. The emphasis on the breadth of the statutory definition of “real property” supports the conclusion that when the appellant entered into the contract on 22 May 2000 it acquired or held something that was an inextricable part of the interest which it sold after 1 July 2000 …’. [para 38]
Institute Comment: We expect that the ATO will update its Decision Impact Statement shortly to reflect the decision of the Full Federal Court.
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6. Leave granted to the Commissioner to file and serve an amended statement of facts issues and contentions - Orica Ltd v Commissioner of Taxation [2008] FCA 906
The Federal Court (Sundberg J) has granted leave to the Commissioner to file and serve an amended statement of facts issues and contentions in relation to this matter.
In brief, the matter concerns a series of events, starting in June 1993 when a distribution agreement between Orica and another party (Zeneca) was entered into by which Orica was appointed as the exclusive processor and distributor of pharmaceutical products in Australia and other territories. In 1997, Zeneca gave Orica notice that the distribution agreement was to terminate in February 1998. This was followed by a sale of business agreement in September 1998 and an assignment deed the same day whereby Orica agreed to assign “the rights and obligations” under the distribution agreement to a Zeneca company
The case under Part IIIA of the Income Tax Assessment Act 1936 (the former CGT provisions) put by the Commissioner in the amended statement made a number of contentions regarding disposals and varied significantly from the original, which simply contended that the rights under the distribution agreement were disposed of by Orica under the assignment deed.
In allowing the amended statement, the court stated that ‘The Commissioner has always contended that Orica’s rights under the Distribution Agreement are an asset for the purposes of Part IIIA, that Orica disposed of that asset in circumstances where there was a capital gain, and that the disposition of that asset was a taxable event. The proposed changes do not alter that stand. Rather they amplify the ways in which the Commissioner will contend that the events that happened, most of which are not controversial, gave rise to a taxable event [para 15].
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7. Appeals update
The High Court has granted the Commissioner special leave to appeal against the Full Federal Court decision in FCT v Day [2007] FCAFC 193. In that decision, the Full Federal Court (Spender, Edmonds JJ, Dowsett J dissenting) allowed the taxpayer’s appeal to claim tax deductions for legal expenses associated with defending charges brought against the taxpayer, a Customs Officer, under s 61 of the (now repealed) Public Service Act 1922, as reported in Edition 1/2008 of the Tax Bulletin.
The transcript of the special leave hearing is here.
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8. Decision Impact Statement
An updated version of the Decision Impact Statement for KAP Motors Pty Ltd v Commissioner of Taxation was released on 13 June 2008, which sets out the implications of the proposed amendments in Tax Laws Amendment (2008 Measures No. 3) Bill 2008 as a result of this case. The DIS includes the statement ‘If the amendments are passed into law, you will not be able to claim any refund of overpaid GST caused by the fact that there was no supply at all for periods outside the relevant four year period unless you have provided a valid notice notifying the Commissioner of your entitlement by no later than 30 June 2008. Notifying your entitlement in your 30 June 2008 activity statement due to be lodged on 21 July or 28 July 2008 will not qualify as a notification of your entitlement prior to 1 July 2008.’
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9. Taxation Rulings
TR 2008/4 - Income tax: effective life of depreciating assets (applicable from 1 July 2008).
This ruling was not previously issued as a draft.
Addendum
TR 2002/13A1 - Addendum - Income tax: Australian films - Division 10B - tax avoidance schemes
Withdrawal
TR 2007/3W - Income tax: effective life of depreciating assets (applicable from 1 July 2007)
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10. Goods and Services Tax Ruling
GSTR 2008/3 - Goods and services tax: dealings in real property by bare trusts.
This ruling was released in draft form as GSTR 2007/D3.
The joint submission lodged by the Institute and various other professional bodies on this draft Goods and Services Tax Ruling, and the ATO’s response, is available on the Institute website.
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11. Taxation Determinations
TD 2008/15 - Income tax: can an unincorporated association of persons acting only in Australia who do not carry on a business in common with a view to profit be a corporate limited partnership within the meaning of section 94D of the Income Tax Assessment Act 1936?
This ruling was released in draft form as TD 2008/D1
TD 2008/16 - Income tax: is an exceptional circumstances relief payment paid to a farmer under the Farm Household Support Act 1992 'assessable primary production income' under subsection 392-80(2) of the Income Tax Assessment Act 1997?
