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Are you seeking a fast paced, exciting and financially rewarding career?

Then you should investigate the opportunities available to you in the tax profession. A career in tax is respected, dependable, satisfying and profitable. The Taxation Institute represents all tax professionals including accountants, tax agents, academics, under and post grads, tax specialists, lawyers and bookkeepers. There are many jobs in the profession and many varied opportunities if you are interested in working in tax.

Once you have the qualifications, you can choose how and where you want to work. Local small businesses provide many personal and professional rewards, or there are opportunities to climb the corporate ladder with large corporate companies or large accounting firms who employ hundreds of tax and accounting professionals. Whatever your personal and professional goals are, there is a place for you in this arena.

A career in tax provides many exciting challenges as it is an ever changing environment that is affected by government legislation and policy.

Your clients can range from individuals with simple tax returns or small business needs right through to representing Australia’s leading businessmen and women and national and international corporations.

In order to boost your confidence and help bridge the gap between your university education and actual workplace application, you should also consider the Taxation Institute’s Foundation Tax course (see advert below). The course is renowned as the most practical in the market place and the most supportive with real life scenarios and tips that help you hit the ground running when you join the workforce.

We hope to see you in the tax profession in the future and hope that the Taxation Institute can support you with these endeavours.

Yours sincerely,

Noel Rowland               Janet Adams
CEO                              Membership Manager

Raftland Pty Ltd v Commissioner of Taxation [2008] HCA 21

The Raftland Trust “washed” $4 million of trust distributions through a loss trust whilst the trust’s controllers retained the benefit of nearly all sums distributed. Because the taxpayer’s financial and fiscal objectives differed, the High Court confirmed, this otherwise legally effective transaction should be set aside as a “sham”. This article examines the reasoning of members of the court and outlines some disturbing implications.

Introduction

In a decision handed down on 22 May 2008, the High Court of Australia restored “sham” findings made by Kiefel J at first instance in the Federal Court [2006] FCA 6 and unanimously dismissed the taxpayer’s appeal from a decision of the Full Federal Court [2007] FCAFC 4, which had affirmed Kiefel J’s judgement on other grounds. The Commissioner’s cross-appeal was allowed.

Kiefel J at first instance found that present entitlements created under the Raftland trust deed were an ineffective façade and contrary to the true intentions of the taxpayer and related parties. Legal effectiveness of the entitlements as parts of a tax-avoidance scheme was held to be only “apparent” and not sufficiently “substantive” to avoid sham characterization. Reasoning of the Full Court of the Federal Court was not followed where it upheld the validity of the trust distributions but denied present entitlement on the basis of anti-trust stripping provisions.

Anti-trust stripping provisions in the Income Tax Assessment Act 1936 (“ITAA36”) were applied in a limited way by Kiefel J, as confirmed by the High Court. Other default distribution provisions in the Raftland trust deed were treated as effective after sham characterization had denied present entitlement to a corporate default beneficiary which had access to trust losses. Various other persons became entitled to the distribution in default. The High Court confirmed both Kiefel J and the Full Court of the Federal Court that the entitlements of these individuals had sufficient “connection” with a reimbursement agreement to attract ITAA36 s100A. Present entitlement of all default beneficiaries was denied. This had the unintended result that the trustee of the Raftland trust was assessed pursuant to ITAA36 s99A.

To read this article in full, please click here

Dr Glover is a barrister practising in Melbourne and a part-time Associate Professor in the Faculty of Law at Monash University.

John practised as a barrister in the 1980s, in commercial areas and tax, having read with Allan Myers of counsel. He re-signed the roll in 2005 and works in all commercial areas - particularly taxation, trusts and equity law.

During time spent as an academic at Monash University, John published the books Equity, Restitution & Fraud (2004) and Commercial Equity: Fiduciary Relationships (1995), and over 40 book chapters and articles in refereed law journals.

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STUDENTS ARE TO IGNORE THE POTENTIAL APPLICATION OF GST TO THE FOLLOWING FACTS ABOUT IAN.

You have a client (Ian who is a solicitor with salary income of $140,000 for the 30 June 2007 year) who plans to conduct some passive investment and business activities in 2008 (in addition to his solicitor salary income).

