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June/July 2020
For information on upcoming events, visit taxinstitute.com.au/cpd.
PK pZPzX X OEBPS/bm02.xhtmlThe following cumulative index is for volume 54, issues (1) to (11). Listed below are the pages for each issue:
Vol 54(1): pages 1 to 52
Vol 54(2): pages 53 to 104
Vol 54(3): pages 105 to 160
Vol 54(4): pages 161 to 228
Vol 54(5): pages 229 to 284
Vol 54(6): pages 285 to 344
Vol 54(7): pages 345 to 410
Vol 54(8): pages 411 to 470
Vol 54(9): pages 471 to 532
Vol 54(10): pages 533 to 596
Vol 54(11): pages 597 to 658
A
ABN
failure to quote ...... 118, 119
reforms ...... 188, 191, 192
Absence rule ...... 421, 441, 442
Absolute entitlement ...... 607, 608, 630
Accelerated depreciation
COVID-19 measures ...... 538, 637
Accommodation
supply of, GST ...... 350, 351
Accountants
common law privilege ...... 20
Accountants’ concession ...... 20–24
“Active asset” defined ...... 451
Active asset test
small business CGT concessions ...... 241, 242, 353–355, 450–452, 542, 543
Adjacent land
CGT main residence exemption ...... 8–10
Adjusted Div 6 percentage ...... 138, 139
Administration
accountants’ concession ...... 20–24
Commissioner’s remedial power ...... 359–363
deceased estates ...... 431–436, 496–501
– IGTO review ...... 290
tax compensation claims ...... 289
Administration trusts
aggregating land interests (SA) ...... 256
Administrative Appeals Tribunal
Small Business Taxation Division ...... 137
Administrative review
judicial review distinction ...... 303
Advocate-General of Taxation
need for ...... 34, 35, 38
Advocates
Federal Court ...... 268–270
Affordable housing measures
downsizer contributions ...... 211–214
foreign investment amendments ...... 289, 290
main residence CGT exemption ...... 439
Age pension
downsizer contribution to superannuation ...... 212
Ageing Australians
redundancy payments ...... 233
tax regime and ...... 372
Aggregated dutiable transactions
land tax (SA) ...... 254–260
sale of hotel and land ...... 45–47
Aggregation principle
land tax (SA) ...... 255
Airport runway construction ...... 603, 604
Allied healthcare industry
payroll tax ...... 248–251
Allocation of income
Australia–US DTA ...... 563
Alternative assets
arm’s length debt test ...... 218–220
COVID-19, tax issues ...... 636–638
cross-border financing ...... 148–150
foreign superannuation funds ...... 454–456
intangible assets ...... 514–516
non-concessional MIT income ...... 99, 100
sovereign immunity ...... 454–456
Amalgamated loan
Div 7A, relieving discretion ...... 7
Amended assessments
derivation of income ...... 7
excessive, onus of proof ...... 111, 112
fraud or evasion ...... 604
income splitting ...... 168
interposed entity provisions ...... 111
tax disputes, burden of proof ...... 84
Amnesty
superannuation guarantee ...... 475, 538
Anshun estoppel ...... 270
Anti-avoidance rules
family trusts ...... 109, 289
intangible assets ...... 417, 514
testamentary trusts, minor beneficiaries of ...... 238, 240, 435
Anti-money laundering ...... 191
Appointors
changing ...... 444, 445
discretionary trust, powers ...... 263, 264
Appropriation powers
deceased estates ...... 317
Arm’s length conditions
debt/equity rules ...... 110, 148, 149
Arm’s length dealing
vacant land deductions ...... 556
Arm’s length debt test ...... 218–220, 637
Arm’s length tenants
SMSFs, rent relief due to COVID-19 ...... 632, 633
Arm’s length test
SMSFs ...... 633
Assessable income
from property, unearned income of minors ...... 239
land held for purpose of producing ...... 113
trusts, franked distributions ...... 138–141
whether proceeds of crime ...... 58, 59
Assessments — see Amended assessments; Default assessments
Asset protection
asset revaluation reserve strategies ...... 427–430
testamentary trusts ...... 297, 394–397, 433–435
Asset revaluation reserve strategies ...... 427–430
Assets — see also Active asset test
depreciation, COVID-19 measures ...... 538
used for carrying on a business ...... 353–355
Associate “sufficiently influenced” ...... 541, 542
AusIndustry
R&D disputes ...... 127–130
Australia
Australia–Israel DTA ...... 233
Australia–UK DTA ...... 291, 292
Australia–US DTA ...... 169, 489, 563
physical presence in, deductible gift recipients ...... 350
residency tests
– permanent place of abode ...... 6, 7, 90, 302–306
– trusts ...... 90, 91
sovereign immunity rules ...... 454–456
Australian Capital Territory
constructive ownership rules ...... 571, 572
land tax surcharge ...... 578
Australian Charities and Not-for-profits Commission ...... 80
Australian corporate tax entities
land acquisition ...... 204
Australian Electoral Commission ...... 77
Australian financial services licence ...... 214, 265, 385, 388
Australian Public Service Review ...... 108, 415
Australian resident trusts
foreign resident beneficiaries
– capital gains ...... 486, 607–611, 624–627
Australian residents
or non-residents ...... 302–306
Australian Securities and Investments Commission
remedial powers ...... 361
Australian Small Business and Family Enterprise Ombudsman ...... 137, 289
Australian Stock Exchange
junior exploration companies, tax losses ...... 174–177
Australian tax residents
trust ...... 90, 91
Australian Taxation Office
arm’s length debt test guidelines ...... 218–220
Black Economy Taskforce ...... 181
bushfire relief ...... 421, 422
COVID-19 reliefs ...... 633, 634, 638
cross-border financing ...... 148–150
electronic invoicing ...... 109, 192, 289
in-house facilitation ...... 135, 136
intangible assets ...... 514–516
legal professional privilege ...... 4
mobile strike teams ...... 119, 191
non-concessional MIT income ...... 99, 100
R&D disputes, resolving ...... 129, 130
residency, views on ...... 304
safe harbour rule ...... 378
SMSFs
– rent relief due to COVID-19 ...... 633, 634
– supervisory powers ...... 385
special leave to appeal ...... 302–306
statutory notices ...... 319
superannuation funds, large ...... 196–201
Tax Agent Portal ...... 604, 605
tax disputes ...... 31–39
– reliability of evidence ...... 319–322
tax gaps ...... 182
Tax Institute submissions to ...... 4, 108, 415
tax law administration ...... 162
Tax Practitioners Board, independence from ...... 232
test case litigation program ...... 136
trusts, foreign resident beneficiaries ...... 486–490
Australian Treasury ...... 415
black economy measures, consultation ...... 190, 191
corporate residency rules ...... 166
Tax Institute submissions to ...... 108, 287, 288, 348, 415
Australia’s Future Fund ...... 412
Automatically reversionary pensions ...... 447–449
B
Baby boomers
tax regime and ...... 372
wealth transfer ...... 307
Backpacker tax
Australia–UK DTA ...... 291, 292
Bakeries ...... 416
Bare trusts
BAS agent services ...... 601
Base erosion and profit shifting
Australia–Israel DTA ...... 233
digital services tax ...... 366
Basic turnover test
JobKeeper Stimulus Package ...... 600
Beneficial ownership
transfer of land to trustees ...... 508, 509
transparency ...... 190
Binding death benefit nominations ...... 41–44, 384, 386, 387, 448, 449, 505, 573
Binding financial agreements ...... 376
Black economy measures
ABN reforms ...... 188, 191, 192
cash payment limit ...... 190, 191
contractors ...... 192
cost to community ...... 182
description of black economy ...... 182
e-invoicing ...... 192
legislation summary ...... 193
non-compliant payments ...... 183
sharing/gig economy ...... 191, 192
single touch payroll system ...... 189, 190
summary and status ...... 194
tax culture change ...... 181
tax gaps ...... 182
taxable payments reporting system ...... 187–189
taxpayer burden ...... 118, 119
Black Economy Taskforce ...... 181–183
Black-hole expenses
deductions ...... 12, 602
penalty interest ...... 5
Board of Taxation review
CGT roll-overs ...... 349
corporate residency rules ...... 166
Borrowings — see Loans
Budget — see Federal Budget
Building and construction industry
taxable payments annual report ...... 118, 187
Building replacement
bushfire relief ...... 422
Buildings
whether different to dwellings ...... 205
Burden of proof — see Onus of proof
Bushfires
Rural Fire Service volunteers ...... 349
tax issues ...... 421, 422
Business continuity test ...... 5
Business register ...... 190
Butchers ...... 416
Buy-backs
hybrid securities ...... 476
C
Cafés ...... 416
Calumny ...... 273
Candidates
political
– deductibility of gifts to ...... 76–80
– deductibility of outlays ...... 80–82
Capacity charges
electricity supply ...... 602, 615–617
Capacity loss
power of attorney ...... 639
SMSF member enduring power of attorney ...... 573
Capital assets
employee labour costs ...... 349, 350
Capital expenditure — see also Expenditure characterisation
airport runway construction ...... 603, 604
capacity charges, electricity supply ...... 602
pre-paid rent ...... 603
Capital gains
assessable income from property, minors ...... 239
Australian trusts, foreign beneficiaries ...... 166, 167, 323, 324, 607–611, 624–627
foreign income tax offset ...... 168, 169, 291
from CGT event ...... 607–611
Capital gains or losses
choices, timing issues ...... 419, 420
Capital gains tax — see also CGT roll-over relief; Small business CGT concessions
choice-making rule ...... 419, 420
deceased estates ...... 309, 310, 435, 436
early stage innovation companies ...... 66
event A1 ...... 116, 239, 419, 420, 436, 439, 443, 482, 611
event C1 ...... 422
event C2 ...... 315, 316, 432, 436
event D1 ...... 239
event D2 ...... 116
event D4 ...... 116
event E1 ...... 315, 436, 548
event E5 ...... 315, 316, 435, 436, 611
event E7 ...... 435, 436
event G1 ...... 432
event I1 ...... 443, 627
event I2 ...... 443, 627
event J2 ...... 420
event J5 ...... 420
event J6 ...... 420
event K3 ...... 432, 436
foreign resident beneficiaries ...... 486–490, 562–566
main residence exemption — see Main residence CGT exemption
residency of trusts ...... 90, 91
roll-overs — see CGT roll-over relief
SMSFs, pension exemption ...... 511–513
Capital or revenue expenditure ...... 328–331
— see Expenditure characterisation
Capital proceeds
downsizer contributions ...... 214
Car expenses
creditable purpose ...... 416, 417
FBT, cents per kilometre rates ...... 540
work-related, deductions ...... 540
Carrying on a business
active asset test ...... 542, 543
companies claiming concessions ...... 11–13
holding land ...... 100
land used for ...... 353–355
vacant land ...... 113, 115, 295, 296, 451, 452, 552–559
Cash flow boost
COVID-19 measures ...... 539
SME employers ...... 638
Cash management strategies
COVID-19 tax issues ...... 637
Cash payment limits
black economy measures ...... 190, 191
Caterers ...... 416
Central banking activities ...... 456
Central management and control
COVID-19 tax issues ...... 638
trusts, residency of ...... 90, 91
CGT roll-over relief
Board of Taxation review ...... 349
market value ratios ...... 252, 253
relationship breakdown ...... 376, 377
special rules re asset ownership ...... 293
testamentary trusts ...... 435, 436
trusts avoiding tax ...... 290
trusts exploiting ...... 290
CGT small business exemptions — see Small business CGT concessions
CGT withholding
foreign residents ...... 360, 361, 476, 477
Children
JobKeeper eligibility ...... 600
Children’s tax ...... 434
Choices
CGT, timing issues ...... 419, 420
Circular trust distributions ...... 289
Cleaning services
taxable payments reporting system ...... 57, 187, 188
Client legal privilege
professional advisers ...... 20–24
Closely held trusts ...... 289
Collectable debts
IGTO reviews ...... 290
Commercial agreement
share purchase, VAT ...... 61–65
Commercial debt forgiveness ...... 233
Commercial leasing
SMSFs, COVID-19 effects on ...... 573–575
Commercial residential premises
sales, GST ...... 483, 484
Commissioner of Taxation
bushfire relief ...... 421, 422
business continuity test ...... 5
crowdfunding ...... 417
default assessments ...... 477
director penalty notice ...... 492
discretion
– COVID-19 tax policy submissions ...... 538
– franking credits, accessing ...... 380–383
– main residence disposal period ...... 151, 152
disputes, settling ...... 31–39
employee work expenses ...... 539, 540
general administration powers ...... 57
goods taken from stock for private use ...... 416
JobKeeper schemes ...... 601, 602
legal professional privilege ...... 4, 21
non-arm’s length arrangements ...... 417
penalty interest ...... 5
property decision tool, GST ...... 6
relieving discretion, Div 7A amalgamated loan ...... 7
remedial power ...... 359–363
residential rental property investments ...... 73
special leave to appeal, residence test ...... 302–306
statutory remedial power ...... 162
tax disputes with, onus of proof ...... 84–88
taxable payments reporting system ...... 57
working-from-home deductions ...... 601
Common reporting standard ...... 191
Community sheds ...... 416
Companies
carrying on a business ...... 11–13
concessions
– holding companies ...... 12
– inactive, with retained profits ...... 11
– investing available funds ...... 12
– investment companies ...... 12
– leasing activities ...... 12
– property investment companies ...... 12
– share investment companies ...... 12
tax disputes, burden of proof ...... 84–88
Company directors — see Director penalty regime
Compensation claims
small business ...... 289
Compensation payments
large superannuation funds ...... 200
Compliance — see Tax compliance
Concessional loans ...... 109, 289
Concessions — see also Small business CGT concessions; Tax concessions
accountants ...... 20–24
Conduct of claims
share purchase, VAT ...... 62
Confidentiality — see Legal professional privilege
Conflict transactions
powers of attorney ...... 639–641
Conflicts of interest
SMSF executors ...... 41–44
