Taxation in Australia

The Taxation in Australia Journal

Written by practitioners for practitioners Taxation in Australia® is continually ranked as Australia's leading tax journal.

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With a readership exceeding 35,000, Taxation in Australia is published 11 times per year and available exclusively to members in hard copy and online format, and now as an app on the Apple iPad and on Android tablets. This comprehensive publication features articles with a strong, practical approach to the latest tax issues and professional development. It is affectionately known as the Blue Journal.

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Articles from the current issue:

  • Tax tips: A control(led) backflip Add to cart

    01 Nov 2014

    The withdrawal by the Commissioner on 3 October 2014 of a six-year-old interpretative decision relating to the control of a discretionary trust has the potential to create substantial problems for some taxpayers.

  • Discretionary trust validity and default beneficiaries Add to cart

    01 Nov 2014

    Discretionary trusts have been popular as trading entities and for asset protection purposes in Australia for decades, for various tax-related reasons. This article examines the law relating to “takers in default”, ie persons who would annually take the income of the trust and who, at termination of the trust, would take the capital in default of the trustee exercising its powers in favour of other beneficiaries, in the context of exposure of the trust fund in the event of financial or marital misadventure by a beneficiary.

    The article considers the effect on the validity of a trust of the absence of default beneficiaries, in the light of the rules about certainty of objects and perpetuities, and the distinction between “mere powers” and “trust powers”.

  • Corporate residence: Has Esquire Nominees stood the test of time? Add to cart

    01 Nov 2014

    This article considers the timeliness of the decision in Esquire Nominees with regard to the test of central management and control when determining corporate residence in modern times. Given technological advancement allowing directors to attend virtual meetings from different parts of the world, it could be argued that the test is now outdated. Furthermore, Esquire Nominees was decided in the period when tax avoidance schemes thrived. One could argue that the case would be held differently if it were considered today.

    Notwithstanding, this article argues that the peculiar facts relevant to Esquire Nominees, the Commissioner’s views in TR 2004/15, and recent judicial authority from various common law jurisdictions suggest that Esquire Nominees would be similarly decided if it were considered today.

  • The income–capital distinction and how it applies to property development Add to cart

    01 Nov 2014

    TA 2014/1, recently released by the ATO, is concerned with the topic of trusts mischaracterising property development receipts as capital gains and, in doing so, accessing the 50% discount. It deals with arrangements where property developers use trusts to return the proceeds from development as capital gains instead of income. In essence, the trustee treats the gain as a discounted capital gain which can be distributed to beneficiaries in a unit or discr etionary trust. The A TO is concer ned that the gains should be r eturned as ordinary income rather than capital.

    This article examines the views set out in the taxpayer alert, and considers the possible taxation consequences of those views. The author concludes that the income–capital distinction remains of fundamental importance, and recommends that taxpayers and their advisers be on alert to the potential problems and review all relevant documentation with respect to trusts and property development.

  • Negative control Add to cart

    01 Nov 2014

    Equity investors in Australian infrastructure commonly seek protection of their investments by obtaining some certainty over the investment vehicle’s governance and its operations, through entering agreements covering these areas. The ATO has expressed the view that the protections employed by minority equity investors may confer on individual investors the control (“negative control”) of the vehicle and its operations. This article explores the ATO’s views and considers whether an alternative view is open, one which would provide greater certainty, and which would not have an unreasonably adverse impact on infrastructure investment.

    The article considers the ATO’s views on the concept of control in the context of the public trading trust regime, and the thin capitalisation regime. The authors then provide a deeper analysis, and conclude with a discussion of possible ways to undo or mitigate the uncertainty caused by the ATO’s position.

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