The passive investment activities are to be negatively geared (that is Ian will borrow money to purchase the investments and for the first few years the interest repayments are projected to exceed the income generated from the investments). The passive investments include the purchase of a 20 year old house for $400,000 in South Brisbane, which Ian will rent out to tenants. With the rental property Ian projects a loss for tax purposes of $15,000 for the 30 June 2008 year and this will continue for the next four years. The other negative geared passive investment are $100,000 worth of shares in BHP Billiton using borrowed money – it is likely for the first five years that the interest repayments will exceed the franked dividends received on these shares. The imputation credits are likely to be worth $7,000 each year.

In preparation for his retirement, Ian proposes to start a small business of goat farming just outside Kingaroy. It is projected that the goat farming business will be generating losses for at least the first five years of operation. In about 6 years time [2014] it is likely that Ian will need to attract an outside investor to inject more equity into the goat farming business to expand its operations. Ian’s old school friend, Josephine, has indicated that she is interested in investing up to 50 per cent of the required extra capital in 2014.

In the goat farm’s first year of operation for the 30 June 2008 year, Ian expects the following expenses and receipts:

• Lease expense of $6,600 for three angora goats. The sum of future lease payments less interest of the leased goats would be $60,000.
• Lease expense of $55,000 for grazing land. The value of the land under the lease would be $600,000, though approximately one-third (1/3) of the land relates to a private family home Ian lives in.
• Manager fees of $4,400.
• Taxation advice of $6,600.
• Veterinary fees of $7,700.
• Truck depreciation of $5,000. Ian plans to purchase the truck secondhand for $44,000 on 1 September 2007. This is equivalent to the depreciation that could be claimed for taxation purposes.
• Sale of goats’ wool to a scarf manufacture ($nil for the first three years, and then a small amount of approximately $15,000 in years four and five)

In relation to the above facts about Ian, address each of the following:

1. Advise Ian on the implication of utilising the losses from the passive investments and the business investments over the next seven years if he initially holds these as a (i) ‘sole proprietor’ or (ii) through a ‘general partnership’ with his wife. Please ensure that you provide full explanations, and that you specify cases and section references to support your conclusions.
2. Advise Ian on the implication of utilising the losses from the passive investments and the business investments over the next seven years if he holds these through a ‘discretionary trust’, with the trustee given a wide discretion as to who the potential beneficiaries are (including Ian, his wife, children, companies that Ian might hold shares in and an old school friend Josephine). Please ensure that you provide full explanations, and that you specify cases and section references to support your conclusions.

To see the full set of questions and their suggested solutions, please click here.

Brett Freudenberg is a Taxation Lecturer at the Griffith Business School within the Department of Accounting, Finance and Economics, Griffith University (Australia). In addition to his taxation teaching, Brett is enrolled in a PhD researching tax transparent companies in the United States, the United Kingdom and New Zealand, and how Australian closely held businesses may benefit from their introduction. In 2006 Brett received a Fulbright Award, which saw him conducting research at the University of Illinois to analyse the proliferation of new business forms in the United States and their potential application for Australian businesses. Brett has published a number of refereed articles in leading Australian and international tax journals.

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Name: Jerome Tse ATIA
Employer: Mallesons, Melbourne
Position: Senior Associate

Jerome graduated from the University of Melbourne with an LLB/B.Com. He started work at PricewaterhouseCoopers and spent two and half years there. He moved onto Hall & Wilcox, Lawyers and spent around 3.5 years there before moving to Mallesons.

Apart from all that, Jerome is also on the Melbourne committee of a National not-for-profit organisation called goodcompany, which works like a seek.com.au to match skilled volunteers with needy charities.

Describe your current role:

I work in the tax group at Mallesons and am involved in high profile tax litigation matters, corporate restructures and M&A deals.

Describe your Taxation Institute committee involvement:

I’m on the Victorian education committee and also help organise some National roadshows.

What are your career highlights:

After many years of watching Law & Order (and for those of you who are mature aged students or into retro TV shows, LA Law) and seeing litigators as the only type of lawyer that you would ever want to be, I have to say my highlight was to be involved in and to instruct counsel before a special leave hearing of the High Court.