SMSF trustees ...... 503, 505, 506
Connected with Australia rules ...... 235
Consolidated groups
reporting obligations ...... 188
Construction industry
taxable payments annual report ...... 118, 187
Constructive ownership rules
Western Australia ...... 568–572
Consular functions ...... 456
Consumer-facing multinationals ...... 365, 368
Continuing professional education
proposed increase in hours ...... 474
Continuity of ownership test
ASX listed junior exploration companies ...... 174–177
Contract for sale
share purchase agreement, VAT ...... 61–65
Contractors
black economy measures ...... 188, 189, 192
Contracts
relevant, payroll tax ...... 248–250
Controlled foreign companies
associate “sufficiently influenced” ...... 541, 542
Core R&D activities ...... 125
Coronavirus — see COVID-19 measures
Corporate groups
aggregating land interests (SA) ...... 259, 260
constructive ownership rules (WA) ...... 568–572
Corporate income tax
tax bases ...... 288
Corporate limited partnerships
large superannuation funds ...... 199
Corporate residency rules
Board of Taxation review ...... 166
Corporate tax
global minimum tax rate proposal ...... 369, 370
multinational corporations ...... 365–371
“Corporate tax entity” defined ...... 204
Corporations
tax disputes, burden of proof ...... 84–88
tax gaps ...... 182
Cost base rules
CGT assets, deductibility ...... 290, 291
main residence CGT calculation ...... 442, 496
real property, deceased estates ...... 310, 311
Country-by-country reporting entities ...... 392, 393
Courier services
taxable payments reporting system ...... 57, 187, 188
Covenants
arm’s length debt test ...... 219
COVID-19 measures ...... 471, 472, 534, 598
cash flow boost ...... 539, 638
depreciation of assets ...... 538
instant asset write-off ...... 534, 538
JobKeeper ...... 598, 600, 638
real estate sector ...... 636–638
SMSFs
– rent relief ...... 632–635
– risk minimisation ...... 573–575
tax policy measures ...... 539
working-from-home deductions ...... 601
Credit ratings
arm’s length debt test ...... 219
Credit reporting bureaus
tax debt disclosures ...... 109, 164, 192, 289
Creditable purpose car expenses ...... 416, 417
Crime
proceeds of, assessable income ...... 58, 59
Cross-border financing
ATO guidance ...... 148–150
intra-group tax avoidance ...... 619
Cross-border transactions
foreign resident beneficiaries ...... 486–490, 562–566
intangible assets ...... 514–516
intra-group tax avoidance ...... 619–623
structuring ...... 562
Cross-staple arrangements
COVID-19 tax issues ...... 636, 637
non-concessional MIT income ...... 99, 100
Crowdfunding ...... 417
D
Data collection
black economy measures ...... 118, 119
R&D disputes ...... 130
taxable payments annual report ...... 118
Data reporting
large superannuation funds ...... 197
De minimus threshold ...... 208
Dealing at arm’s length
vacant land deductions ...... 556
Death — see Deceased estates
Death benefit dependants ...... 574
Death benefit distributions
SMSFs ...... 502–506, 574
Death benefit nominations ...... 505
Debt deductions ...... 149, 150
Debt/equity rules
arm’s length conditions ...... 110
transfer pricing rule interaction ...... 148, 149
Debt forgiveness ...... 233
Debts — see also Tax debts
disclosure to credit bureaus ...... 109, 164, 192
Deceased estates — see also Succession and estate planning
administration ...... 431–436, 496–501
CGT
– dwelling acquired from ...... 58
– real property ...... 309, 310
– reliefs ...... 435, 436
CGT main residence exemption ...... 10, 151, 152, 312–314, 443, 496–501
deeds of arrangement ...... 316, 317
foreign resident beneficiaries ...... 432
income tax ...... 309
joint tenants ...... 308, 311, 312
life estates ...... 436
life interests ...... 314–316
mere right of occupancy ...... 436
protected information of, disclosure ...... 361, 417
real property issues ...... 307–317
remainder interests ...... 314–316
small business CGT concessions ...... 312
SMSFs, executor conflicts of interest ...... 41–44
stamp duty ...... 312, 316
tax administration, IGTO review ...... 290
testamentary trusts ...... 312
– grandchildren ...... 433–435
– tax concessions to minors ...... 349, 374
– unearned income of minors ...... 238–240
Declaration of trust
partnership ...... 545–548
Deductible gift recipients
community sheds ...... 416
“in Australia” condition ...... 350
black economy measures ...... 118, 119, 183–186
black-hole expenses ...... 12, 602
car expenses, work-related ...... 540
CGT assets, cost base ...... 290, 291
COVID-19 measures
– depreciation of assets ...... 538
– loan agreements ...... 637
– working-from-home ...... 601
electricity supply, capacity charges ...... 602, 615–617
employee labour costs ...... 349, 350
employee work expenses ...... 291, 539, 540
entity start-up costs ...... 12
foreign currency losses ...... 170–173
payments to doctors ...... 351, 352
penalty interest ...... 5
political candidates
– gifts/donations to ...... 76–80
– outlays ...... 80–82
pre-paid rent ...... 603
prepaid expenses ...... 12
schemes to secure ...... 619–621
share loss ...... 543
vacant land ...... 73, 74, 109, 113–116, 164, 203–208, 289, 294–296, 552–559
Deeds of arrangement
deceased estates ...... 316, 317
families ...... 500, 501
Defamation ...... 235, 236
Default assessments
Commissioner’s assessment upheld ...... 477
tax disputes, burden of proof ...... 84–88
trust income ...... 110
Defective administration
compensation claims ...... 289
Delicatessens ...... 416
Dental practices
payroll tax ...... 248–251
Departure prohibition orders ...... 270
Dependants
SMSF death benefits ...... 574
Depreciation of assets
COVID-19 measures ...... 538
Derivation of income
amended assessments ...... 7
Developed land
sale of, margin scheme ...... 59
Development projects
COVID-19 tax issues ...... 637
Digital services tax ...... 366, 370
Digitalisation of tax ...... 56, 191, 192
Digitalised multinational corporations ...... 365, 366
Director penalty regime
GST liabilities ...... 491–495
penalty notices ...... 185, 189, 190
phoenixing offences ...... 109
Disaster relief
tax exemption on relief payments ...... 349
tax issues ...... 421, 422
Disclosure
intangible assets ...... 515
legal professional privilege ...... 476
protected information ...... 361, 417
tax debt information ...... 109, 164, 192, 289
Discount capital gain concessions
special rules re asset ownership ...... 293
Discretionary reversionary pensions ...... 448
Discretionary trusts — see also Family trusts
aggregating land interests (SA) ...... 255–259
appointors, powers ...... 263, 264
asset revaluation reserve strategies ...... 427–430
CGT small business reliefs ...... 353–355
distribution resolutions ...... 417, 418
foreign beneficiaries ...... 323, 324
– capital gains ...... 607–611, 624–627
foreign persons, land tax surcharge ...... 577–579
powers of trustees ...... 271–274
reform ...... 297, 298
Dispute resolution — see Tax disputes
Distribution of unrealised gains ...... 427–430
Diverted profits taxes
intangible assets ...... 417, 514
new rules ...... 366
Dividends
foreign resident beneficiaries ...... 489
Division 7A
amalgamated loan ...... 7
COVID-19 tax policy submissions ...... 538
trust revaluation reserve arrangements ...... 427, 429
unpaid present entitlement sub-trust arrangements ...... 58
year of loan ...... 111
Division 50 in Australia condition ...... 350
Documentation
binding death benefit nominations ...... 505
evidence, reliability ...... 319–322
legal professional privilege ...... 476
SMSF deeds ...... 448, 449
Domestic expenditure ...... 540
Domicile
resident of Australia ...... 6, 7
test of ...... 90, 302, 303, 305, 306
Dominant purpose
and anti-avoidance rules ...... 622
Donations
to political candidates, deductibility ...... 76–82
Double tax agreements
Australia–Israel ...... 233
Australia–UK ...... 291, 292
Australia–US ...... 169, 489, 563
Downsizer contributions ...... 211–214
Drilling units
offshore, transfer pricing ...... 475, 476
Duress ...... 376
Dutiable property ...... 480
Dutiable transactions
aggregation of assets ...... 45–47
goodwill, transfer of ...... 479–482
Duty exemption
transfer of land to trustees (Vic) ...... 508, 509
Dwellings
CGT main residence exemption ...... 8, 10, 496–501
substantial and permanent structures ...... 203–208
E
E-invoicing ...... 109, 192, 289
Early refund scheme
VAT, Peru ...... 61
Early release schemes
superannuation ...... 388–391
Early stage innovation companies
tax incentives ...... 66–68, 166
Early stage test ...... 66
Economic recovery package
COVID-19 ...... 471, 538
Education direction
superannuation guarantee rules ...... 93
Elections
deductibility
– gifts/donations to political candidates ...... 76–80
– political candidate outlays ...... 80–82
Electoral expenditure ...... 81, 82
Electricity industry
capacity charges, capital expenditure ...... 602, 615–617
Electronic invoicing ...... 109, 192
Employee share trusts ...... 234, 235
Employees
guide for work expenses ...... 57, 58
labour costs, deductibility ...... 349, 350
living-away-from-home allowance ...... 540, 541
superannuation guarantee ...... 92
work expense deductions ...... 291, 539, 540
work-related car expenses ...... 540
Employer entities
basic turnover test ...... 600
Employer obligations
single touch payroll system ...... 184, 189, 190
– salary sacrifice integrity measures ...... 109
– superannuation guarantee ...... 92–94
Employers
COVID-19 cash flow boost ...... 539
superannuation guarantee amnesty ...... 475, 538
Employment
derivation of income ...... 7
Enduring power of attorney
scope of powers ...... 639
SMSF members ...... 573
SMSFs ...... 43, 44
Enforceable reversionary pensions ...... 447–449
Equity derivatives
taxation, superannuation funds ...... 198, 199
Estate planning — see Succession and estate planning
Estoppel by conduct/convention
ATO tax disputes ...... 31, 39
Event-based reporting
large superannuation funds ...... 196
Evidence
foreign currency loans ...... 171, 172
intangible assets ...... 515
margin scheme ...... 59
ownership of residence ...... 95–97
R&D tax incentives ...... 128, 129, 132, 133
share farming agreement ...... 144–146
tax disputes
– reliability ...... 319–322
– with Commissioners ...... 84–88
Excepted trust income
tax concessions for minors ...... 349, 374–376, 434, 435
Exceptional circumstances
vacant land deductions ...... 294, 295, 555
Excluded foreign residents ...... 440
“Excluded instalment trust” defined ...... 629
Excluded trusts
aggregating land interests (SA) ...... 255
Exempt current pension income
SMSFs ...... 512
Exemptions — see also Main residence CGT exemption
Disaster Recovery Funding Arrangements ...... 349
“in Australia” condition ...... 350
land tax, primary production land ...... 144
SMSFs, pension exemption ...... 511–513
Exit strategies
discretionary trusts ...... 427–430
SMSF members ...... 574, 575
Expenditure characterisation
Division 50 “in Australia” condition ...... 350
electricity supply capacity charges ...... 602, 615–617
gaming machine entitlements ...... 292, 293, 328–331
medical practices ...... 351, 352
pre-paid rent ...... 603
Expense test
early stage innovation companies ...... 166
Explanatory memoranda
interpretive guidance ...... 415
Exploration companies
ASX listed, tax losses ...... 174–177
Extent of creditable purpose
car expenses ...... 416, 417
F
Facilities, use and trust model
payroll tax, medical practices ...... 248, 250
Fairness of tax system ...... 624
Family home
deceased estates ...... 496–501
Family law
asset protection ...... 394–397
CGT roll-overs ...... 376, 377
Family trust election ...... 380
Family trusts — see also Discretionary trusts
anti-avoidance rule ...... 109, 289
disputes ...... 271–274
distributions to testamentary trusts ...... 375
residential rental property investments ...... 73, 74
Farmers
building replacement, bushfire relief ...... 422
redundancy payments ...... 233
Farming
land tax (Vic) ...... 144–146
Federal Budget 2011-12 ...... 435
Federal Budget 2012-13 ...... 435
Federal Budget 2017-18
main residence CGT exemption ...... 439
Federal Budget 2018-19 ...... 73, 201, 238
discretionary trust reform ...... 297, 298
excepted trust income status ...... 435
illegal phoenixing ...... 492
significant global entities definition ...... 392, 393
testamentary trusts ...... 349, 374
vacant land deductions ...... 294
Federal Budget 2019-20 ...... 56, 201
Federal Budget 2020-21
deferred date ...... 539
TTI submission ...... 288
Federal Court
tax agents, assistance at hearings ...... 268–270
Federal election 2019 ...... 56
gifts/donations to candidates ...... 76–80
timetable ...... 78
Fettering ...... 447, 448
Financial agreements
estate planning ...... 376, 377
Financial products
SMSF investment strategies ...... 265, 266
Financial risk
arm’s length debt test ...... 219
Financial services advice
downsizer contributions ...... 214
Financial settlements
family law asset protection ...... 394–397
Fit and proper person test
tax agents ...... 111
Fixed interest in trust holding ...... 381
Fixed trusts
aggregating land interests (SA) ...... 255–257
Food and drink expenses
fringe benefits tax ...... 540, 541
Foreign companies
land tax surcharge ...... 577
Foreign controlled consolidated groups
multinational tax avoidance ...... 110
Foreign currency loans ...... 170–173
Foreign exchange gains and losses
taxation, superannuation funds ...... 199
Foreign income
Australian trusts ...... 90
penalty interest ...... 5
source concept ...... 167, 324
tax offsets ...... 168, 169, 199, 291
Foreign Investment Review Board
approvals, COVID-19 tax issues ...... 637, 638
CGT amendments ...... 289, 290
foreign superannuation funds ...... 454–456
large superannuation funds ...... 199
