Legal news
As previously reported in November 2017 (see here), the Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 introduced to the Parliament in October of that year dropped, without notice or explanation, reference to the proposed change to the CGT main residence exemption as that exemption applies to foreign residents.
On 7 February 2018 the Commonwealth Government introduced into Parliament legislation which if enacted will, subject to a transitional rule (discussed further below), require from 1 July 2018 that purchasers of taxable supplies of new residential premises or new subdivisions of potential residential land pay either 1/11, or 7% if the margin scheme applies, of the purchase price to the Australian Taxation Office (ATO) at settlement (the Legislation).
On 8 February 2018, the Government released for public consultation exposure draft legislation to implement the announcement in the 2017 Budget regarding integrity improvements to the small business capital gains tax (CGT) concessions.
The Victorian Court of Appeal recently successfully allowed an appeal from the Supreme Court concerning the GST treatment of a property sale. The decision, in fact both decisions, illustrate the importance of ensuring that the contract of sale correctly sets out whether the price includes or excludes GST and the required due diligence including legal advice needed before signing such contracts.
The Commissioner issued Draft Taxation Ruling TR 2017/D10 “Income Tax: Trust Vesting – amending the vesting date and consequences of a trust vesting” on 13 December 2017.
The views in TR 2017/D10 are not materially different from those expressed at recent public forums, although TR 2017/D10 states those views in an administratively binding form and provides further detail (including several examples).
The Australian Taxation Office (ATO) finalised Tax Determinations TD 2017/23 and TD 2017/24 on 13 December 2017. Released in draft in November 2016, the Determinations consider certain aspects of the interaction of the capital gains provisions and the trust assessing provisions in Division 6 as those provisions apply to foreign trusts. In particular, where a foreign trust makes a capital gain on assets that are not taxable Australian property (TAP) and distributes that gain to Australian beneficiaries.
In September 2017, an article written by Sladen Legal's Neil Brydges was published in the Tax Institute’s Journal, Taxation in Australia.
In Commissioner of Taxation v Miley, the Federal Court overturned decision of the Administrative Appeals Tribunal (AAT) concerning the share valuation method for the purposes of the maximum net asset value (MNAV) test in s 152-15 of the Income Tax Assessment Act 1997.
In the 2016-2017 Economic and Fiscal Outlook (http://www.budget.gov.au/2016-17/content/myefo/download/09-Appendix-A-Revenue.pdf), the Government announced that the Australian Taxation Office (ATO) would be allowed to report to credit reporting agencies the tax debt information of entities that don’t effectively engage with the ATO to manage those tax debts.
The recent case of FCT v Hacon illustrates the practical difficulties in obtaining a private ruling that depends on assumptions about future events - in particular, in the context of the application of Part IVA.
As previously reported in June this year, the Australian Taxation Office (ATO) published the Draft Taxation Determination TD 2017/D1 altering their previous published interpretation of the meaning of “distributes” for the purposes of the family trust distribution tax (FTDT).
The draft tax determination has now been published in its final form as TD 2017/20, confirming that FTDT can apply where there is a “distribution” to a person who is not a beneficiary of the trust.
Following an announcement in the 2017 Budget (see our article here), the Government on 6 November 2017 released exposure draft legislation which if enacted will, subject to a transitional rule (below), require from 1 July 2018 that purchasers of taxable supplies of new residential premises or new subdivisions of potential residential land pay 1/11 of the purchase price directly to the Australian Taxation Office (ATO) at settlement. The 1/11 of the purchase price is irrespective of whether the margin scheme or otherwise applies to calculate the actual GST liability.
In the 2017 Budget on 9 May 2017, the Government announced a proposed change to the CGT main residence exemption as that exemption applies to foreign and temporary tax residents. If enacted the announced change removed the CGT main residence exemption for foreign and temporary tax residents with effect from Budget night (9 May 2017).
The strength of the Commissioner of Taxation’s (Commissioner) hand in raising taxation assessments, and the difficulties taxpayers face in challenging a taxation assessment other than under Part IVC of the Taxation Administration Act 1953 (Administration Act) has again been illustrated in the Federal Court decision of Chhua v Commissioner of Taxation [2017] FCA 1127 (Chhua).
The concept of “present entitlement” within the meaning of section 97 of the Income Tax Assessment Act 1936 and validity of a “disclaimer of entitlement of income” were considered by the Full Federal Court in the recent case of Lewski v Commissioner of Taxation [2017] FCAFC 145 (Lewski) that illustrates the importance of having trust law and taxation law concepts properly aligned. Lewski was an appeal from a decision of the Administrative Affairs Tribunal.
The recent Full Federal Court cases of Bazzo v FCT [2017] FCAFC 139 illustrates the importance of drafting in agreements and, in particular, agreements with revenue authorities.
On 18 September 2017, the Government released for public consultation exposure draft legislation to amend the Income Tax Rates Act 1986 to confirm that companies that earn predominantly passive income will not be eligible for the lower company tax rate.