This ruling was released in draft form as TD 2008/D7
The joint submission lodged by the Institute and various other professional bodies on these draft determinations is available on the Institute website.
Addenda
TD 2002/20A1 - Addendum - Income tax: if an Australian film production company alters its method of charging for film production services supplied to a foreign associate to account for the impact of the tax offset scheme under Division 376 of the Income Tax Assessment Act 1997, will the Commissioner apply Division 13 of Part III of the Income Tax Assessment Act 1936 or the Associated Enterprises article of a relevant double tax agreement to increase the charge?
TD 2004/25A1 – Addendum - Income tax: do moneys used to acquire financial securities or which are otherwise set aside to fund a guaranteed return to investors satisfy the 'expended directly' requirement of Division 10BA of Part III of the Income Tax Assessment Act 1936?
TD 2006/2A1 - Addendum - Income tax: for the purpose of Division 376 of the Income Tax Assessment Act 1997, are some insurance premiums excluded from film production expenditure?
TD 2006/3A1 - Addendum - Income tax: to what extent are freight costs included in 'qualifying Australian production expenditure' within the meaning of section 376-40 of the Income Tax Assessment Act 1997?
Withdrawal
TD 2005/D27W - Withdrawal - Income tax: consolidation: capital gains: do the core consolidation rules in Division 701 of the Income Tax Assessment Act 1997 modify the effect of the CGT contract rules if an entity contracts to sell or buy a CGT asset and the contract settles after the entity becomes, or ceases to be, a member of a consolidated group?
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12. Draft Taxation Determinations
TD 2008/D9 - Income tax: consolidation: capital gains: do the core consolidation rules in Division 701 of the Income Tax Assessment Act 1997 modify the effect of the CGT contract rules if an entity contracts to buy or sell a CGT asset and the contract settles after the entity becomes, or ceases to be, a member of a consolidated group?
TD 2008/D10 - Income tax: consolidation: capital gains: for the purposes of Part 3 90 of the Income Tax Assessment Act 1997, is the CGT asset that an entity has contracted to buy from another taxpayer an asset of the entity at a time it joins or leaves a consolidated group, if the contract is not completed at that time?
TD 2008/D11 - Income tax: consolidation: capital gains: for the purposes of Part 3 90 of the Income Tax Assessment Act 1997, is the CGT asset that an entity has contracted to sell to another taxpayer an asset of the entity at a time it joins or leaves a consolidated group, if the contract is not completed at that time?
The Institute will be preparing or co-ordinating the preparation of submissions to the ATO in respect of these Draft Taxation Determinations. If you have any comments please e-mail them to us at mailto:taxgroup@charteredaccountants.com.au by 15 July 2008.
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13. Draft Goods and Services Tax Determination
GSTD 2008/D2 - Goods and services tax: is a supply by way of an in specie distribution of an asset that is applied or intended to be applied in an enterprise carried on by a discretionary trust to a beneficiary of the trust made ‘in the course or furtherance of’ the trust’s enterprise?
The Institute will be preparing or co-ordinating the preparation of a submission to the ATO in respect of this Draft Goods and Services Tax Determination. If you have any comments please e-mail them to us at mailto:taxgroup@charteredaccountants.com.au by 15 July 2008.
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14. Draft Goods and Services Tax Ruling
GSTR 2008/D3 - Goods and services tax: partitioning of land
The Institute will be preparing or co-ordinating the preparation of a submission to the ATO in respect of this Draft Goods and Services Tax Ruling. If you have any comments please e-mail them to us at mailto:taxgroup@charteredaccountants.com.au by 29 July 2008.