trusts, capital gains ...... 486–490, 562–566
Foreign persons
land tax surcharges ...... 577–579
Foreign resident beneficiaries
cross-border transactions ...... 486–490, 562–566
deceased estates ...... 499, 500
discretionary trusts ...... 577–579
– capital gains ...... 607–611, 624–627
Foreign resident trusts
owning Australian non-TAP assets ...... 562, 566
Foreign residents
capital gains, resident trusts ...... 166, 167, 323, 324, 486, 487, 607–611
CGT withholding ...... 476, 477
– Commissioner’s remedial power ...... 360, 361
deceased estates ...... 443
– beneficiaries of ...... 432
– legal personal representative ...... 433
definition ...... 440
excluded ...... 440
investments, CGT amendments ...... 289, 290
land tax surcharges ...... 577–579
life events test ...... 440
main residence CGT exemption abolition ...... 439–443, 538
mobile offshore drilling units, transfer pricing ...... 475, 476
non-real property dwellings ...... 443
permanent place of abode ...... 302–306
source concept ...... 167, 324
terminal medical condition ...... 440
Foreign source income
Australian trusts ...... 90
penalty interest ...... 5
source concept ...... 167, 324
Foreign superannuation funds
new eligibility conditions ...... 454–456
Foreign trusts
distribution to resident beneficiary ...... 433
Foreign vendors
withholding tax, property sales ...... 109
Forestry operation
active asset test ...... 542, 543
Forgiveness of debts/loans ...... 170, 171, 233
France
digital services tax ...... 370
Franked distributions
received by trustee of trust ...... 138–141
Franking credits
accessing through unit trusts ...... 380–383
Fraud
conviction quashed ...... 58, 59
on a power ...... 264
Fraud or evasion
summons set aside ...... 604
Fringe benefits tax
cents per kilometre rates ...... 540
food and drink expenses ...... 540, 541
remote area concessions ...... 475
Uber, proposed exemption ...... 230
Fruiterers ...... 416
Fund manager entities
JobKeeper Stimulus Package ...... 638
Future Fund ...... 412
G
Gaming machine entitlements
capital or revenue expenditure ...... 292, 293, 328–331
General administration powers
Commissioner of Taxation ...... 57
General anti-avoidance rule
intangible assets ...... 514
General interest charge
tax dispute re remission ...... 31–39
General purpose financial statements ...... 392, 393
GenTrader Agreements ...... 602, 615, 616
Gifts
to political candidates, deductibility ...... 76–80
Gig economy reporting ...... 191, 192
Globalisation
digitalisation of tax ...... 56
minimum tax rate proposal ...... 369, 370
Going concern value
and goodwill ...... 29
Goods and chattels
constructive ownership rules (WA) ...... 568–572
Goods and services tax
creditable purpose, car expenses ...... 416, 417
director penalties ...... 491–495
hotel bookings in Australia, offshore sales ...... 110
intangibles ...... 235
property decision tool ...... 6
real property sales ...... 483, 484
supply of accommodation ...... 350, 351
tax bases ...... 288
tax reform ...... 348
taxable payments annual report ...... 118
Uber tax issues ...... 230
Goods taken from stock for private use ...... 416
Goodwill
gaming machine entitlements ...... 329–331
transfer, whether dutiable ...... 479–482
valuation ...... 27–30
Government tenders ...... 190
Graduality regime
VAT discount, Peru ...... 62
Grandchildren
testamentary trusts for ...... 433–435
Grandfathered assets
residential rental property investments ...... 75
Group structures
cross-border refinancing ...... 619
JobKeeper Stimulus Package ...... 600
H
Harmonisation of tax
multinational corporations ...... 365–371
Healthcare industry
payroll tax ...... 248–251
Henry review ...... 288, 348
High wealth individuals ...... 182
Highly visible mobile strike teams ...... 119, 191
Holding companies ...... 12
Holding costs
land ...... 204
Holding deposits
residential rental property investments ...... 74
Holding land ...... 553
Holding trusts
Home office expenses ...... 540
creditable purpose car expenses ...... 416, 417
Hotel and land sale
aggregated dutiable transactions ...... 45–47
Hotel bookings in Australia
multinational tax avoidance ...... 110
Hotel industry
gaming machine entitlements ...... 292, 293, 328–331
Housing affordability measures
downsizer contributions ...... 211–214
foreign investment amendments ...... 289, 290
main residence CGT exemption ...... 439
Hybrid securities
buy-back ...... 476
I
Illegal economy ...... 182
Immunity
legal professional privilege ...... 476
“In Australia” condition
deductible gift recipients ...... 350
In-house asset test
SMSFs ...... 633
In-house assets
SMSF investment via ...... 142, 209, 210
In-house facilitation
ATO ...... 135, 136
In specie contributions
downsizer contributions ...... 214
In use or available for use ...... 553
Inactive companies
with retained profits ...... 11
Income allocation
Australia–US DTA ...... 563
Income of trust estate
franked distributions ...... 138–141
Income or capital expenditure
medical practices ...... 351, 352
Income splitting
amended assessment ...... 168
unearned income of minors ...... 238–240
Income tax
deceased estates ...... 309
tax bases ...... 288
Income tax gaps
ATO identification of ...... 182
Indemnified VAT receivable
tax indemnities, Peru ...... 62–64
Independent candidates
political, deductibility of gifts ...... 77–79
Independent contractors ...... 491–495
Independent purpose
substantial and permanent structure ...... 553
Indirect tax zone
GST ...... 235
Individual taxpayers
whether residents of Australia ...... 302–306
Influence test ...... 454–456
Informal economy ...... 182
Information disclosure
deceased estates ...... 361, 417
protected information ...... 235, 236
tax debts ...... 109, 164, 192
Information-gathering
common reporting standard ...... 191
evidence for tax disputes ...... 319–322
legal professional privilege ...... 22, 23
tax debt disclosures ...... 109, 164, 192
Information technology services
taxable payments reporting system ...... 57, 187–189
Infrastructure sector
COVID-19, tax issues ...... 636–638
Inheritances — see Succession and estate planning
Innovation
Israel’s knowledge-based economy ...... 233
Innovation and Science Australia
R&D disputes ...... 124
Innovation test
tax incentives ...... 66
Input tax credits
car expenses ...... 416, 417
vacant land purchases ...... 605
Insolvency
director liability, GST ...... 491–495
Inspector-General of Taxation
collectable debt levels ...... 290
tax debt disclosures ...... 164, 192
tax profession report ...... 54
Inspector-General of Taxation and Taxation Ombudsman
deceased estate administration ...... 290
Instant asset write-off
COVID-19 measures ...... 538, 637
COVID-19 tax policy submissions ...... 538
medium businesses ...... 13
small business entities ...... 12, 13
Insurance
SMSF investment strategies ...... 265, 266
Intangible assets
cross-border arrangements ...... 514–516
schemes relating to ...... 417
Intangibles
GST ...... 235
Integrity measures
government procurement ...... 190
non-concessional MIT income ...... 99, 100
superannuation guarantee ...... 93, 289
tax avoidance ...... 109
testamentary trusts
– excepted trust income status ...... 435
– minor beneficiaries of ...... 238–240, 435
– reforms ...... 297, 298
vacant land deduction changes ...... 113, 203, 204, 289, 294
Intellectual property
and goodwill, valuation ...... 29
Interest
foreign resident beneficiaries ...... 489
Interest deductibility
trust distributions, unrealised gains ...... 429, 430
Intergenerational wealth transfer ...... 372, 431
Interlocutory application
McKenzie friend ...... 268–270
International arrangements — see Cross-border transactions
International tax agreements — see Double tax agreements
International tax planning
foreign resident beneficiaries ...... 486–490, 562
Interposed companies
market value ratios, CGT roll-over relief ...... 252, 253
Interposed entity provisions
Div 7A loan ...... 111
Investigation services
taxable payments reporting system ...... 57, 187, 188
Investment
SMSF strategies ...... 265, 266
start-up companies, tax incentives ...... 66–68
taxation, superannuation funds ...... 198, 199
unit trusts, SMSFs investing via ...... 142, 143, 209, 210
Israel
Australia–Israel DTA ...... 233
Issue estoppel ...... 270
J
JobKeeper Stimulus Package ...... 534, 598
amendments ...... 600
BAS agent services ...... 601
children’s eligibility ...... 600
Commissioner’s guidelines ...... 601, 602
fund manager entities ...... 638
group structures ...... 600
rent relief and SMSFs ...... 573–575
Joint appointors of trusts ...... 264
Joint tenants
deceased estates ...... 308, 311, 312
Judicial review
administrative review distinction ...... 303
Junior exploration companies
ASX listed, losses ...... 174–177
large superannuation funds ...... 197
L
Labour costs
employees, deductibility ...... 349, 350
Labour underpayments ...... 191
Land — see also Vacant land
active asset test ...... 353–355, 450–452
in use or available for use ...... 553
property development measures ...... 203–208
savings/building funded by loan ...... 206
transfer to trustees (Vic) ...... 508, 509
used for carrying on a business ...... 353–355, 451, 452
used in business rather than enterprise ...... 207
Land banking ...... 113
Land contract
aggregated dutiable transactions ...... 45–47
Land rich ratio
goodwill valuation ...... 27–30
Land tax
aggregation changes (SA) ...... 254–260
primary production land (Vic) ...... 144–146
surcharges, foreign persons ...... 577–579
Land Titles Office ...... 307, 308
Landholders
constructive ownership rules (WA) ...... 568–572
Landlords
rent relief due to COVID-19 ...... 632–635
Landowners
land tax (SA) ...... 254, 256
Lease, hire or license
vacant land ...... 295, 296, 554, 556
Lease agreement
lease of McDonald’s premises ...... 479, 480
Lease-in, lease-out arrangements
mobile offshore drilling units ...... 475, 476
Leased residential properties
negative gearing ...... 73–75
Leasing activities
companies ...... 12
Legal advice privilege ...... 21
Legal personal representatives
deceased estates
– cost base rules ...... 496
– LPR is a foreign resident ...... 433
– probate applications ...... 308, 309
– tax liabilities ...... 431–436
SMSFs ...... 573, 574
Legal professional privilege
ATO requirements ...... 4
claiming ...... 22
Commissioner’s powers ...... 21
professional advisers ...... 20
right to recover documents ...... 476
tax disputes ...... 21
waiver ...... 22
Legislative instruments
Commissioner’s remedial power ...... 360, 361
Licence agreement
McDonald’s ...... 479, 480, 603
Life estates ...... 436
Life events test ...... 440
Life interests
deceased estates ...... 314–316
Life tenants ...... 436
Limited recourse borrowing arrangement
SMSFs, rent relief due to COVID-19 ...... 633, 634
Liquidation
deceased estates, sale of shares ...... 431, 432
director liability, GST ...... 491–495
Litigation privilege ...... 21
Living-away-from-home allowance
FBT, food and drink expenses ...... 540, 541
Loan agreements
COVID-19 tax issues ...... 637
penalty interest ...... 5
Loans — see also Debt/equity rules
concessional ...... 109, 289
cross-border refinancing ...... 619–621
Div 7A ...... 7, 111
– COVID-19 tax policy submissions ...... 538
downsizer contributions ...... 214
foreign currency ...... 170–173
refinancing principle ...... 430
trust distributions, unrealised gains ...... 429, 430
Look-through approach
Loss recoupment rules ...... 174
Losses
ASX listed junior exploration companies ...... 174–177
foreign currency, deductibility ...... 170–173
shares, deductible ...... 543
Losses or outgoings
vacant land deductions ...... 116, 553
Lump sum payments
SMSFs ...... 575
Luxury car tax ...... 110, 233, 491, 492
M
Main purpose
and anti-avoidance rules ...... 622
Main residence
downsizer contribution ...... 211–214
Main residence CGT exemption
adjacent land ...... 8–10
bushfire relief ...... 421, 422
choices, timing issues ...... 419
deceased estates ...... 58, 312–314, 443, 496–501
disposal of dwelling
– discretionary trust ...... 59, 60
– from deceased estate ...... 58
downsizer contributions ...... 212, 213
foreign investment amendments ...... 289, 290
foreign residents, abolition ...... 439–443, 538
ownership of residence ...... 95–97
pre-CGT dwellings ...... 151, 152, 496, 497
right of occupancy ...... 436
tax dispute, evidence ...... 320–322
Managed investment trusts
COVID-19 tax issues ...... 636, 637
non-concessional income ...... 99, 100
residential rental property investments ...... 74
Margin schemes
sale of developed land ...... 59
valuations ...... 476
Market value
definition ...... 252
goodwill ...... 27–30
ratios, CGT roll-over relief ...... 252, 253
Market value discounts ...... 252, 253
Marriage breakdown — see Relationship breakdown
Maximum net asset value test ...... 352
“McDonald’s system” defined ...... 479
McKenzie friend ...... 268–270
Meal allowances
overtime, reasonable amounts ...... 110
Medical practices
capital or income expenditure ...... 351, 352
payroll tax ...... 248–251
Medium businesses
instant asset write-off ...... 13
Member Profile
Joshua Cardwell ...... 19
Leanne Connor ...... 180
Rhys Cormick ...... 246
Amanda Donald ...... 357
Julianne Jaques ...... 551
Jacquii Reeves ...... 122
Kyriacos Savvas ...... 301
Paul Sokolowski ...... 72
Adrian Varrasso ...... 614
Mental capacity loss ...... 573, 639
Mere right of occupancy
deceased estates ...... 436
Migration of intangible assets ...... 515
Minimum interests rules
ASX listed junior exploration companies ...... 177
Minors
testamentary trusts ...... 238–240, 349, 374, 433–435
Mixed businesses ...... 416
Mobile offshore drilling units
non-resident-owned, transfer pricing ...... 475, 476
Mobile strike teams ...... 119, 191
