1. ATO submission on tax haven banks released

• Persistent and sustained compliance action is required to obtain abusive use of tax heavens.
• Bank secrecy is often a feature of tax havens. However, some countries that are not low-tax jurisdictions have bank secrecy arrangements that may be exploited to conceal income and evade tax because they do not have effective tax information exchange program with other countries.
• The priority for is to deal very firmly with the worst abuses and in particular, promoters and their onshore associates who encourage use of abusive tax haven schemes. International promoters provide specialised accounting, banking and professional trustee services. According to the ATO intelligence, a component of the services provided by promoters is to establish entities or trustees which are not able to be connected to the ultimate or beneficial owner.
• Privacy and secrecy laws in tax havens facilitate tax evasion and impede tax evasion investigations and enforcement efforts. Essentially, the main impediment arises from the difficulty of obtaining basic information that may be indicative of fraud or evasion.
• Whilst the legislative framework of banking and privacy laws governs the operation of financial institutions, trusts and nominee companies, it is useful to recognise the importance of separating the powers between the financial sector, the executive and the judiciary to ensure transparency and effective operation of the regulatory system.

2. Draft legislation on Division 6C released

• Clarifying the scope and meaning of investment in land for the purpose of deriving rent;
• Introducing a 25 per cent safe harbour allowance for non-rental, non trading income from investment in land;
• Expanding the range of financial instruments that a managed fund may invest in or trade; and
• Following consultation with industry, providing a further 2 per cent safe harbour allowance at the whole of trust level for non-trading income.

3. Institute meets with Government Departments on Carbon Pollution Reduction Scheme

4. Meeting with ATO and Treasury to discuss GST issues

• Consequences of recent significant litigation cases such as KAP Motors and Brady King
• Application provisions for future amendments to indirect tax law
• ATO approach to GST audits
• Status of the following issues under the new Government:
• Use test relating to residential premises
• Going concern
• Section 38-190(3)
• Division 48- GST Groups
• Division 147
• Vouchers
• Recent press release of GST measures announced but not enacted by the previous government
• Discussion of “in connection with”.

5. Institute attends NTLG - Transfer Pricing Sub-group meeting

• The issue was one that should be addressed by Treasury rather than by the ATO
• Concern as to the planned retrospective application of the ATO’s proposed approach
• Practical issues associated with taxpayers implementing the ATO’s proposed approach, including:
• Determination of the arm’s length capital structure for a particular taxpayer
• Determining the impact, if any, of implicit credit support provided by a parent company
• Potential for double taxation
• Compliance costs and whether the ATO could develop administrative approaches to enable a large proportion of affected taxpayers to be removed from the need to incur substantial compliance costs.

• The ATO Transfer Pricing Compliance program and strategy
• Litigation update
• APA program review update
• Customs implications of transfer pricing adjustments – GST issues still being resolved.
• Business Restructures
• OECD developments - The ATO advised that it expected the OECD to issue a series of issues papers on transfer pricing and business restructuring in September/October 2008.

6. Institute’s submission on Inquiry into Schedules 1 and 2 of the Tax Laws Amendment (2008 Measures No. 3) Bill 2008 released

7. Institute’s submission on Inquiry into the Tax Laws Amendment (2008 Measures No.4) Bill 2008 released

8. Joint submission on draft ruling and determinations

9. Transfer pricing judgment finalised - Roche Products Pty Limited v Commissioner of Taxation [2008] AATA 639

10. Commissioner’s decision not to transfer amount to running balance account not reviewable - Command Recruitment Group (Qld) Pty Ltd v Commissioner of Taxation [2008] AATA 619

11. Decision Impact Statements

• Murdoch v Commissioner of Taxation, as reported in Edition 20/2008 of the Tax Bulletin. This Full Federal Court case looked at characterisation of an amount paid by trustees of a trust to a beneficiary entitled to income for life in consequence of a claim made for an amount as recompense for moneys not had as a result of breach of fiduciary duty by the trustees. As stated in the DIS, ‘The view of the Court was that the taxpayer's claim was a claim against the corpus beneficiary for an accounting by him to her of an actual capital profit or gain seen by the Court as having been made by him and to an entitlement to a constructive trust over the assets of the trust estate, with the result that the amount received by the taxpayer was not income’. The ATO is of the view that the decision is of limited application because of the unique facts of the case.
  
  
• Drysdale v Commissioner of Taxation, as reported in Edition 18/2008 of the Tax Bulletin. In this case, the Tribunal found that the acquisition of a yacht and associated acquisitions by the applicant were not creditable acquisitions, as the acquisitions were not made in carrying on an enterprise. Rather, the yacht was used either in a private recreational pursuit or hobby and/or purchased without any reasonable expectation of profit or gain. The DIS states that the decision confirms that a taxpayer is required to demonstrate that sufficient indicators of a business exist to establish that activities have been done in the form of a business for the purpose of paragraph 9-20(1)(a) of the GST Act.

12. Class Rulings

13. Product Rulings

14. ATO Interpretative Decisions

15. Legislative Instrument

16. Recent ATO publications

17. OECD Model Tax Convention – update approved

• The concept of “place of effective management”
• The situation of dual-resident persons who are treaty non-residents under the tie-breaker rule
• Certain aspects of the definition of royalties
• Whether days of residence should be taken into account for the purposes of the computation of the 183-day rule.

18. OECD Report on the Attribution of Profits to Permanent Establishments