Why did you join the Taxation Institute?

When I first joined, I did so because work paid for it! Nothing like a good freebie, especially as a first year graduate.

As you get more involved in tax, you realise that you need to continually keep up to date with the law. Tax law is the only area of law that will have guaranteed major changes at least once a year (on Budget night) as well as regular changes in 99% of Parliamentary sittings.

Your clients rely on you to keep up to date with these substantial changes and the Taxation Institute’s seminars help you do that.

What advice can you give graduates?

It’s hard to know what area of law you want to get into when you are in your penultimate or final year of university. Give yourself as many opportunities (through articles, clerkships, vacation work, work experience etc) to experience different areas of law before you make your mind up. Talk to as many people who are already working in your areas of interest as possible.

Having said that, it is widely known that there is a huge shortage of tax lawyers and practitioners in Australia, so there will be many employment opportunities if you do end up choosing tax.

What do you do to unwind?

There’s a reason I bought a wine fridge, you know! But I’m not always drinking. I try and hoard my annual leave to do a big three or four week overseas holiday at least once every two years. But my mortgage repayments and rising interest rates are trying to ruin that idea.

Favourite holiday destination:

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Structured Education Program
Want to ensure your career moves forward after university? Foundation Tax >> Applied Tax >> Advanced Tax
	The Foundation Tax course is the answer. Presented by practitioners, this practical course covers key tax compliance areas ensuring you maximise your productivity and confidence in the workplace.   Foundation Tax – the next step in your tax career: http://sep.taxinstitute.com.au

Legislation

Places to locate legislation include the following sites:

• Austlii - Federal and State legislation
• ComLaw - Official Australian Government site
• ATO - Exhaustive site for tax and superannuation and related legislation; Includes EM’s and Second Reading speeches
• Federal Parliament - Bills, EM’s and Second Reading speeches; No Acts (go to ComLaw for these)

ATO

www.ato.gov.au

This website is extremely useful for students and practitioners and will reward your efforts to become familiar with the contents and how they are arranged.

• Public Rulings, Determinations etc.
• ATO Interpretive Decisions
• NTLG Minutes
• Tax, superannuation and related legislation. Also includes EM’s and Second Reading speeches

Journals

• Taxation in Australia
• The Tax Specialist
• Australian Tax Forum

The Treasury and Ministry Websites

• Treasury
• The Hon. Wayne Swan - Treasurer
• The Hon. Chris Bowen – Assistant Treasurer & Minister for Competition Policy & Consumer Affairs
• The Hon. Nick Sherry – Minister for Superannuation & Corporate Law

Related websites

• Taxation Institute of Australia
• ATO
• Board of Taxation
• Austlii
• ComLaw
• Treasury: Ralph Review
• Treasury: Review of Income Self Assessment
• Inspector-General of Taxation
• Federal Parliament - Canberra

Education Websites

You may have access to one or more of these sites via your educational institution – it’s a good idea to check this out.

• Thomson - Subscription needed for access
• CCH - Subscription needed for access
• LexisNexis - Subscription needed for access

Some Recent Cases of Interest

• Raftland Pty Ltd as trustee of the Raftland Trust v Commissioner of Taxation [2008] HCA 21 (22 May 2008)
• Raftland Pty Ltd v Commissioner of Taxation [2007] FCAFC 4 (31 January 2007)
• KAP Motors Pty Ltd v Commissioner of Taxation [2008] FCA 159
• KPA Motors Pty Ltd v Commissioner of Taxation [2008] FCA 159
• Bamford & Ors v FC of T [2008] AATA 322
• Malouf v Commissioner of Taxation [2008] FCA 497 (22 April 2008)
• St George Bank Limited v Commissioner of Taxation [2008] FCA 453 (11 April 2008)

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Various special offers from the Taxation Institute’s Business Alliance Partners are available to Student Members. Please click here to see special offers from Thomson, HSBC, Wine Box Warehouse and more.

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We welcome your feedback about ConTax and the receipt of proposed content contributions (i.e articles) for future editions. Contact ConTax.

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