Money laundering ...... 191
Motor vehicle expenses
creditable purpose ...... 416, 417
FBT, cents per kilometre rates ...... 540
work-related, deductions ...... 540
Multinational corporations
consumer-facing ...... 365, 368
corporate tax, harmonisation ...... 365–371
digitalised ...... 365, 366
minimum tax rate proposal ...... 369, 370
significant global entities definition ...... 392, 393
Multinational tax avoidance
foreign controlled consolidated groups ...... 110
hotel bookings in Australia ...... 110
luxury cars, refurbished ...... 110
thin capitalisation ...... 110
Multiple entry consolidated groups
reporting obligations ...... 188
N
National Innovation and Science Agenda ...... 66
Natural disasters
relief payments, tax exemption ...... 349
tax issues ...... 421, 422
Nature of expenditure — see Expenditure characterisation
Negative gearing
restrictions ...... 73–75
Negligible test
Commissioner’s remedial power ...... 360, 361
New residential premises
available for rent ...... 74
sales, GST ...... 484
New South Wales
aggregated dutiable transactions ...... 45–47
constructive ownership rules ...... 571, 572
land tax surcharge ...... 578
New taxing right
rules for multinationals ...... 366
New Zealand
tax debt disclosures ...... 164
Non-arm’s length arrangements
intangible assets ...... 417, 514
Non-arm’s length income
superannuation ...... 233, 234, 325, 326
Non-compliant payments
deductions ...... 183–186
Non-concessional MIT income
ATO guidance ...... 99, 100
Non-geared unit trusts
SMSF investment via ...... 142, 143
Non-real property dwellings
foreign residents ...... 443
Non-residents — see Foreign residents
Northern Territory
constructive ownership rules ...... 571, 572
Not inconsistent test
Commissioner’s remedial power ...... 360
O
Occupancy
mere right of ...... 436
OECD
multinational taxation harmonisation plan ...... 365–371
Offshore drilling units
non-resident-owned, transfer pricing ...... 475, 476
Older Australians
redundancy payments ...... 233
One hundred-and-eighty-three-day test ...... 291, 292, 302, 305
One hundred-point innovation test ...... 66
Onus of proof
excessive assessment ...... 111, 112
fraud or evasion ...... 604
margin scheme ...... 59
share farming agreement ...... 145
tax disputes with Commissioner ...... 84–88
Optometrist practices
payroll tax ...... 248–251
Ordinary time earnings
superannuation guarantee ...... 92, 93
Oslo manual
principles-based innovation test ...... 67
Overtime meal allowances
reasonable amounts ...... 110
Ownership
ASX listed junior exploration companies ...... 174–177
constructive ownership rules (WA) ...... 568–572
Ownership interest
CGT main residence exemption ...... 59, 60, 95–97, 440, 441
P
Parliament elections — see Elections
Parliamentary scrutiny
Commissioner’s remedial power ...... 360
Partnerships
personal services income ...... 167
residential rental property investments ...... 74
tax avoidance ...... 109
whether a dutiable declaration of trust ...... 545–548
“Payable” defined ...... 63, 64
PAYG withholding
director liability ...... 491, 492, 494
employer obligations ...... 118, 119, 190
voluntary disclosure ...... 184, 185
Payroll tax
COVID-19 reliefs ...... 638
medical practices ...... 248–251
Penalties
COVID-19 tax policy submissions ...... 538
deferment of proceedings ...... 604
director penalty notices ...... 492, 493
foreign currency loans ...... 171, 173
phoenixing offences ...... 109
significant global entities ...... 189, 392, 393
superannuation early release schemes ...... 388–391
superannuation guarantee rules ...... 93
tax scheme promoters, R&D incentives ...... 130–132
Penalty interest
loan agreements ...... 5
Pension exemption
SMSFs ...... 511–513
Pension tax bonus
large superannuation funds ...... 199, 200
Pensions
reversionary ...... 447–449
Permanent establishments
COVID-19 tax issues ...... 638
Permanent place of abode
whether resident of Australia ...... 6, 7, 90, 302–306
Personal income tax cuts ...... 348
Personal marginal tax brackets ...... 56
Personal services income
black economy measures ...... 191
results test ...... 167, 215–217
unrelated clients test ...... 167, 168, 215–217
Peru
tax indemnities, VAT ...... 61–65
Phoenixing ...... 109, 181, 182, 492
Place of abode — see Permanent place of abode
Political candidates
deductibility of gifts to ...... 76–80
deductibility of outlays ...... 80–82
Portfolio interest test ...... 454–456
Powers of attorney
estate planning ...... 639–641
Pre-CGT dwellings
main residence exemption ...... 151, 152, 496, 497
Pre-nuptial agreements ...... 376
Preference share investment ...... 619–622
Prepaid expenses
deductions, small business entities ...... 12
rent, capital expenditure ...... 603
Presently entitled beneficiaries
foreign residents, non-TAP gains ...... 607–611
Primary producers
Disaster Recovery Funding Arrangements ...... 349
Primary production land
land tax (Vic) ...... 144–146
vacant land deduction exclusion ...... 295, 296, 555, 556
Principal purpose
and anti-avoidance rules ...... 622
Principles-based innovation test ...... 67, 68
Private companies
market value ratios, CGT roll-over relief ...... 252, 253
UPE sub-trust arrangements ...... 58
Private expenditure ...... 540
Privilege — see Legal professional privilege
Probate
deceased estates ...... 308, 309
Productivity Commission
remote area tax concessions ...... 475
Professional conduct
tax professionals ...... 232
Professional development ...... 3, 474
Professional indemnity insurance ...... 384
Professional services
taxable payments reporting system ...... 188, 189
Profit-making undertaking
vacant land deductions ...... 556–558
Project scope
airport runway construction ...... 603, 604
Promissory note
cross-border financing ...... 619–621
Promoters of tax exploitation schemes
R&D disputes ...... 130–132
Property
assessable income from, minors ...... 239
characterising nature of ...... 483, 484
Property decision tool
GST ...... 6
Property development
deceased estates, income tax ...... 309
SMSFs ...... 541
substantial and permanent structures ...... 203–208, 557
vacant land deductions ...... 556, 557
Property investment
companies carrying on a business ...... 12
non-residents, CGT amendments ...... 289, 290
Property investment companies ...... 12
Property sales
characterisation for GST ...... 483, 484
foreign vendors, withholding tax ...... 109
Property settlement
ownership of residence ...... 95–97
Protected information ...... 235, 236
disclosure, deceased estates ...... 361, 417
Public financial entity ...... 455, 456
Public interest
legal professional privilege ...... 20
tax agent registration, cancellation ...... 6
Public moneys ...... 455
Public non-financial entity ...... 455, 456
Public policy
statutory officer decisions, reliance on ...... 37
Public trading trust ...... 352
Public unit trusts
residential rental property investments ...... 74
Purpose
and anti-avoidance rules ...... 622
Q
Queensland
constructive ownership rules ...... 571, 572
R
Rates of tax
land tax (SA) ...... 261
reform ...... 348
R&D
building replacement, bushfire relief ...... 422
COVID-19 tax policy submissions ...... 538
innovation test ...... 66
tax incentive disputes ...... 124–133
Real estate sector
COVID-19, tax issues ...... 636–638
Real property
deceased estates ...... 307–317
sales, GST ...... 483, 484
Reasonable amounts
travel and overtime meal allowances ...... 110
Reasonable care
foreign currency loans ...... 171, 172
Reasonable test
Commissioner’s remedial power ...... 360
Reconstruction arrangements
transfer pricing ...... 332–334
Record-keeping
highly visible mobile strike teams ...... 119
modernisation ...... 190
R&D tax incentives ...... 128, 129, 132
transfer pricing ...... 235
vacant land deductions ...... 295
Redundancy payments ...... 233
Refinancing — see Loans
Reforms
Henry review ...... 348
land tax, aggregation changes (SA) ...... 254–260
Registered charities
community sheds ...... 416
Related corporations
aggregating land interests (SA) ...... 255, 259
Related entities ...... 208
Related party financing
cross-border debt ...... 148–150
Related party tenants
SMSFs, rent relief due to COVID-19 ...... 633
Related party test
residential rental property investments ...... 74
Related party transfers
downsizer contributions ...... 213, 214
Related unit trusts
SMSF investment via ...... 142, 209, 210
Relating to holding land ...... 114
Relationship breakdown
CGT roll-overs ...... 376, 377
family law asset protection ...... 394–397
ownership of residence ...... 95–97
SMSF death benefits ...... 448
Relevant contracts
medical practices, payroll tax ...... 248–250
Relieving discretion
Div 7A amalgamated loan ...... 7
Remainder interests
deceased estates ...... 314–316
Remedial power of Commissioner ...... 359–363
Remote area tax concessions
Productivity Commission ...... 475
Renovation
residential rental property, unoccupied ...... 75
Rent
pre-paid capital expenditure ...... 603
Rent from land investment
concessional MIT income ...... 100
Rent relief
COVID-19 measures
– SMEs ...... 636
– SMSFs ...... 632–635
Rental properties
residential
– negative gearing ...... 73–75
– non-commercial losses ...... 207
Replacement assets
bushfire relief ...... 422
Reporting obligations
black economy measures ...... 119, 187–189
courier, cleaning and other services ...... 57, 187–189
downsizer contribution ...... 212
foreign landowners ...... 578
margin scheme ...... 59
sharing economy ...... 190
significant global entities ...... 392
Res judicata ...... 270
Research and development — see R&D
Resettlement
trust deed variations ...... 445
Residence — see also Main residence CGT exemption
deceased estates, sale of shares ...... 431, 432
Residence tests ...... 302–306
Residency
backpacker test case ...... 291, 292
corporations, Board of Taxation review ...... 166
COVID-19 tax issues ...... 638
of individuals ...... 302–306
of trusts, central management and control ...... 90, 91
source concept ...... 489, 490
Resident of Australia
deceased estates, sale of shares ...... 431, 432
definition, Australia–US DTA ...... 563
permanent place of abode ...... 6, 7, 90, 302–306
trusts ...... 90, 91
Residential premises
deduction of holding costs ...... 207
GST
– real property sales ...... 483, 484
– supply of accommodation ...... 350, 351
vacant land deduction ...... 115, 116, 294, 295, 554, 556, 557
Residential rental properties
negative gearing ...... 73–75
non-commercial losses ...... 207
vacant land deductions ...... 557
Restaurants ...... 416
Restructure roll-overs
safe harbour rule ...... 377–379
trusts avoiding CGT ...... 290
Restructuring businesses
cross-border debt arising from ...... 619
Results test
personal services income ...... 167, 215–217
Retirement
CGT small business retirement relief ...... 420
Retrospectivity
main residence CGT exemption ...... 443
tax legislation ...... 162
Return of capital
arm’s length debt test ...... 219
Revenue or capital expenditure
gaming machine entitlements ...... 292, 293, 328–331
medical practices ...... 351, 352
Reversionary pensions ...... 447–449
Road freight services
taxable payments reporting system ...... 57, 187, 188
Roll-over relief — see CGT roll-over relief
Royal Commission
superannuation funds ...... 200
Royalties
foreign resident beneficiaries ...... 489
Rural Fire Service volunteers ...... 349
Rural properties
building replacement, bushfire relief ...... 422
S
Safe harbour rule
arm’s length debt test guidelines ...... 218, 219
main residence exemption, deceased estates ...... 151, 152, 498
small business restructure relief ...... 377–379
Salary and wages
compulsory payment to bank account ...... 190
derivation of income ...... 7
ordinary time earnings, relationship with ...... 92, 93
Salary sacrifice
integrity measures ...... 109
superannuation guarantee charge ...... 289, 541
Sale of business
goodwill, transfer of ...... 479–482
Sale of land and business
aggregated dutiable transactions ...... 45–47
Sale of real property
GST ...... 483, 484
Sale of shares
small business CGT concessions ...... 241–243
Same business test ...... 5
ASX listed junior exploration companies ...... 174
Same share same interest rule
ASX listed junior exploration companies ...... 176
Savings provisions
ASX listed junior exploration companies ...... 177
Securities
hybrid, buy-back ...... 476
Security services
taxable payments reporting system ...... 57, 187, 188
Self-managed superannuation funds
advisers giving unlawful advice ...... 384–387
bare trusts, use of ...... 629, 630
CGT, pension exemption ...... 511–513
COVID-19 economic effects
– rent relief due to ...... 632–635
– risk minimisation ...... 573–575
downsizer contributions ...... 211–214
exit strategy ...... 574, 575
investing via unit trusts ...... 142, 143, 209, 210
investment strategies ...... 265, 266
lump sum payments in specie ...... 575
non-arm’s length income ...... 234, 325, 326
property development ...... 541
residential rental property investments ...... 73, 74
reversionary pensions ...... 447–449
succession planning
– death benefit distributions ...... 502–506, 574
– executor conflicts of interest ...... 41–44
– risk minimisation ...... 573–575
– trustee conflicts of interest ...... 503, 505, 506
Separation of powers
Commissioner’s remedial power ...... 362
Sham transactions
conviction quashed ...... 58, 59
political gifts/donations ...... 80
Share farming agreement
primary production land ...... 144–146
Share investment companies ...... 12
Shareholders
market value ratios, CGT roll-over relief ...... 252, 253
Shares
loss deductible ...... 543
market value ratios, CGT roll-over relief ...... 252, 253
maximum net asset value test ...... 352
purchase of, Peruvian copper mine ...... 61–65
sale of