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15. Class Rulings
CR 2008/44 - Income tax: scrip for scrip roll-over: merger of Zinifex Limited and Oxiana Limited
CR 2008/45 - Income tax: early retirement scheme - Alcoa of Australia Ltd
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16. Income Tax Rulings - Addenda
IT 2111A - Addendum - Income tax: taxation incentives for the Australian film industry
IT 2476A – Addendum - Income tax: taxation incentives for Australian film industry
IT 2629A - Addendum - Income tax: taxation incentives for the Australian film industry
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17. Product Ruling - Addendum
PR 2007/100A - Addendum - Income tax: Kiri Park Projects - pre 30 June 2008 Growers
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18. Legislative Determination
Income Tax - Effective Life 2008/1 - Income Tax (Effective Life of Depreciating Assets) Amendment Determination 2008 (No. 1)
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19. Heading
PS LA 2008/3 (GA) - Attribution rules and late registration for fuel tax credits
PS LA 2008/11 - Fraudulently altered or created income tax returns or activity statements
PS LA 2008/12 - Public advice and guidance products: selection, development, publication and review processes
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20. Taxpayer Alerts
TA 2008/13 - Employee Savings Plans
TA 2008/14 - Salary Deferral Arrangements
TA 2008/15 - Profit washing scheme using a trust and a loss entity
TA 2008/16 - Liquidation of entities to avoid the payment of tax liability
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21. Tax Laws Amendment (2008 Measures No. 4) Bill 2008 introduced
Tax Laws Amendment (2008 Measures No. 4) Bill 2008 introduced
The Government introduced Tax Laws Amendment (2008 Measures No. 4) Bill 2008 into parliament on 26 June. The Bill contains the following measures:
- Schedule 1 amends the Income Tax Assessment Act (ITAA) 1997 to provide relief from capital gains tax (CGT) to private health insurance policy holders when their insurer converts, by demutualising, from being a not for profit to a for profit insurer. These amendments apply to demutualisations that occur on or after 1 July 2007.
- Schedule 2 amends Schedule 2F to the ITAA 1936 (the trust loss measures) to:
- change the definition of ‘family’ to limit lineal descendants to children or grandchildren of the test individual or of the test individual’s spouse.
These amendments apply to the 2008-09 income year, and later income years.
- remove the ability for family trusts to make a one-off variation to the test individual specified in a family trust election (other than specifically in relation to the 2007-08 income year or a marriage breakdown).
These amendments apply to the 2007-08 income year, and later income years. However, there is a welcome transitional measure now contained in the proposals.
Institute Comment: In this regard, members may recall that the Institute was disappointed when the government confirmed in the May Budget that it would reverse certain changes to family trust elections (FTEs) made by the former Government last year.
Of particular concern was the second change (preventing family trusts from making a once-off variation to the test individual specified in a FTE), which was to have effect from the 2007-08 income year according to the Budget press release. The Institute particularly opposed this change having retrospective effect as taxpayers who acted on the basis of the existing law and varied test individuals for the 2007-2008 year would find themselves with a family trust distribution tax liability if they had made distributions outside the family group of the original test individual.
The Institute expressed its concerns to Government and is pleased to see that the Bill incorporates a transitional measure for the 2007-2008 year. As stated in the EM a variation to the test individual made under subsection 272-80(5A) can only be made once and will only be valid for the 2007-08 income year. A family trust that has made a variation under subsection 272-80(5A) will revert back to the test individual specified in the original family trust election from the 2008-09 income year (subsection 272-80(5B)).
- Schedule 3 makes technical corrections and other minor amendments to the taxation laws. These amendments are part of the Government’s commitment to the care and maintenance of the tax system.
These corrections, amendments and improvements generally commence from Royal Assent but some apply prospectively or retrospectively.
The Explanatory Memorandum is available here.
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22. Legislation update
The following Tax Bills received Royal Assent last week:
- Tax Laws Amendment (Personal Income Tax Reduction) 2008 – 23 June
- Income Tax (Managed Investment Trust Transitional) 2008 – 23 June
- Income Tax (Managed Investment Trust Withholding Tax) 2008 – 23 June
- Tax Laws Amendment (Election Commitments No.1) 2008 – 23 June
- Tax Laws Amendment (2008 Measures No. 2) 2008 – 24 June
- First Home Saver Accounts Bill 2008 – 25 June
- First Home Saver Accounts (Consequential Amendments) Bill 2008 – 25 June
- Income Tax (First Home Saver Accounts Misuse Tax) Bill 2008 – 25 June
- Tax Laws Amendment (Medicare Levy and Medicare Levy Surcharge) Bill 2008 – 25 June
On 25 June, the Tax Laws Amendment (Budget Measures) Bill 2008 passed by the Senate without amendment and now awaits Royal Assent.
On 27 June, the Tax Laws Amendment (2008 Measures No. 4) Bill 2008 was referred to the Economics Committee for inquiry and report by 27 August 2008.
