Legal news
With news and social media feeds being filled with tales of cryptocurrency (in particular bitcoin) prices fluctuating many taxpayers are making, or considering making, investments. However before jumping in taxpayers should understand that the anonymity that was originally touted as the shining crown of cryptocurrencies is not the invisibility cloak many may think it to be. What does the ATO really know about your cryptocurrency holdings and what do you need to disclose?
Our international tax series predominantly discusses Federal tax issues relating to non-resident (foreign) beneficiaries or non-resident trustees of a trust. This seventh article of the series focuses on the CGT main residence exemption (CGT MRE) for non-resident beneficiaries of deceased estates.
AAT denies deductions for work-related expenses: Lambourne v Commissioner of Taxation [2020] AATA 4562
The Administrative Appeals Tribunal (AAT) recently agreed with the Commissioner in disallowing certain deductions for work-related expenses.
We have previously written about carefully reading the clauses of a trust deed when seeking to make variations. The recent Federal Court decision of Advanced Holdings once again exemplifies the adverse outcomes that can arise when protocols prescribed in a trust deed are not followed.
The AAT has rejected the Federal Commissioner of Taxation’s (Commissioner) view that a discretionary payment received by an employee upon his termination should be taxed as ordinary income. Despite the payment being made upon the termination of the employee the Commissioner argued that it was received in respect of their employment as it was calculated in relation to fees earnt.
The Full Federal Court in FCT v Healius [2020] FCAFC 173 has upheld the Australian Taxation Office’s (ATO) appeal of the Federal Court decision in Healius v COT [2019] FCA 2011 which considered whether lump sum payments made by a medical centre to its doctors were assessable on revenue or capital account.
Over the last 18 months several decisions of the Administrative Appeals Tribunal, Federal and Full Federal Courts considered the application of Australian tax residency laws including Harding v FCT [2019] FCAFC 29, FCT v Addy [2020] FCAFC 135, Stockton v FCT [2019] FCA 1679, Handsley v FCT [2019] AATA 917 and Coelho v FCT [2020] AATA 2474.
In our earlier articles we discussed the Administrative Appeals Tribunal (AAT) and Federal Court decisions in Eichmann v FCT [2019] AATA 162 and FCT v Eichmann [2019] FCA 2155. The Full Federal Court in Eichmann v FCT [2020] FCAFC 155 recently allowed the taxpayer’s appeal of the Federal Court decision.
On 17 August 2020, the Full Federal Court handed down its decision in FCT v Fortunatow [2020] FCAFC 139 allowing the Commissioner’s appeal from the decision of Griffiths J of the Federal Court and finding Griffiths J had erred in his construction of section 87-20(1)(b) of the Income Tax Assessment Act 1997 (ITAA 97).
As we discussed in Coelho v FCT [2020] AATA 2474, different tax rates apply to residents and non-residents. Further, under Pt III of Sch 7 to the Income Tax Rates Act 1986, a working holiday maker pays tax at 15% on the first $37,000 of income in Australia. Commonly referred to as the ‘backpacker tax’.
We wrote here on the decision of Thawley J of the Federal Court in Peter Greensill Family Co Pty Ltd (trustee) v FCT (Greensill) where the Commissioner of Taxation was successful in arguing that section 855-10 of the Income Tax Assessment Act 1997 (ITAA 1997) does not disregard a capital gain distributed to a foreign resident beneficiary of an Australian discretionary trust. The taxpayer has appealed that decision to the Full Federal Court.
In our earlier article, we noted the Federal Court in FCT v Eichmann [2019] FCA 2155 (Eichman) in late 2019 had found in favour of the Australian Taxation Office (ATO) (appealing a decision of the Administrative Appeals Tribunal) and held land used for storage was not an active asset for the purposes of the small business capital gains tax (CGT) concessions in Division 152 of the Income Tax Assessment Act 1997 (ITAA 1997).
The recent Administrative Appeals Tribunal (AAT) decision of Holman v FCT highlights once again the importance of documentation and maintaining objective factual evidence to discharge the statutory burden of proof when disputing an assessment.
In 2017, the Australian Taxation Office (ATO) released Draft Practical Compliance Guideline PCG 2017/D11 (the PCG) to provide safe harbour measures for professional sportsperson’s who receive lump sum payments in exchange for their professional services and the use and exploitation of their “public fame” or “image”.
The Australian Taxation Office (ATO) position for several years has been a foreign beneficiary distributed a capital gain made by an Australian discretionary trust on an asset that is not taxable Australian property is assessed on the capital gain even though that would not occur if the foreign resident made the gain directly, or through a fixed trust. Some commentators disagree with that view, the Federal Court in a recent case agreed with the ATO position in what may be the first skirmish of a battle through the courts on this issue.