– deceased estates ...... 431, 432
– small business CGT concessions ...... 241–243
Sharing economy reporting ...... 190–192
Significant global entities
expanding definition ...... 392, 393
penalties, taxable payment reporting system breach ...... 189
Similar business test
ASX listed junior exploration companies ...... 174
Simplified record-keeping ...... 235
Single touch payroll
employer obligations ...... 93, 119, 189, 190
Small and medium-sized businesses
cash flow boost ...... 638
Small business CGT concessions
active asset test ...... 353–355, 450–452, 542, 543
choices, timing issues ...... 419, 420
deceased estates ...... 312
partnerships ...... 109
retirement relief ...... 420
sale of shares in businesses ...... 241–243
vacant land ...... 289
Small business entities
instant asset write-off ...... 12, 13
tax concessions ...... 12, 13
Small business entity turnover test ...... 241
Small business restructures
Commissioner’s remedial power ...... 361
safe harbour rule ...... 377–379
Small Business Taxation Division
Administrative Appeals Tribunal ...... 137
Small businesses
Disaster Recovery Funding Arrangements ...... 374
sale of shares, CGT concessions ...... 241–243
single touch payroll transitional relief ...... 190
tax compensation claims ...... 289
tax gaps ...... 182
Sole purpose test
SMSFs ...... 633
Source concept
foreign resident beneficiaries ...... 167, 324, 487–490
residency of trust ...... 90, 91
South Australia
constructive ownership rules ...... 571, 572
foreign persons ...... 577, 578
land tax, aggregation changes ...... 254–260
Sovereign immunity rules
influence test ...... 454–456
Stamp duty
deceased estates ...... 312, 316
foreign persons ...... 577, 578
land tax surcharge ...... 577–579
SMSFs, investment via unit trusts ...... 143
Stapled structures
non-concessional MIT income ...... 99, 100
Start-up companies
R&D tax incentive disputes ...... 124–133
tax incentives ...... 66–68
Statutory notices ...... 319
Stay of proceedings
tax agent registration, cancellation ...... 6, 604, 605
Streaming of franked distributions ...... 140
Structured arrangements
taxation, superannuation funds ...... 198
Sub-trust arrangements
Div 7A, unpaid present entitlements ...... 58
Subjective intention
primary production land ...... 144–146
Substantial and permanent structures ...... 114, 203–208, 294, 295, 553–558
Substantial continuity of ownership
ASX listed junior exploration companies ...... 175, 176
Substantive permanent building/structure ...... 74
Succession and estate planning — see also Deceased estates
appointors of trusts, powers ...... 263, 264
asset revaluation reserve strategies ...... 427–430
discretionary trust powers ...... 271–274
estate administration ...... 431–436, 496–501
excepted trust income ...... 374–376
family law
– asset protection ...... 394–397
– CGT roll-overs ...... 376, 377
foreign residents, land tax surcharges ...... 577–579
main residence exemption, pre-CGT dwellings ...... 151, 152
powers of attorney, conflict transactions ...... 639–641
real property issues ...... 307–317
safe harbour rule ...... 377–379
SMSFs
– death benefit distributions ...... 502–506
– executor conflicts of interest ...... 41–44
– risk minimisation ...... 573–575
– trustee conflicts of interest ...... 503, 505, 506
testamentary trusts ...... 297, 298, 312
– grandchildren ...... 433–435
trust splitting ...... 373, 374
trust vesting ...... 372, 373
Successor fund transfers
large superannuation funds ...... 196, 197
“Sufficiently influenced” associate ...... 541, 542
Summons
fraud or evasion ...... 604
Superannuation
CGT small business retirement relief ...... 420
downsizer contributions ...... 211–214
early release schemes ...... 388–391
large fund issues ...... 196–201
non-arm’s length income ...... 233, 234, 325, 326
salary sacrifice integrity measures ...... 109
Tax Institute submission ...... 108
Superannuation death benefits
SMSFs
– executor conflicts of interest ...... 41–44
– trustee conflicts of interest ...... 503, 505, 506
Superannuation funds
event-based reporting ...... 196
foreign, new eligibility conditions ...... 454–456
justified trust program ...... 197
Royal Commission ...... 200
successor fund transfers ...... 196, 197
tax risk management ...... 197, 198
taxation of investments ...... 198, 199
third-party data ...... 197, 198
Superannuation guarantee
amnesty ...... 475, 538
charge ...... 183, 189, 538
COVID-19 tax policy submissions ...... 538
director liability ...... 491, 492, 494
employer obligations ...... 92–94
salary sacrifice contributions ...... 289, 541
single touch payroll ...... 93, 119
Supply of accommodation
GST ...... 350, 351
Supporting R&D activities ...... 125
Surveillance services
taxable payments reporting system ...... 57, 187, 188
T
Takeaway food shops ...... 416
Tasmania
constructive ownership rules ...... 571, 572
Tax administration — see Administration
Tax advisers
SMSF investment strategies ...... 265, 266
superannuation advice ...... 384
trusted adviser status ...... 347
Tax Agent Program ...... 179, 244, 245
Tax agent services ...... 384
definition ...... 23
independent review ...... 55, 56
Tax agents
Federal Court hearing, assistance ...... 268–270
fit and proper person test ...... 111
non-reapplication period reduced ...... 543, 544
provision of legal advice ...... 23
registration cancellation ...... 6, 543, 604, 605
registration requirements ...... 2
Tax avoidance
cross-border intra-group transactions ...... 619–623
integrity measures ...... 109
Tax Avoidance Taskforce ...... 109
Tax brackets
personal marginal ...... 56
Tax compensation claims
small business ...... 289
Tax compliance
black economy measures ...... 118, 119, 181–192
large superannuation funds ...... 199, 200
Tax concessions
companies carrying on a business ...... 11–13
minors, testamentary trust income ...... 238–240, 349, 374–376, 431, 434, 435
natural disasters ...... 421, 422
partnerships ...... 109
remote area concessions ...... 475
sale of shares in businesses ...... 241–243
small business entities ...... 12, 13
Tax consolidated groups
reporting obligations ...... 188
Tax credits
VAT, Peru ...... 62
Tax debts
disclosures to credit reporting bureaus ...... 109, 164, 192, 289
Federal Court, tax agent as advocate ...... 268–270
general interest charge ...... 31–39
Tax disputes
ATO
– in-house facilitation ...... 135, 136
– reliability of evidence ...... 319–322
Commissioners of Taxation
– onus of proof ...... 84–88
– settling ...... 31–39
general interest charge ...... 31–39
legal professional privilege ...... 21
R&D tax incentives ...... 124–133
Small Business Taxation Division ...... 137
transfer pricing ...... 332–334, 367
Tax exemptions — see Exemptions
Tax gaps
ATO identification of ...... 182
Tax incentives
early stage innovation companies ...... 66–68, 166
R&D ...... 124–133
Tax indemnities
VAT, Peru ...... 61–65
Tax integrity rules
corporate residency ...... 166
Tax liabilities
directors, GST ...... 491–495
legal personal representatives ...... 431–436
Tax losses — see Losses
Tax offences
conviction quashed ...... 58, 59
Tax offsets
early stage innovation companies ...... 66, 67
foreign income ...... 168, 169, 199
franked distributions received by trustee ...... 138–141
Tax policy development
Tax Institute submission to review ...... 108
Tax Practitioners Board ...... 2, 6, 111, 384, 412
ATO, independence from ...... 232
CPD compliance ...... 3
CPE requirements ...... 474
independent review ...... 54, 56, 190
non-reapplication period reduced ...... 543, 544
review ...... 163, 232
tax agent registration cancellation ...... 543, 604, 605
Tax Institute submission to ...... 232
Tax professionals ...... 20
accountants’ concession ...... 22
administrative and judicial review distinction ...... 303
collaboration with ATO ...... 472
CPD compliance ...... 3
CPE requirements ...... 412, 474
definition ...... 54
JobKeeper rules ...... 598
legal professional privilege ...... 20
professional conduct ...... 232
proposed reforms to regulation ...... 232
qualifications and experience ...... 232
tax agent services regime review ...... 54, 56
Tax residence — see Resident of Australia
Tax risk ...... 162
large superannuation funds ...... 197, 198
Tax treaties — see Double tax agreements
Taxable payments reporting system
annual report ...... 118, 188
black economy measures ...... 187
Commissioner’s power to exempt entities ...... 57
courier, cleaning and other services ...... 57, 187–189
definition of service ...... 188
Taxable wages
medical practices ...... 248–251
“Taxation law” defined ...... 384
Taxation Ombudsman — see Inspector-General of Taxation
Temporary absence rule ...... 421, 441, 442
Temporary residents
capital gains ...... 166
Ten per cent test
ASX listed junior exploration companies ...... 176
Tenants
rent relief due to COVID-19 ...... 632–635
Tenants in common
deceased estates, property ...... 308
Terminal medical condition
foreign residents ...... 440
Test case litigation program ...... 136
Testamentary trusts
asset protection ...... 394–397
assets transferred to ...... 312
CGT reliefs ...... 435, 436
family trusts distributing to ...... 375
grandchildren ...... 433–435
life estates ...... 436
minors ...... 238–240, 349, 374, 434, 435
reforms ...... 297, 298
The Tax Institute
2019 Corporate Tax Adviser of the Year Award
– Joshua Cardwell ...... 16
ATL001 CTA1 Foundations Dux Award, study period 1, 2019
– Caitlin McKenna ...... 120
ATL001 CTA1 Foundations Dux Award, study period 2, 2018
– Ross Heard ...... 14
ATL001 CTA1 Foundations Dux Award, study period 2, 2019
– Clare Pendlebury ...... 423
ATL001 CTA1 Foundations Dux Award, study period 3, 2019
– Van Thi Quynh Nguyen ...... 550
ATL002 Commercial Law 1 Dux Award, study period 2, 2018
– Antonio Marandola ...... 15
ATL002 Commercial Law 1 Dux Award, study period 3, 2018
– Michael Mangion ...... 69
ATL002 Commercial Law 1 and ATL006 Commercial Law 3 Dux Award, study period 1, 2019
– Daniel Vucetic ...... 245
ATL003 CTA2A Advanced Dux Award, study period 1, 2019
– Jason Hawe ...... 120, 121
ATL003 CTA2A Advanced Dux Award, study period 2, 2018
– Georgiena Ryan ...... 16
ATL003 CTA2A Advanced Dux Award, study period 3, 2018
– Jenna Podolczak ...... 69
ATL003 CTA2A Advanced Dux Award, study period 3, 2019
– Elliot Gillard ...... 613
ATL004 CTA2B Advanced Dux Award, study period 1, 2018
– Nicola Bird ...... 14
ATL004 CTA2B Advanced Dux Award, study period 2, 2018
– Gabriele Lanzara ...... 244
ATL004 CTA2B Advanced Dux Award, study period 3, 2018
– Adéle Coetzee ...... 70
ATL004 CTA2B Advanced Dux Award, study period 2, 2019
– Uphar Chhabra ...... 299
ATL005 Commercial Law 2 and ATL006 Commercial Law 3 Dux Award, study period 1, 2019
– Hannah Edwards ...... 244, 245
ATL005 Commercial Law 2 Dux Award, study period 3, 2018
– Zhien (Marco) Zhou ...... 70
ATL006 Commercial Law 3 Dux Award, study period 2, 2019
– Widyawati Utomo ...... 423, 424
ATL009 Corporate Tax Dux Award, study period 2, 2019
– Chris Harris ...... 299
change at the Institute ...... 3
COVID-19 responses ...... 534, 598, 599
CPD compliance ...... 3
Jacobson, Robyn ...... 534, 535, 599
member portal ...... 107, 534, 535
members, importance of participation ...... 2, 230
membership benefits ...... 356
mentoring program ...... 230
Mills, Andrew ...... 599
professional development ...... 3
Speakers Academy ...... 413
study/work balance ...... 613
submissions
– Australian Public Service Review ...... 108, 415
– FBT exemption to Uber rides ...... 230
– federal Budget 2020-21 ...... 288
– to ATO ...... 4, 108
– to Australian Treasury ...... 108, 287, 288, 348, 415
– to Senate Economics Legislation Commission ...... 164
– to Tax Practitioners Board ...... 54, 56, 232
Tax Adviser of the Year Awards 2020 ...... 107, 473
Tax Agent Program ...... 179, 244, 245
Tax Policy and Advocacy team ...... 3, 55, 163, 230, 287, 535
Tax Summit 2020 ...... 230, 231, 286, 287, 346, 347, 412, 413
– reflections from ...... 472
volunteers ...... 107, 346
women in tax ...... 230, 231, 287, 356
Thin capitalisation
arm’s length debt test guidelines ...... 218–220
COVID-19 tax issues ...... 637
debt deduction, meaning ...... 149, 150
multinational tax avoidance ...... 110
Third-party data
large superannuation funds ...... 197, 198
Timing issues
CGT choices ...... 419, 420
vacant land deductions ...... 295
Tourism operators
redundancy payments ...... 233
Tracing rules
ASX listed junior exploration companies ...... 175, 177
Trading stock
goods taken for private use ...... 416
Transfer
concept of ...... 480, 481
Transfer pricing
arm’s length debt test ...... 218
debt/equity rule interaction ...... 110, 148, 149
disputes ...... 367
intangible assets ...... 417, 514
non-resident-owned mobile offshore drilling units ...... 475, 476
penalty proceedings, deferment ...... 604
record-keeping ...... 235
tax disputes ...... 332–334
taxation harmonisation plan ...... 365–371
Transparency
beneficial ownership ...... 190
intangible assets ...... 515
Travel allowances
reasonable amounts ...... 110
Trust beneficiaries
foreign residents, capital gains ...... 167, 607–611
franked distributions received by ...... 138–141
Trust deeds
appointors ...... 263, 264
changing appointors ...... 444, 445
distribution resolutions ...... 417, 418
interpretation ...... 444
power to appoint unrealised gains ...... 428
public trading trust ...... 352
variation power amending ...... 445
Trust distributions
unrealised capital gains ...... 427–430
Trust estates
unearned income of minors ...... 238
Trust income
default assessments ...... 110
distribution resolutions ...... 417, 418
tax concessions for minors ...... 238–240, 349, 374–376, 434, 435
versus net income ...... 138
Trust splitting