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23. Legislative Instruments
The Income Tax Amendment Regulations 2008 (No.1) were registered on the Federal Register on 25 June.
The Regulations amend the Income Tax Regulations 1936 prescribing reporting obligations for Australian entities concerning tax withheld from certain payments to foreign residents under Subdivision 12-H of the Taxation Administration Act 1953 (inserted by Tax Laws Amendment (Election Commitments No. 1) Act 2008).
These Regulations commence on the commencement of the Tax Laws Amendment (Election Commitments No. 1) Act 2008.
The Explanatory Statement is available here.
The Income Tax Assessment Amendment Regulations 2008 (No.3) were registered on the Federal Register.
The purpose of the Regulations is to support recent changes made to the Act by the Tax Laws Amendment (2008 Measures No. 2) Act 2008 which provide tax-free treatment for superannuation lump sums paid to persons suffering from a terminal medical condition.
The Explanatory Statement is available here.
The Income Tax Assessment Amendment Regulations 2008 (No.4) were registered on the Federal Register.
The Regulations amend the Income Tax Assessment Regulations 1997 to update the requirements relating to private health insurance statements as a consequence of the enactment of the Private Health Insurance Act 2007. These amendments would apply for the 2007-08 income year and later income years.
The Explanatory Statement is available here.
The Income Tax Assessment Amendment Regulations 2008 (No.5) were registered on the Federal Register.
The Regulations amend the Income Tax Assessment Regulations 1997 to provide income tax exemption for bonuses for early completion of apprenticeships.
The Explanatory Statement is available here.
The Taxation Administration Amendment Regulations 2008 (No.1) were registered on the Federal Register on 25 June.
The Regulations amend the Taxation Administration Regulations 1976 to deliver half of the low income tax offset throughout the year via withholding schedules from 1 July 2008.
The Explanatory Statement is available here.
The Taxation Administration Amendment Regulations 2008 (No.2) were registered on the Federal Register on 25 June.
These Regulations amend the Taxation Administration Regulations 1976 to prescribe 'information exchange countries'.
The Regulations commenced on the commencement of the Tax Laws Amendment (Election Commitments No. 1) Act 2008.
The Explanatory Statement is available here.
The Lodgment of correct TB statements in accordance with the Income Tax Assessment Act 1936 for the year of income ended 30 June 2008 (or approved period in lieu) was registered on the Federal Register on 27 June.
This instrument sets out a specified class of trustees of closely held trusts who will not be required to make a correct Trustee Beneficiary statement for the year of income ended 30 June 2008 (or approved period in lieu).
It applies to the year of income ended 30 June 2008 or an approved period in lieu and is effective from the day after it is registered.
The Explanatory Statement is available here.
The Lodgment of returns in accordance with the Income Tax Assessment Act 1936, the Income Tax Assessment Act 1997, the Taxation Administration Act 1953 and the Superannuation Industry (Supervision) Act 1993 for the year of income ended 30 June 2008 was registered on the Federal Register on 27 June.
This instrument sets out who is required to lodge an annual return, in the approved form, and the due date for lodgment.
It applies to the financial year ended 30 June 2008 or an approved period in lieu and is effective from the day after it is registered.
The Explanatory Statement is available here.
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24. Recent ATO publications
Booklets and publications
Entrepreneurs' tax offset - You may be eligible for a tax offset up to 25% on your business income if you meet the conditions for the entrepreneurs' tax offset (ETO). This information applies from 1 July 2007.
Application of general interest charge and penalties - This document provides different scenarios explaining how the remission policy will apply.
Corporate Plan 2008-09 - Our Corporate Plan for 2008-09 (PDF, 156KB) outlines our corporate priorities for the next 12 months and beyond.
eLink 23/08 - Bulletin to inform tax practitioners of the most recent updates to ato.gov.au including a lead article titled 'Gross domestic product (GDP) instalment adjustment rate has increased from 1 July 2008'. Issued on 18 June 2008.
Retrospective measures decision tool - This tool has been developed to assist project managers to make recommendations for the Tax Office's administrative approach to retrospective tax law changes and what advice we can provide to taxpayers.
Simplified trading stock rules - If you are a small business entity you may be able to use the simplified trading stock rules. This information applies from 1 July 2007.
Immediate deductions for prepaid expenses - If you are a small business entity you can claim an immediate deduction for certain prepaid expenses. This information applies from 1 July 2007.
New personal income thresholds to apply from 1 July 2008 - The Tax Office today reminded employers to apply the new personal income thresholds to all payments they make to their employees from 1 July 2008.
Broad overview of the trust loss measures - A general guide to the trust loss measures.
Demutualisation of MBF - This information applies to you if you had a private health insurance policy with MBF on 8 November 2007 and receive a payment of cash under the demutualisation of MBF which took place on 16 June 2008.
Administration
Your small business tax calendar - An easy-to-use computer tool that automatically builds a 12-month schedule of your tax obligations tailored to your business, giving you reminders using Outlook or your Windows operating system.
Keydates for tax agents July - September 2008 - A list of key dates for tax agents for the period July - September 2008.
Update financial institution details on the Tax Agent Portal - Tax agents are now able to enter, update, or delete their clients' financial institution account details for their activity statement roles on the Tax Agent Portal when they login using their digital certificate.
The TAXAGENT magazine - issue 40 - June 2008 - Download a PDF version of the June 2008 edition of the TAXAGENT magazine. Also available are the PDF versions of the Lodgment program 2008-09 summary and Lodgment program 2008-09 desk calendar included with this edition.
Employment termination payment
Tax-free and employment termination payment amount for genuine redundancy or early retirement scheme payments - Use this worksheet (PDF, 84KB) to help you calculate the tax-free and employment termination payment amount for genuine redundancy or early retirement scheme payments. Do not use this worksheet for invalidity or death benefit payments.
Employment termination payment on the death of an employee - Use this worksheet (PDF, 92KB) if you are making an eligible termination payment on the death of an employee. Do not include payments made to a trustee of a deceased estate. No amount is required to be withheld from a death benefit ETP paid to a trustee of a deceased estate.
Employment termination payments worksheet - Use this worksheet (PDF, 96 KB) if you are making an employment termination payments. Do not use this worksheet for payments relating to invalidity, a death benefit, a genuine redundancy or early retirement.
Employment termination payment with an invalidity segment worksheet - Use this worksheet (PDF, 104KB) if you are making an employment termination payment that has an invalidity segment. Do not use this worksheet for payments relating to a death benefit, a genuine redundancy, or an early retirement payment.
Goods and Services Tax
Goods and services tax: international telecommunications supplies - mobile telephone global roaming - The Government announced on 13 May 2008 that it will amend this measure, (previously announced in the 2007-08 Budget) to apply only to mobile telephone global roaming services.
Goods and services tax: real property Budget announcement - The Government announced on 13 May 2008 that it will introduce a measure to ensure that interactions between a number of provisions in GST law do not allow real property transactions to be structured to reduce GST liability.
Superannuation
Super co-contribution - Provides information about the Super co-contribution. The Super co-contribution is for low to middle income earners to help boost retirement savings.
Sample authority to release excess contributions tax - A sample copy of the release authority you may receive from the Tax Office.
Sample compulsory release authority for excess contributions tax - A sample copy of the compulsory release authority you may receive from members.
Relief from double super payments for employers - Senator the Hon Nick Sherry, Minister for Superannuation and Corporate Law, on 25 June 2008 announced changes which will provide relief to employers who make super contributions after the due date.
Superannuation guarantee late payment offset - The Government has announced an extension to the super guarantee late payment offset. The proposed law means that employers will generally be able to offset super contributions paid late to a super fund on behalf of an employee against a super guarantee charge assessment for that employee.
Sample voluntary release authority - A sample copy of the voluntary release authority you may receive from members.
What to do if you havent met your super obligations - Information about what to do if you haven't met your superannuation guarantee obligations
Family Trusts
Family trust elections (FTEs) and Interposed entity elections (IEEs) - Question and answers - Provides questions and answers around the trust loss measures, FTEs and IEEs, company loss tracing and franking credit trading measures.
Family Trusts - Details of amendments - Outlines the amendments to the law as enacted on 24 September 2007 in the Tax Laws Amendment (2007 Measures No. 4) Act 2007 which apply to income years starting on or after 1 July 2007.
Family trusts - savings measure - In the 2008 Federal Budget the Government announced its intention to reverse two of the family trust changes introduced by the previous Government in Tax Laws Amendment (2007 Measures No 4) Act 2007 to improve the integrity of the tax system and to achieve cost savings to help fund more urgent priorities.