estate planning ...... 373, 374
Trust vesting
estate planning ...... 372, 373, 377
“Trustee of a deceased estate” defined ...... 497
Trustees
fettering ...... 447, 448
foreign currency loans ...... 170–173
franked distributions received by ...... 138–141
power to appoint themselves ...... 263, 264
powers of ...... 271–274
SMSFs, conflicts of interest ...... 503, 505, 506
transfer of land to (Vic) ...... 508, 509
Trusts — see also Discretionary trusts; Family trusts; Trust beneficiaries; Unit trusts
aggregating land interests (SA) ...... 255–259
anti-avoidance rule ...... 289
asset revaluation reserve strategies ...... 427–430
CGT avoidance, restructure roll-over ...... 290
deceased estates, property ...... 308
declaration of ...... 545–548
foreign resident capital gains ...... 166, 167, 486–490
franked distributions received by trustee ...... 138–141
public trading trust ...... 352
residency rules ...... 90, 91
residential rental property investments ...... 73, 74
Turnover test
JobKeeper Stimulus Package ...... 600
Turnover threshold test
taxable payments reporting system ...... 57
Two-year rule
deceased estates ...... 498, 499
U
Uber tax issues ...... 230
Unallowable purpose ...... 620
Unconscionable conduct ...... 273, 376, 377
Undue influence ...... 376, 377
Unearned income of minors ...... 238–240, 349, 431
Unit trust scheme ...... 256, 257
Unit trusts
accessing franking credits in ...... 380–383
aggregating land interests (SA) ...... 255–257
residency ...... 91
residential rental property investments ...... 74
SMSFs investing via ...... 142, 143, 209, 210
United Kingdom
Australia–UK DTA ...... 291, 292
cross-border intra-group tax avoidance ...... 619–623
United States
Australia–US DTA ...... 169, 489, 563
cross-border intra-group refinancing ...... 619–623
digital services tax levied on US corporations ...... 370
Unlawful advice
SMSF advisers ...... 384–387
Unpaid present entitlements
Div 7A sub-trust arrangements ...... 58
trust asset revaluation ...... 428
Unrealised capital gains
trust distributions ...... 427–430
Unrecorded economy ...... 182
Unrelated clients test
personal services income ...... 167, 168, 215–217
Unreported economy ...... 182
Upfront payments
capital expenditure ...... 603
Usual place of abode ...... 302–306
V
Vacancy
involuntary evacuation/significant damage ...... 205
pre-sale ...... 206
significant renovation/expansion phase ...... 205
Vacancy periods
residential rental properties ...... 75
Vacant land — see also Land
amendments ...... 109, 113, 162, 203, 289, 294
carrying on a business ...... 113, 115, 295, 296, 354, 450–452
deduction amendments ...... 73, 74, 109, 113–116, 162, 203–208, 552–559
exceptional circumstances ...... 294, 295
input tax credit ...... 605
primary production land ...... 295, 296
residential premises ...... 115, 116, 294, 295
residential rental properties ...... 73–75
substantial and permanent structures ...... 114, 203–208, 294, 295
Valuation
asset revaluation reserve strategies ...... 427–430
goodwill ...... 27–30
margin schemes ...... 476
shares, CGT roll-over relief ...... 252, 253
Value-added tax
purchase of shares, Peruvian copper mine ...... 61–65
Victoria
constructive ownership rules ...... 571, 572
duty exemption, transfer of land to trustees ...... 508, 509
foreign purchasers ...... 577
gaming machine entitlements ...... 292, 293, 328–331
land tax surcharge ...... 578
primary production land, “subjective intention” ...... 144–146
Voluntary disclosure
PAYG withholding ...... 184, 185
Volunteers
Rural Fire Service ...... 349
W
Wages
taxable, medical practices ...... 248–251
Warranties
VAT, Peru ...... 64
Wealth transfer
baby boomers ...... 307
post-baby boomers ...... 372
Western Australia
constructive ownership rules ...... 568–572
Wills — see also Succession and estate planning
estate planning structuring ...... 375
testamentary trusts ...... 312, 394–397
Winding up
deceased estates, sale of shares ...... 431, 432
director liability, GST ...... 491–495
Wine equalisation tax ...... 491, 492
Withholding tax
foreign residents, CGT ...... 476, 477
foreign superannuation funds ...... 454–456
foreign vendor property sales ...... 109
non-concessional MIT income ...... 99, 100
PAYG ...... 118, 119, 184, 185
Work expenses
deductions, employees ...... 291, 539, 540
guide for employees ...... 57, 58
Work-related car expenses ...... 540
Working-from-home deductions
COVID-19 measures ...... 601
Working holiday tax
Australia–UK DTA ...... 291, 292
Z
Zone tax offset ...... 475
Legislation
A New Tax System (Goods and Services Tax) Act 1999 ...... 115, 207, 492, 554
Div 31 ...... 493
Div 75 ...... 476
Div 85 ...... 235
Div 268 ...... 493
s 9-5 ...... 484
s 9-25(5)(a) ...... 235
s 9-25(5)(b) ...... 235
s 9-25(5)(c) ...... 235
s 9-30(3) ...... 351
s 38-250(1)(b)(i) ...... 351
s 40-65(1) ...... 351, 484
s 40-65(2) ...... 483
s 40-75(1) ...... 484
s 195-1 ...... 483
s 268-10(1)(c) ...... 493
s 269-15(2)(b) ...... 493
s 269-15(2)(c) ...... 493
Acts Interpretation Act 1901 ...... 363
Administration Act 1903 (WA)
s 14 ...... 545, 546
Administrative Appeals Tribunal Act 1975 ...... 604
s 44 ...... 450
Administrative Decisions (Judicial Review) Act 1977 ...... 84
s 5(1)(c) ...... 32
s 5(1)(d) ...... 32
s 13(1) ...... 36
Australian Charities and Not-for-profits Commission Act 2012 ...... 80
Boosting Cash Flow for Employers (Coronavirus Economic Response Package) Act 2020 ...... 539
Broadcasting Services Act 1992
Sch 2 ...... 83
Commonwealth Electoral Act 1918 ...... 78, 80
s 4 ...... 77, 82
s 125 ...... 83
s 152 ...... 78
s 152(e) ...... 78
s 154 ...... 78
s 155 ...... 78
s 156 ...... 78
s 157 ...... 78
s 158 ...... 78
s 159 ...... 78
s 175 ...... 78
s 176 ...... 78
s 287AB ...... 82
s 309 ...... 81, 82
Commonwealth of Australia Constitution Act 1900
s 5 ...... 78
s 12 ...... 83
s 28 ...... 78, 83
s 32 ...... 78
s 44 ...... 77
Coronavirus Economic Response Package (Payments and Benefits) Act 2020
Coronavirus Economic Response Package (Payments and Benefits) Alternative Decline in Turnover Test Rules 2020 ...... 638
Coronavirus Economic Response Package (Payments and Benefits) Amendment Rules (No. 2) 2020 ...... 600, 638
Corporation Tax Act 2009 (UK)
s 441 ...... 620
s 442 ...... 620
s 442(4) ...... 620
Corporations Act 2001 ...... 11, 175, 214, 265, 385–387, 571
s 9 ...... 88, 89
s 268 ...... 88
s 286 ...... 89
s 601GC(1)(a) ...... 381
s 763A(1) ...... 266
s 763B ...... 266
s 763C ...... 266
s 766A(1) ...... 266
s 766B ...... 266
s 766B(1) ...... 266
s 766C ...... 266
s 1305 ...... 84, 86–88, 171
s 1305(1) ...... 86
COVID-19 Omnibus (Emergency Measures) Act 2020 (Vic) ...... 632
s 13(3)(c) ...... 632
COVID-19 Omnibus (Emergency Measures) (Commercial Leases and Licences) Regulations 2020 (Vic) ...... 632
Crimes Act 1914
s 4AA ...... 388
Criminal Code Act 1995 ...... 111
Currency (Restrictions on the Use of Cash) Bill 2019 ...... 191, 193, 195
Duties Act 1997 (NSW) ...... 479, 579
s 8 ...... 480
s 11 ...... 480
s 21 ...... 46, 47
s 21(1) ...... 45, 47
s 25 ...... 45–47
s 25(1) ...... 45
s 25(3) ...... 46
s 27 ...... 45–47
s 27(1) ...... 45
s 32 ...... 47
s 32(1) ...... 47
s 56 ...... 510
s 158 ...... 571
s 158A ...... 571
s 159 ...... 571
Duties Act 1999 (ACT)
s 57 ...... 510
s 81 ...... 571
s 82 ...... 571
Duties Act 2000 (Vic) ...... 579
s 3(1) ...... 579
s 35 ...... 508, 509
s 35(1)(a) ...... 508, 509
s 42 ...... 579
s 75 ...... 571
s 76 ...... 571
Duties Act 2001 (Qld) ...... 579
s 166 ...... 571
s 167 ...... 571
s 182 ...... 571
Duties Act 2001 (Tas) ...... 579
s 40 ...... 510
s 76 ...... 571
s 77 ...... 571
Duties Act 2008 (WA) ...... 545, 547, 568, 579
s 9 ...... 546
s 10 ...... 546
s 11(1) ...... 548
s 11(1)(a) ...... 548
s 11(1)(b) ...... 548
s 11(1)(c) ...... 546–548
s 15(a) ...... 546
s 15(b) ...... 546
s 26(1)(a) ...... 546
s 78 ...... 547
s 151 ...... 568
s 153 ...... 569
s 154A ...... 568
s 154A(2) ...... 569
s 154A(3) ...... 569
s 154A(3)(a) ...... 569
s 154A(3)(b) ...... 569
s 154A(4)(a) ...... 569
s 154A(4)(b) ...... 569, 570
s 154A(5) ...... 569
s 155(2) ...... 568, 570
s 156(2) ...... 569, 570
s 156(3) ...... 569, 570
s 156(4) ...... 568, 570
s 156A ...... 569
s 186 ...... 568
s 186(2) ...... 570
Evidence Act 1995
s 4(1) ...... 24
s 69 ...... 89
s 69(3) ...... 87
s 69(3)(a) ...... 89
s 117 ...... 25
s 118 to 126 ...... 20
Excise Tariff Amendment (Collecting Tobacco Duties at Manufacture) Bill 2018 ...... 193
Fair Work (Registered Organisations) Act 2009 ...... 80
Family Law Act 1975 ...... 394–396
Pt VIIIA ...... 376
Federal Court Act 1976
s 23 ...... 269
s 478 ...... 268
Federal Court Rules 2011
r 30.23(g) ...... 268
Finance Act 2008 (UK)
Sch 36 ...... 26
Fringe Benefits Tax Assessment Act 1986
s 31G ...... 540
s 31G(1)(b) ...... 540
s 31G(2) ...... 540
Gambling Regulation Act 2003 (Vic) ...... 292, 328
Guardianship and Administration Act 1990 (WA) ...... 641
s 107 ...... 641
Income Tax and Social Services Contributions Assessment Act 1936
s 51(1) ...... 329
Income Tax Assessment Amendment Bill 1983 ...... 488
Income Tax Assessment Regulations 1997
reg 303-10.01 ...... 443
Income Tax Laws Amendment Act 1980 ...... 238
Income Tax Rates Act 1986 ...... 238
Pt II
– Subdiv C ...... 437
s 13 ...... 298
s 23 ...... 12, 554
Sch 10 ...... 436
– Pt I ...... 437
Income Tax (Transitional Provisions) Act 1997
s 118-110 ...... 440, 501
s 118-195 ...... 313
s 128-15 ...... 310, 501
Industry Research and Development Act 1986 ...... 124
s 4 ...... 131
s 27A ...... 125
s 29A ...... 67
Insolvency (Tax Priorities) Legislation Amendment Act 1993 ...... 491
Inspector-General of Taxation Act 2003 ...... 164
Internal Revenue Code 1986 (US)
s 671 to 679 ...... 567
s 904 ...... 567
s 7525 ...... 26
s 7701(a)(30) ...... 567
ITAA36
Pt III
– Div 1A ...... 198
– Div 3B ...... 170, 172
– Div 6 ...... 432, 434, 630
– Div 6AA ...... 434, 435, 437
– Div 13 ...... 148
Pt IIIAA
– Div 1A ...... 380
Pt IVA ...... 80, 213, 290, 298, 378, 417, 436, 619, 622
Pt X ...... 541, 542
Div 6 ...... 138–140, 167, 324, 487, 490, 608, 610, 628, 630
Div 6AA ...... 238–240, 297, 374
Div 6AAA ...... 349
Div 6C ...... 100, 352, 636
Div 6E ...... 138, 140, 323, 487, 488, 608, 625
Div 7A ...... 7, 111, 377, 427, 429, 538, 559
– Subdiv EA ...... 427, 429
Div 13 ...... 332, 333, 604
s 6 ...... 90
s 6(1) ...... 6, 90, 239, 302–305, 440
s 23AH ...... 149
s 44 ...... 111
s 45B ...... 623
s 47 ...... 436
s 47(1) ...... 436
s 47(1A) ...... 436
s 67 ...... 150
s 74 ...... 81
s 74(1) ...... 81
s 82KZMD ...... 603
s 95 ...... 91, 141, 323, 607, 624
s 95(1) ...... 433, 628
s 95(2) ...... 90, 91
s 95AAA ...... 141
s 97 ...... 88, 140, 141, 610, 624
s 97(1) ...... 490, 567
s 97(1)(a) ...... 139
s 97(1)(a)(i) ...... 628
s 97(1)(a)(ii) ...... 628
s 98 ...... 141, 167, 437, 487, 489, 608–611, 624–626
s 98(2)(e) ...... 487
s 98(2A) ...... 490, 611
s 98(3) ...... 166, 490, 565, 610, 611
s 98A ...... 487–489, 611
s 98A(1) ...... 488, 610
s 98A(1)(b) ...... 487
s 98A(2) ...... 166, 167, 610
s 99 ...... 141, 324, 431–434
s 99A ...... 140, 141, 324, 432, 434, 487
s 99A(2) ...... 437
s 99B ...... 110, 433
s 99B(1) ...... 433
s 99B(2) ...... 437
s 99B(2)(a) ...... 437
s 99D ...... 324, 487
s 99D(2) ...... 487
s 100 ...... 141, 437
s 100A ...... 627
s 102 ...... 373
s 102AA(1) ...... 239, 297
s 102AA(2AA)(b) ...... 239
s 102AA(4) ...... 239, 240
s 102AAM ...... 433
s 102AAM(1B) ...... 437
s 102AE ...... 238
s 102AG ...... 238, 239
s 102AG(1) ...... 238, 297
s 102AG(2) ...... 238, 437
s 102AG(2)(a) ...... 238–240, 297, 298
s 102AG(2)(a)(i) ...... 374
s 102AG(2)(e) ...... 238
s 102AG(2AA) ...... 239, 297
s 102AG(2AA)(a) ...... 239
s 102AG(2AA)(b) ...... 240, 374
s 102AG(3) ...... 437
s 102AG(4) ...... 238, 240, 437
s 102AG(5) ...... 238
s 102AG(8) ...... 238
s 102M ...... 636
s 102MB ...... 636
s 102MC ...... 636
s 102P ...... 74
s 102UW(b) ...... 140, 489
s 102UW(b)(ii) ...... 141
s 102UW(b)(iii) ...... 141
s 102UX ...... 628
s 102UX(2) ...... 141
s 102UX(3) ...... 141
s 102UX(4) ...... 141
s 102UY ...... 489
s 102UY(2) ...... 141
s 102UY(4) ...... 140
s 102UY(4)(b) ...... 140
s 109D ...... 111
s 109E ...... 7
s 109N ...... 58
s 109Q ...... 7
s 109Q(2) ...... 7
s 109UB ...... 430
s 109XA(1) ...... 429
s 109XA(1)(c)(i) ...... 430
s 109XA(1)(c)(ii) ...... 430
s 109XB ...... 429
s 109XB(2) ...... 430
s 160APHL(10) ...... 380
s 160APHL(11) ...... 381
s 160APHL(13) ...... 381
s 160APHL(14) ...... 381, 382
s 160APHT ...... 383
s 160ZZQ ...... 497
s 166 ...... 85, 111, 112, 476
s 167 ...... 88, 111, 112, 477
s 170 ...... 436
s 177A(5) ...... 623
s 177D ...... 623
s 177EA ...... 198, 622
s 221P ...... 491
s 221YHJ ...... 491
s 221YHZD ...... 491
s 221YU ...... 491
s 222AOG ...... 495
s 222APE ...... 35
s 263 ...... 21
s 264 ...... 21
s 273 ...... 325
s 318 ...... 74, 207, 541
s 318(6)(b) ...... 542
Sch 2F ...... 382
– Div 271 ...... 383
– s 272-5 ...... 382
– s 272-5(1) ...... 490
– s 272-5(3) ...... 363, 382, 490
– s 272-65 ...... 381
– s 272-95 ...... 383
ITAA97
Pt 2-42 ...... 215
Pt 3-1 ...... 617
Pt 3-3 ...... 617
Pt 3-90 ...... 177
Div 6 ...... 490
Div 25 ...... 80, 555
Div 35 ...... 73, 207
Div 40 ...... 361, 422, 539
Div 43 ...... 296, 422
Div 70 ...... 556
Div 106 ...... 97
Div 114 ...... 213
Div 115 ...... 213
Div 128 ...... 309, 310, 312, 315, 316, 373, 435, 436
Div 136 ...... 624
Div 149 ...... 373
Div 152 ...... 74, 241, 242, 419, 450, 512
Div 165 ...... 175
Div 166 ...... 174, 175, 362
Div 207 ...... 138, 141
Div 328 ...... 12
Div 355 ...... 131
Div 770 ...... 169, 291
Div 775 ...... 172, 173
Div 815 ...... 149
Div 855 ...... 91, 324, 487, 490, 562, 608, 611, 624–627
Div 974 ...... 110, 359
Subdiv 30-DA ...... 78–81
Subdiv 43-H ...... 422
Subdiv 50-A ...... 79, 80
Subdiv 115-C ...... 167, 323, 324, 432, 433, 436, 437, 486, 487, 490, 562, 608–611, 625, 628
Subdiv 118-B ...... 212, 310, 321, 322, 421, 439, 443
Subdiv 122-A ...... 378
Subdiv 124-B ...... 422
Subdiv 126-A ...... 376
Subdiv 126-G ...... 290
Subdiv 152-A ...... 450–452
Subdiv 152-C ...... 450
Subdiv 165-D ...... 175
Subdiv 166-B ...... 175
Subdiv 207-B ...... 138–140, 323
Subdiv 328-G ...... 361, 372, 377–379
Subdiv 768-R ...... 304
Subdiv 815-A ...... 332, 333
Subdiv 815-B ...... 110, 148, 149
Subdiv 815-E ...... 392, 393
Subdiv 855-A ...... 166, 486
Subdiv 900-B ...... 110
s 6-5 ...... 511, 512, 557
s 6-5(2) ...... 58, 59, 91, 490, 624
s 6-5(3) ...... 91, 490
s 6-10 ...... 512, 626
s 6-10(4) ...... 91, 490, 511
s 6-10(5) ...... 91, 490
s 6-10(5)(a) ...... 487, 626
s 6-10(5)(b) ...... 487, 626
s 6-15(2) ...... 79
s 8-1 ...... 5, 87, 88, 113, 116, 166, 170, 172, 291, 328, 349, 351, 512, 539, 540, 543, 552, 554, 556–558, 560, 602, 603, 615, 617
s 8-1(2) ...... 512
s 12-5 ...... 552, 559
s 20-30 ...... 207
s 25-25 ...... 5, 75, 150
s 25-30 ...... 5
s 25-60 ...... 81, 82
s 25-90 ...... 5
s 26-22 ...... 76, 77, 79
s 26-22(3) ...... 77
s 26-31 ...... 559
s 26-102 ...... 113, 114, 203, 204, 206–208, 294, 295, 552, 557–559
s 26-102(1) ...... 115, 116, 206, 207, 552–554, 556–560
s 26-102(1)(a) ...... 206
s 26-102(1)(b) ...... 115, 205, 206, 559
s 26-102(2) ...... 115, 208, 296, 559
s 26-102(3) ...... 115, 559
s 26-102(4) ...... 115, 116, 205, 206, 294, 559
s 26-102(5) ...... 113, 294, 555
s 26-102(5)(a) ...... 203, 204
s 26-102(6) ...... 294, 295, 559
s 26-102(6)(b) ...... 295
s 26-102(6)(c) ...... 295
s 26-102(6)(d) ...... 295
s 26-102(7) ...... 295, 559
s 26-102(8) ...... 295, 556, 559
s 26-102(8)(c) ...... 296
s 26-102(8)(d) ...... 296
s 26-102(9) ...... 296, 559
s 26-105 ...... 183
s 26-105(1) ...... 73, 75, 194
s 26-105(1)(a) ...... 75
s 26-105(1)(b) ...... 75
s 26-105(1)(b)(i) ...... 194
s 26-105(1)(b)(ii) ...... 195
s 26-105(2) ...... 73, 74, 195
s 26-105(3) ...... 73, 194, 195
s 26-105(3)(b) ...... 75
s 26-105(4) ...... 74, 195
s 26-105(5) ...... 195
s 26-105(6) ...... 195
s 26-105(7) ...... 195
s 26-105(8) ...... 195
s 28-25 ...... 540
s 30-242 ...... 78, 79
s 30-242(1) ...... 79
s 30-242(1)(c) ...... 79
s 30-244 ...... 79
s 35-55 ...... 73, 207, 208
s 35-55(1)(b)(ii) ...... 73, 207
s 40-27 ...... 559
s 40-180 ...... 309
s 40-190(2)(b) ...... 5
s 40-880 ...... 5, 12, 329, 331, 602, 615, 617
s 40-880(2) ...... 331, 617
s 40-880(5)(d) ...... 602, 616
s 40-880(5)(f) ...... 602, 616, 617
s 40-880(6) ...... 331
s 45-40(1)(c) ...... 422
s 50-1 ...... 79
s 50-47 ...... 80
s 70-105 ...... 309, 310
s 70-105(6) ...... 309
s 86-15(1) ...... 167
s 86-15(3) ...... 167
s 87-15 ...... 215
s 87-15(2) ...... 167, 215
s 87-18(3) ...... 167
s 87-20 ...... 215
s 87-20(1)(b) ...... 168, 215–217
s 87-20(2) ...... 168, 216, 217
s 102-5 ...... 213, 239, 439, 490, 511, 512, 610
s 102-10 ...... 511
s 102-25 ...... 511
s 103-25 ...... 419
s 103-25(1)(a) ...... 419
s 104-10 ...... 97, 437
s 104-10(1) ...... 419
s 104-10(2) ...... 482
s 104-10(3) ...... 419, 436
s 104-10(3)(a) ...... 443
s 104-10(5) ...... 611
s 104-25 ...... 437
s 104-55 ...... 437
s 104-55(1) ...... 548
s 104-75 ...... 437
s 104-85 ...... 437
s 104-135 ...... 437
s 104-160 ...... 443, 628
s 104-160(3) ...... 628
s 104-160(4) ...... 628
s 104-165 ...... 443
s 104-165(3) ...... 628
s 104-170 ...... 91, 628
s 104-170(2) ...... 91
s 104-170(3) ...... 91, 628
s 104-170(4) ...... 91, 628
s 104-215 ...... 437
s 106-1 ...... 97
s 106-5(1) ...... 548
s 106-5(4) ...... 548
s 106-50 ...... 97, 630
s 108-5 ...... 355, 627
s 108-5(1) ...... 482
s 108-5(2) ...... 482
s 108-5(2)(a) ...... 355
s 108-5(2)(c) ...... 548
s 108-5(2)(d) ...... 548
s 108-55 ...... 422
s 108-70(2) ...... 206
s 108-75(3) ...... 206
s 110-25(4) ...... 204, 443, 559
s 110-43 ...... 548
s 110-45(2) ...... 290
s 110-50 ...... 548
s 110-55(7) ...... 436
s 110-55(9) ...... 559, 560
s 112-20 ...... 213, 315
s 112-35 ...... 290, 291
s 115-25 ...... 512
s 115-25(1) ...... 312
s 115-30(1) ...... 312
s 115-100(b) ...... 512
s 115-200 to 115-230 ...... 608
s 115-215 ...... 486, 608-611, 625, 626
s 115-215(1) ...... 490, 610
s 115-215(3) ...... 166, 323, 487, 564, 609, 610, 626, 628
s 115-215(4A) ...... 490, 610, 628
s 115-215(6) ...... 432
s 115-220 ...... 166, 167, 432, 487, 488, 490, 609, 610, 625–627
s 115-220(2) ...... 610
s 115-222 ...... 167, 324, 487, 610
s 115-222(2) ...... 610
s 115-222(4) ...... 610
s 115-225 ...... 490
s 115-225(1) ...... 610
s 115-225(1)(a) ...... 610
s 115-225(1)(b) ...... 610
s 115-227(a) ...... 430, 610, 628
s 115-227(b) ...... 628
s 115-228 ...... 430, 628
s 115-228(1) ...... 430
s 116-20 ...... 213
s 116-30 ...... 213
s 118-20 ...... 213, 548, 557, 559, 560
s 118-20(1) ...... 511
s 118-110 ...... 421, 439
s 118-110(1) ...... 97
s 118-110(2) ...... 443
s 118-110(3) ...... 439
s 118-110(3)(b) ...... 441
s 118-110(4) ...... 439, 440
s 118-110(5) ...... 439, 440
s 118-115 ...... 8, 421
s 118-115(1)(a) ...... 204
s 118-120 ...... 8, 9, 153
s 118-120(1) ...... 8
s 118-120(2) ...... 8, 9
s 118-120(5) ...... 8
s 118-120(6) ...... 8
s 118-130 ...... 443
s 118-145 ...... 213, 314, 420, 441, 498, 501
s 118-145(4) ...... 501
s 118-150 ...... 10, 421
s 118-150(4) ...... 10
s 118-160 ...... 421
s 118-165 ...... 8
s 118-185 ...... 213
s 118-190 ...... 501
s 118-190(1) ...... 314, 501
s 118-190(3) ...... 314
s 118-190(4) ...... 501
s 118-195 ...... 58, 151, 152, 213, 312, 313, 497, 499, 501
s 118-195(1) ...... 153, 499, 501
s 118-195 to 118-210 ...... 443
s 118-200 ...... 58
s 118-305 ...... 511
s 118-320 ...... 512
s 126-5(1) ...... 440
s 128-10 ...... 310, 315, 316, 501
s 128-15(2) ...... 310
s 128-15(3) ...... 310, 316, 501
s 128-15(4) ...... 310, 311, 436, 501
s 128-20 ...... 500
s 128-20(1) ...... 315
s 128-20(1)(a) to (d) ...... 316
s 128-20(1)(d) ...... 317, 496, 500, 501
s 128-50 ...... 501
s 128-50(2) ...... 311
s 128-50(3) ...... 311
s 128-50(4) ...... 311
s 130-85(4) ...... 234
s 152-1 ...... 450
s 152-5 ...... 450
s 152-10(1)(a) ...... 420
s 152-10(2) ...... 242
s 152-35 ...... 206, 242, 450, 451
s 152-40 ...... 353
s 152-40(1) ...... 355, 451
s 152-40(1)(a) ...... 353, 450, 451
s 152-80(1) ...... 312
s 152-105 ...... 420
s 152-110(1)(a) ...... 420
s 152-205 ...... 420
s 152-220 ...... 420
s 152-305 ...... 420
s 152-305(1)(a) ...... 420
s 152-305(2)(a) ...... 420
s 202-5 ...... 141
s 205-70(5) ...... 559
s 207-5(3) ...... 141
s 207-5(4) ...... 141
s 207-35 ...... 141
s 207-35(1) ...... 141
s 207-35(2) ...... 138
s 207-35(3) ...... 139
s 207-35(3)(d) ...... 138, 141
s 207-35(4) ...... 138
s 207-35(4)(b)(ii) ...... 139
s 207-35(5) ...... 139
s 207-35(6) ...... 139
s 207-37 ...... 139
s 207-37(1) ...... 141
s 207-37(2) ...... 141
s 207-37(3) ...... 139
s 207-45 ...... 140
s 207-45(a) ...... 141
s 207-50(3) ...... 139
s 207-50(3)(a) ...... 139
s 207-50(3)(b) ...... 139
s 207-55 ...... 139, 141
s 207-55(2) ...... 141
s 207-55(3) ...... 139, 141
s 207-55(4) ...... 139
s 207-55(4)(a) ...... 139
s 207-55(4)(b)(i) ...... 141
s 207-57(2) ...... 141
s 207-58(1) ...... 140, 141
s 207-157(4) ...... 383
s 207-157(5) ...... 383
s 235-820 ...... 630
s 235-840 ...... 630
s 245-40(e) ...... 233
s 276-90 ...... 198
s 292-102 ...... 212
s 292-102(3) ...... 213
s 294-25(1) ...... 449
s 295-10(1) ...... 513
s 295-85 ...... 511
s 295-95(1) ...... 513
s 295-385 ...... 512
s 295-387 ...... 512
s 295-390 ...... 512
s 295-390(3) ...... 512
s 295-550 ...... 233, 234, 325
s 295-550(1)(b) ...... 325
s 295-550(1)(c) ...... 325
s 302-195 ...... 574
s 328-125 ...... 115, 559
s 328-130 ...... 115, 559
s 328-430 ...... 378
s 328-430(1)(a) ...... 378
s 328-435 ...... 378
s 355-25 ...... 125
s 355-25(1) ...... 126, 127
s 355-25(1)(a) ...... 126, 127
s 355-25(1)(b) ...... 126, 127
s 355-25(2) ...... 133
s 355-25(2)(f) ...... 127
s 355-30 ...... 125, 133
s 355-30(1) ...... 125
s 355-30(2)(c) ...... 125
s 355-205(1) ...... 125, 133
s 355-315 ...... 422
s 355-525 ...... 422
s 360-15 ...... 68
s 360-40 ...... 166
s 360-40(1)(a) to (d) ...... 68
s 360-40(1)(a)(ii) ...... 166
s 360-40(1)(b) ...... 166
s 360-40(1)(e) ...... 68
s 360-45(1) ...... 68
s 360-50(4) ...... 68
s 360-50(5) ...... 68
s 615-20(2) ...... 252, 253
s 768-915(1) ...... 166, 625, 628
s 770-75 ...... 291
s 770-75(4)(a)(i) ...... 291
s 770-75(4)(a)(ii) ...... 291
s 815-110(1) ...... 110
s 815-115 ...... 110, 148
s 815-115(2) ...... 110
s 815-125 ...... 110
s 815-130 ...... 148
s 815-145 ...... 148, 149
s 815-355(1)(a) ...... 393
s 815-380 ...... 393
s 820-40(1)(a) ...... 5
s 820-40(1)(a)(i) ...... 150
s 820-40(1)(a)(ii) ...... 150
s 820-40(1)(a)(iii) ...... 148
s 855-10 ...... 166, 323, 432, 433, 437, 487, 490, 564, 565, 567, 568, 608–611, 624–626, 628
s 855-10(1) ...... 323, 487, 607–611, 625, 626
s 855-15 ...... 437, 567, 624, 625, 628
s 855-20 ...... 567, 628
s 855-25 ...... 437, 628
s 855-40 ...... 91, 166, 167, 323, 432, 434, 487, 490, 562, 564, 565, 611, 624–626, 628
s 855-40(1) ...... 624
s 855-40(2) ...... 611
s 855-40(3) ...... 567
s 855-40(5) to (8) ...... 567
s 855-50(1) ...... 91
s 855-50(4) ...... 91
s 960-100 ...... 134
s 960-115 ...... 116, 203, 296, 559
s 960-555 ...... 393
s 960-555(2A) ...... 393
s 960-555(2A)(ii) ...... 393
s 960-555(3) ...... 393
s 960-565(3) ...... 393
s 960-575 ...... 393
s 960-575(3) ...... 393
s 974-160(1) ...... 141
s 974-160(2) ...... 141
s 995-1 ...... 77, 80, 141, 185, 239, 384, 490, 553, 556, 559, 628
s 995-1(1) ...... 296, 501, 567
Judiciary Act 1903
s 35A ...... 37
s 39B ...... 84
s 79 ...... 24
s 80 ...... 88
s 398 ...... 268
Land Tax Act 1936 (SA) ...... 254
s 2(1) ...... 261, 262
s 4(1) ...... 261
s 4(2) ...... 261
s 4(3) ...... 261
s 5 ...... 261
s 5(10)(a) ...... 261
s 5(10)(g) ...... 261
s 5AA ...... 262
s 7(2) ...... 261
s 9 ...... 261
s 9(6) ...... 262
s 9(7) ...... 262
s 12 ...... 261
s 12(1) ...... 261
s 12(2) ...... 261
s 13 ...... 261
s 13(3)(a) ...... 261
s 13(3)(b) ...... 261
s 13(6) ...... 262
s 13A(1) ...... 262
s 13A(2) ...... 261
s 13A(3) ...... 261, 262
s 13A(6) ...... 262
s 13A(7)(c)(ii) ...... 262
s 13A(7)(d) ...... 258
s 13A(9) ...... 262
s 13H ...... 261
s 13I ...... 261
s 13J(1)(b) ...... 262
s 13J(1)(c) ...... 260
s 13J(1)(c)(ii) ...... 262
s 13K(2) ...... 262
s 14 ...... 260
Land Tax Act 1956 (NSW) ...... 579
Land Tax Act 2005 (Vic) ...... 579
s 66 ...... 144
s 66(c) ...... 144
s 68 ...... 144, 145
Land Tax Act 2010 (Qld) ...... 579
Land Tax (Miscellaneous) Amendment Bill 2019 (SA) ...... 254–256, 258–262
Legal Profession Conduct Rules 2010 (WA) ...... 26
Legal Profession Uniform Law Application Act 2014 (Vic) ...... 384
Sch 1
– s 10(1) ...... 386
National Cabinet Mandatory Code of Conduct – SME Commercial Leasing Principles During COVID-19 ...... 632
New Business Tax System (Taxation of Financial Arrangements) Bill (No. 1) 2003 ...... 172
New Business Tax System (Thin Capitalisation) Bill 2001 ...... 149
Partnership Act 1892 (NSW)
s 20(1) ...... 548
s 22 ...... 548
Partnership Act 1895 (WA)
s 30(1) ...... 546
s 30(2) ...... 546
s 32 ...... 546
s 33 ...... 546
Partnership Act 1958 (Vic)
s 24(1) ...... 548
s 26 ...... 548
Pay As You Go Withholding Non-compliance Tax Act 2012 ...... 495
Payroll Tax Act 2007 (Vic)
s 32 ...... 249
s 32(1) ...... 249
s 32(2) ...... 251
s 35 ...... 250
s 35(1) ...... 249
Powers of Attorney Act 1980 (NT) ...... 641
s 22(8) ...... 641
Powers of Attorney Act 1998 (Qld) ...... 641
s 73 ...... 641
s 89 ...... 641
Powers of Attorney Act 2000 (Tas) ...... 641
s 31(2A)(i) ...... 641
s 32AB ...... 641
Powers of Attorney Act 2003 (NSW) ...... 641
s 10 ...... 641
s 11 to 13 ...... 641
s 12 ...... 641
Powers of Attorney Act 2006 (ACT) ...... 641
s 34 ...... 641
Powers of Attorney Act 2014 (Vic) ...... 641
s 64 ...... 641
s 64(2) ...... 641
s 67 ...... 641
Powers of Attorney and Agency Act 1984 (SA) ...... 641
s 7 ...... 639
Retail and Other Commercial Leases (COVID-19) Regulation 2020 (NSW) ...... 632
Retail Leases Act 1994 (NSW) ...... 632
Retail Leases Act 2003 (Vic) ...... 633
Revenue Laws Amendment Act 2019 (WA) ...... 568
Social Security Act 1991 ...... 600
Stamp Act 1921 (WA)
Pt IIIBA
– Div 3B ...... 27
Stamp Duties Act 1923 (SA) ...... 579
s 2(14)(b)(ii) ...... 579
s 71(5)(h) ...... 579
s 71(8) ...... 579
s 72(6) ...... 579
s 72(7) ...... 579
s 91 to 96 ...... 571
s 102 ...... 571
Stamp Duty Act 1978 (NT)
s 56NA ...... 571
s 56NB ...... 571
Stamps Act 1958 (Vic)
Third Schedule ...... 508
State Taxation Acts Further Amendment Bill 2008 (Vic) ...... 509
Succession Act 1981 (NSW)
Pt 3.3 ...... 641
Superannuation Guarantee (Administration) Act 1992 ...... 92, 494
Pt 7 ...... 93
s 6(1) ...... 92
s 12 ...... 92
s 12(3) ...... 92
s 59 ...... 475
Superannuation Industry (Supervision) Act 1993 ...... 70, 142, 265, 384, 541, 632
Pt 7 ...... 385
s 6 ...... 385
s 6(1)(e) ...... 385
s 6(1)(ea) ...... 385
s 6(1)(f) ...... 385
s 6(1)(fa) ...... 385
s 6(1)(g) ...... 385
s 6(2AA) to (2AC) ...... 385
s 10 ...... 503
s 10(1) ...... 629
s 17A ...... 388, 573, 574
s 17A(2) ...... 502, 503
s 17A(3) ...... 574
s 17A(4)(b) ...... 502
s 17B ...... 388
s 31(1) ...... 388
s 42A ...... 502
s 66 ...... 142, 214, 385
s 67A ...... 629
s 68B ...... 388, 390
s 68B(1) ...... 389
s 71(1) ...... 629
s 71(8) ...... 629
s 71(9) ...... 629
s 82 ...... 210
s 83 ...... 210
s 196 ...... 389
s 196(2) ...... 389
s 196(3) ...... 389
s 315 ...... 389
s 315(2) ...... 389
Superannuation Industry (Supervision) Regulations 1994 ...... 142, 265, 385, 541, 632
Div 13.3A ...... 634
reg 4.09(2)(e) ...... 265, 386
reg 6.21(1) ...... 503
reg 6.22(2) ...... 503
reg 6.22(3)(a) ...... 503
reg 6.22(3)(b) ...... 503
reg 7.04 ...... 214
reg 13.22C ...... 209, 210