Increased flexibility for family trusts - This document describes the changes to the trust loss measures to further increase flexibility for family trust and interposed entity elections.
Non-profits
Non-Profit News Service No. 0204 - Refund of franking credits mail out - Jun 2008. On 23 June 2008 the Tax Office mailed the 2007-08 refund of franking credits application package to non-profit organisations that received a refund of franking credits in the prior year.
Minutes of meeting
NTLG GST Sub-group minutes - Current and previous minutes of the National Tax Liaison Group (NTLG) GST Sub-group meetings.
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25. Clarification on luxury car tax, 1 July 2008 commencement date will not change
The Treasurer, the Hon Wayne Swan MP, issued a press release on 23 June to clarify media speculation that the Government may change the commencement date for the luxury car tax measure as announced in the 2008-09 Budget. He confirmed that the Government will not be amending the commencement date, and upon passage of the legislation, the measure will apply from 1 July 2008, as intended.
The Commissioner, Mr Michael D’Ascenzo, also issued a media release on the same day, to clarify how the proposed luxury car tax will apply to vehicles delivered from 1 July 2008. He said that the current law continues to apply until the proposed law is enacted, but once enacted the proposed law in its present form will apply retrospectively from 1 July 2008.
The Commissioner said that the rate of luxury car tax is determined by the date of delivery, not the date the order is placed. Thus, where a luxury car is ordered but not delivered before 1 July, the supplier is entitled to include the extra luxury car tax in the price of the vehicle.
In relation to administrative matters for motor vehicle suppliers, Mr D’Ascenzo said the ATO will allow suppliers to report the additional luxury car tax in the first BAS that is due after the law is passed, without incurring additional penalties or general interest charge. Alternatively, suppliers may choose to account for their additional luxury car tax liability by requesting the ATO to amend their BAS for the period in which they originally accounted for their luxury car tax.
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26. Commissioner warned taxpayers of four abusive tax schemes
On 25 June, the ATO issued a media release warning taxpayers of its concerns about abusive tax schemes on which four taxpayer alerts (TAs) were released. The alerts cover employee saving plans, salary deferral arrangements, a profit washing scheme and a liquidation scheme (refer item 20). A summary of these schemes is set out below.
Employee savings plan (TA 2008/13) – these schemes use a trust structure to attempt to convert salary or wages income into a capital gain, to reduce their tax.
Salary deferral arrangements (TA 2008/14) – these schemes involve an employee deferring their salary and instead receiving a payment categorised as a loan which is claimed not to be taxable. In later years the employee is paid a salary which is offset against their loan.
Profit washing scheme using a trust and a loss entity (TA 2008/15) – these schemes are designed to offset trading profits in a trust against tax losses in an unrelated company in an attempt to reduce tax payable on the trading profits.
Liquidation of entities to avoid the payment of liability (TA 2008/16) – these schemes attempt to evade the tax and penalties from tax avoidance by liquidating the companies and trust involved. They may include Phoenix arrangements. Criminal charges may apply to people who participate in these schemes.
The Commissioner warned that people who are involved in these schemes face close examination, and the ATO is also considering whether the promoter penalty laws should apply to those promoting these schemes.
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27. ATO Service Entity Arrangement Survey
NWC Research has been engaged by the ATO to conduct an online Service Entity Arrangement survey. The survey is a follow up evaluation around the effectiveness of the ATO products for Service Entity Arrangements (TR 2006/2 Income Tax: deductibility of service fees paid to associated service entities and the accompanying guide publication “Your service entity arrangements”).
Survey responses will be anonymous and will remain confidential. The survey will be available until 4th July 2008 and will take approximately 15 minutes to complete.
The survey can be accessed here
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Chartered Accountants New Employees Taxation Workshop
Throughout July and August in Sydney, Brisbane, Melbourne, Adelaide and Perth. This intensive two day workshop will provide new employees with the taxation skills and understanding needed to improve productivity in the early stages of employment.
Chartered Accountants Tax Atlas Series
A reference tool that assists in identifying key issues, understanding of key concepts and provisions. Available now: Tax & Wealth Creation; FBT & Salary Packaging; Small Business CGT Concessions.
Cpe.tv
Tax news TV that you can watch from a CD Rom or online. Keep informed on current trends in tax.
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