reg 13.22D ...... 209, 210, 634
Tax Administration Act 1994 (NZ)
s 20B to 20G ...... 26
Tax Agent Services Act 2009 ...... 54, 82, 111, 190, 232, 384, 474, 601
Div 30 ...... 26
s 20-5(1)(a) ...... 6, 604
s 30-10(1) ...... 605
s 30-35(1)(b) ...... 111
s 40-5(1)(b) ...... 543
s 90-5 ...... 23, 26, 384
Tax Agent Services Regulations 2009 ...... 232
Sch 1 ...... 24
Sch 2 ...... 24
Tax and Superannuation Laws Amendment (2016 Measures No. 2) Act 2017 ...... 359, 363
Sch 1 ...... 364
Tax and Superannuation Laws Amendment (debt and equity scheme integrity rules) Bill ...... 363
Tax Laws Amendment (2004 Measures No. 1) Bill 2004 ...... 430
Tax Laws Amendment (2006 Measures No. 3) Bill 2006 ...... 484
Tax Laws Amendment (2006 Measures No. 4) Bill 2006 ...... 628
Tax Laws Amendment (2008 Measures No. 1) Bill 2008 ...... 76
Tax Laws Amendment (2011 Measures No. 5) Act 2011 ...... 323
Tax Laws Amendment (2011 Measures No. 5) Bill 2011 ...... 141, 429
Tax Laws Amendment (2012 Measures No. 2) Act 2012 ...... 495
Tax Laws Amendment (2012 Measures No. 2) Bill 2012 ...... 495
Tax Laws Amendment (Combating Multinational Tax Avoidance) Act 2015 ...... 392
Tax Laws Amendment (Loss Recoupment Rules and Other Measures) Bill 2005
Sch 1 ...... 174
Tax Laws Amendment (Political Contributions and Gifts) Bill 2008 ...... 82
Tax Laws Amendment (Political Contributions and Gifts) Bill 2010 ...... 76, 82
Tax Laws Amendment (Research and Development) Bill 2010 ...... 133, 134
Tax Laws Amendment (Small Business Restructure Roll-over) Bill 2016 ...... 378
Tax Laws Amendment (Tax Incentives for Innovation) Bill 2016 ...... 66
Tax Laws Amendment (Transfer of Provisions) Bill 2010 ...... 495
Taxation Administration Act 1953 ...... 93, 183, 269
Pt IVC ...... 84–86, 270, 320
s 8AAG ...... 32
s 14ZZK ...... 84
s 14ZZK(b)(i) ...... 24
s 14ZZO ...... 84, 322
s 14ZZO(b)(i) ...... 24
Sch 1
– Div 268 ...... 189, 491
– Div 269 ...... 184, 491, 492
– Div 290 ...... 26
– Div 353 ...... 24, 25
– Div 370 ...... 359
– Subdiv 290-C ...... 134
– Subdiv 290-D ...... 134
– Subdiv 396-B ...... 57
– s 12-35 ...... 183, 184
– s 12-40 ...... 183
– s 12-47 ...... 183
– s 12-60 ...... 183
– s 12-190 ...... 183
– s 14-5 ...... 183, 184
– s 14-15 ...... 194
– s 14-200 ...... 477
– s 16-25 ...... 184, 195
– s 16-25(1) ...... 186, 194
– s 16-25(2) ...... 195
– s 16-30 ...... 184
– s 16-70 ...... 184
– s 16-150 ...... 184, 186, 194
– s 26-105 ...... 184–186
– s 26-105(1) ...... 186
– s 26-105(1)(a)(ii) ...... 186
– s 26-105(1)(b)(i) ...... 186
– s 26-105(2) ...... 186
– s 26-105(7) ...... 184–186
– s 26-105(8) ...... 184–186
– s 265-90(1) ...... 93
– s 269-15 ...... 494, 495
– s 269-15(1) ...... 495
– s 269-20 ...... 495
– s 269-20(3)(b) ...... 495
– s 269-20(4) ...... 495
– s 269-20(5) ...... 495
– s 269-25 ...... 495
– s 269-25(1) ...... 495
– s 269-25(4) ...... 495
– s 269-30 ...... 494
– s 269-30(1) ...... 495
– s 269-30(2) ...... 493, 495
– s 269-30(3) ...... 495
– s 269-35 ...... 494, 495
– s 269-35(3A) ...... 495
– s 269-40 ...... 495
– s 269-52 ...... 495
– s 284-75(1) ...... 172, 322
– s 284-75(2) ...... 171
– s 284-75(3) ...... 477
– s 284-75(5) ...... 171, 172
– s 284-90 ...... 171, 172, 478
– s 284-90(1) ...... 171
– s 284-225 ...... 185
– s 288-25 ...... 296
– s 290-50(1) ...... 130
– s 290-60 ...... 130
– s 290-65 ...... 130, 131
– s 353-10 ...... 21, 322
– s 353-15 ...... 21, 322
– s 353-25 ...... 322
– s 355-25 ...... 417
– s 355-25(2) ...... 417
– s 355-50(2) ...... 236
– s 355-72(1) ...... 164
– s 370-5 ...... 360
– s 370-5(1)(a) ...... 363
– s 370-5(1)(b) ...... 363
– s 370-5(1)(b)(i) ...... 363
– s 370-5(1)(b)(ii) ...... 363
– s 370-5(1)(c) ...... 363
– s 370-5(4) ...... 363
– s 370-5(5) ...... 363
– s 370-15 ...... 364
– s 370-20 ...... 364
– s 384-10(1) ...... 93
– s 389-5 ...... 184, 186, 194
– s 389-20 ...... 184, 190
– s 396-55 ...... 187
– s 396-70(4) ...... 187
Taxation Administration Act 1996 (NSW)
s 88 ...... 88
Taxation Administration Act 1996 (SA)
s 85 ...... 88
Taxation Administration Act 1997 (Tas)
s 81 ...... 88
Taxation Administration Act 1997 (Vic)
s 98 ...... 88
Taxation Administration Act 2001 (Qld)
s 66 ...... 88
Taxation Administration Act 2003 (WA)
s 37 ...... 88
Taxation Administration Regulations 1976
reg 64 ...... 195
Taxation Administration Regulations 2017
reg 70 ...... 187
Taxation Administration (Tax Debt Information Disclosure) Declaration 2019 ...... 164
Taxation Laws Amendment Bill 1990 ...... 497
Taxation Laws Amendment Bill (No. 2) 1992 ...... 501
Trade Practices Act 1974
s 155 ...... 36
Treasury Laws Amendment (2018 Measures No. 4) Act 2019 ...... 189, 193
Sch 5 ...... 495
Treasury Laws Amendment (2018 Superannuation Measures No. 1) Act 2019 ...... 233, 325
Sch 2 ...... 325
Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2018 ...... 325
Treasury Laws Amendment (2019 Measures No. 2) Bill 2019 ...... 233
Treasury Laws Amendment (2019 Measures No. 3) Bill 2019 ...... 349, 362, 364, 437
Treasury Laws Amendment (2019 Tax Integrity and Other Measures No. 1) Act 2019 ...... 289, 294
Sch 3 ...... 294
Treasury Laws Amendment (2019 Tax Integrity and Other Measures No. 1) Bill 2019 ...... 109, 164, 193, 195, 552
Sch 3 ...... 113, 203, 205, 207, 208, 552
Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Act 2018 ...... 187, 193
Treasury Laws Amendment (Black Economy Taskforce Measures No. 2) Act 2018 ...... 187, 194, 195
Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020 ...... 491, 495
Sch 3 ...... 495
Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019 ...... 109, 189, 193, 492, 495
Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016 ...... 449
Treasury Laws Amendment (International Tax Agreements) Bill 2019 ...... 233
Treasury Laws Amendment (Making Sure Foreign Investors Pay Their Fair Share of Tax in Australia and Other Measures) Act 2019 ...... 99, 454
Treasury Laws Amendment (Making Sure Foreign Investors Pay Their Fair Share of Tax in Australia and Other Measures) Bill 2018 ...... 99
Treasury Laws Amendment (Making Sure Multinationals Pay Their Fair Share of Tax in Australia and Other Measures) Bill 2019 ...... 110
Treasury Laws Amendment (Measures for a later sitting) Bill 2018 ...... 73, 74
Treasury Laws Amendment (Measures for a later sitting) Bill 2019 ...... 213, 230
Treasury Laws Amendment (Measures for Consultation) Bill 2019 ...... 298, 379, 392
Treasury Laws Amendment (Recovering Unpaid Superannuation) Act 2020 ...... 475
Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures) Bill 2019 ...... 289, 439, 501
Treasury Laws Amendment (Research and Development Tax Incentive) Bill 2019 ...... 538
Treasury Legislation Amendment (Repeal Day) Act 2015 ...... 25
Treasury Legislation Amendment (Repeal Day) Bill 2014 ...... 25
Trustee Act 1936 (SA)
s 59C ...... 446
Trustee Act 1958 (Vic)
s 63A ...... 446
Trustees Act 1962 (WA)
s 90 ...... 446
Trusts Act 1973 (Qld)
s 95 ...... 446
Variation of Trusts Act 1994 (Tas)
s 13 to 15 ...... 446
Rulings and other materials
Australian Taxation Office
CRP 2017/1 ...... 360, 363, 364
CRP 2017/2 ...... 361, 364
CRP 2020/1 ...... 361, 417
GN 2020/1 ...... 541
GSTD 2002/3 ...... 188
GSTR 2001/4 ...... 200
GSTR 2003/3 ...... 484
GSTR 2006/1 ...... 417
GSTR 2006/4 ...... 416
GSTR 2008/3 ...... 630
GSTR 2012/5 ...... 483, 484
GSTR 2012/6 ...... 483, 484
GSTR 2012/7 ...... 483, 484
GSTR 2019/1 ...... 345
GSTR 2019/D2 ...... 235
ID 2003/589 ...... 233
ID 2006/34 ...... 497
ID 2007/60 ...... 324, 611
ID 2010/54 ...... 432, 628
ID 2010/55 ...... 432, 628
IT 2167 ...... 501
IT 2622 ...... 436
IT 2650 ...... 302, 304–306
LCG 2016/2 ...... 377
LCG 2016/3 ...... 377, 378
LCR 2015/1 ...... 100
LCR 2017/3 ...... 449
LCR 2017/D6 ...... 5
LCR 2018/8 ...... 187, 188
LCR 2018/9 ...... 212
LCR 2018/D8 ...... 187, 188
LCR 2018/D10 ...... 201
LCR 2019/1 ...... 5
LCR 2019/4 ...... 188, 195
LCR 2019/4EC ...... 195
LCR 2019/5 ...... 345
LCR 2019/D2 ...... 99, 100, 636
LCR 2019/D3 ...... 233, 325, 326, 634
LCR 2019/D4 ...... 454–456
MSV 2009/1 ...... 476
MT 2012/3 ...... 185
MVE 2020/D1 ...... 540
PBR 76868 ...... 324
PBR 1012191260298 ...... 373
PBR 1051238902389 ...... 375
PBR 1051286776633 ...... 378
PBR 1051386393245 ...... 378
PBR 1051386604629 ...... 378
PBR 1051401067097 ...... 378
PBR 1051401566911 ...... 377
PBR 7920126593966 ...... 378
PCG 2016/5 ...... 634
PCG 2016/6 ...... 199
PCG 2016/16 ...... 382, 383, 437, 490
PCG 2017/2 ...... 235
PCG 2017/13 ...... 58
PCG 2018/5 ...... 515
PCG 2018/9 ...... 345
PCG 2019/5 ...... 58, 151–153, 314, 498, 501
PCG 2019/5EC ...... 153
PCG 2019/D2 ...... 199, 200
PCG 2019/D3 ...... 218–220
PCG 2019/D4 ...... 492, 495
PCG 2019/D6 ...... 234, 326
PCG 2020/1 ...... 475
PCG 2020/3 ...... 601
PCG 2020/4 ...... 601
PS LA 2000/2 ...... 630
PS LA 2003/12 ...... 312, 437
PS LA 2007/11 ...... 364
PS LA 2009/4 ...... 57
PS LA 2010/4 ...... 58
PS LA 2011/18 ...... 495
PS LA 2011/27 ...... 162
PS LA 2019/D2 ...... 622
SGR 2005/1 ...... 92
SGR 2009/2 ...... 92
SMSFR 2009/3 ...... 210, 634
SMSFR 2009/4 ...... 629
SMSFR 2010/2 ...... 641
SMSFRB 2020/1 ...... 541
TA 2015/3 ...... 133, 134
TA 2016/12 ...... 429
TA 2017/1 ...... 99
TA 2017/2 ...... 133, 134
TA 2017/3 ...... 133, 134
TA 2017/4 ...... 133, 134
TA 2017/5 ...... 133, 134
TA 2018/1 ...... 198
TA 2019/2 ...... 290
TA 2020/1 ...... 417, 514–516
TAS 2020/1 ...... 601
TD 93/D115 ...... 557
TD 94/89 ...... 419
TD 1999/67 ...... 9
TD 1999/68 ...... 8, 9
TD 1999/70 ...... 501
TD 1999/83 ...... 91
TD 2000/15 ...... 9
TD 2003/28 ...... 628
TD 2004/3 ...... 315, 437
TD 2007/11 ...... 380
TD 2012/21 ...... 445
TD 2017/23 ...... 323, 324, 433
TD 2017/24 ...... 323, 324, 433
TD 2018/D3 ...... 373, 374, 379
TD 2019/7 ...... 324
TD 2019/10 ...... 110, 148, 150
TD 2019/11 ...... 110
TD 2019/12 ...... 148–150
TD 2019/14 ...... 345, 379
TD 2019/D5 ...... 166
TD 2019/D6 ...... 166, 167, 323, 324, 432, 437, 486, 489, 490, 562, 611, 626, 628
TD 2019/D7 ...... 167, 323, 324, 432, 486–490, 562, 626, 628
TD 2019/D8 ...... 234, 235
TD 2019/D9 ...... 233
TD 2019/D10 ...... 291, 489, 490
TD 2019/D11 ...... 290
TD 2020/1 ...... 416
TD 2020/3 ...... 540
TD 2020/4 ...... 540
TPRS 2019/1 ...... 57, 187, 195
TR 92/3 ...... 513
TR 93/8 ...... 172
TR 93/17 ...... 513
TR 93/30 ...... 601
TR 95/35 ...... 200
TR 98/17 ...... 302, 304–306
TR 1999/10 ...... 83
TR 1999/16 ...... 482
TR 2003/1 ...... 218, 219
TR 2004/D25 ...... 435, 630
TR 2005/12 ...... 429, 430
TR 2005/D25 ...... 630
TR 2006/14 ...... 317, 436, 437, 501
TR 2007/1 ...... 148
TR 2010/1 ...... 200
TR 2010/3 ...... 430
TR 2013/5 ...... 447–449
TR 2014/7 ...... 199
TR 2017/D10 ...... 372
TR 2018/3 ...... 636
TR 2018/5 ...... 91
TR 2018/6 ...... 372, 377
TR 2019/1 ...... 11, 13, 553
TR 2019/2 ...... 5
TR 2019/6 ...... 350
TR 2019/D2 ...... 218, 219
TR 2019/D4 ...... 291
TR 2019/D6 ...... 349
TR 2020/1 ...... 539, 540
Variation 2020/D1 ...... 477
Double tax agreements
Australia–UK
– art 12(7) ...... 623
– art 25 ...... 292
Australia–US
– art 2(1)(b)(i) ...... 567
– art 4(1)(a)(i) to (ii) ...... 567
– art 4(1)(a)(iii) to (iv) ...... 567
– art 4(1)(b) ...... 567
– art 6 ...... 567
– art 10 ...... 489
– art 10 to 12 ...... 567
– art 11 ...... 489
– art 12 ...... 489
– art 13 ...... 567
– art 16 ...... 567
– art 16(1) ...... 567
– art 16(2)(g)(i) ...... 567
– art 16(2)(g)(ii) ...... 567
– art 21 ...... 563, 567
– art 21(3) ...... 563
– art 22 ...... 567
– art 22(2) ...... 169
– art 24(1)(a) ...... 567
– art 24(1)(b) ...... 567
– art 27 ...... 567
Revenue NSW
Revenue Ruling LT 003v2 ...... 262
Tax Practitioners Board
Code of Professional Conduct ...... 111
Cases
12 Years Juice Foods Australia Pty Ltd v FCT [2015] FCA 741 ...... 21, 24, 25
304 Wanda Street Pty Ltd and FCT [2020] AATA 921 ...... 605
A
Adamas v O’Connor (2011) 282 ALR 302 ...... 24
Addy v FCT [2019] FCA 1768 ...... 291, 304, 306
AGC (Investments) Ltd v FCT (1991) 21 ATR 1379 ...... 40
Alcan (NT) Alumina Pty Ltd v Commr of Territory Revenue [2009] HCA 41 ...... 451
Allen v FCT [2011] FCAFC 118 ...... 172
Allied Pastoral Holdings Pty Ltd v FCT [1983] 1 NSWLR 1 ...... 89
Amede’s case: International Indigenous Football Foundation Australia Pty Ltd; FCT v [2018] FCA 528 ...... 131
Applegate; FCT v (1979) 38 FLR 1 ...... 303, 304
Applegate v FCT [1978] 1 NSWLR 126 ...... 304
Archibald Howie Pty Ltd v Commr of Stamp Duties (NSW) [2005] HCA 3 ...... 47
Ariss and FCT [2019] AATA 2958 ...... 168
Asahi Holdings (Australia) Pty Ltd v Pacific Equity Partners Pty Ltd (No. 4) [2014] FCA 796 ...... 22, 24
Ashton and Ashton [1986] FamCA 20 ...... 397
Attorney-General (Cth) v Breckler (1999) 197 CLR 83 ...... 503
Attorney-General (NT) v Kearney (1985) 158 CLR 500 ...... 25
Attorney-General (NT) v Maurice (1986) 161 CLR 475 ...... 24, 25
Augustus v Permanent Trustee Co (Canberra) Ltd [1971] HCA 25 ...... 373
Aurora Developments Pty Ltd v FCT (No. 2) [2011] FCA 1090 ...... 173
Australia and New Zealand Savings Bank Ltd; FCT v (1994) 181 CLR 466 ...... 88
Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36 ...... 446
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 ...... 37
Australian Competition and Consumer Commission v Air New Zealand Ltd (No. 1) (2012) 207 FCR 448 ...... 89
Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (1998) 81 FCR 526 ...... 24
Australian Competition and Consumer Commission v Maritime Union of Australia [2001] FCA 1549 ...... 610
Australian Machinery and Investments Co Ltd v DCT [1946] HCA 65 ...... 628
Australian Securities and Investments Commission v Rich [2005] NSWSC 417 ...... 89
Australian Workers’ Union v BlueScope Steel (AIS) Pty Ltd [2018] FCA 80 ...... 92
AWB Ltd v Cole (2006) 152 FCR 382 ...... 25
AWB Ltd v Cole (No. 5) [2006] FCA 1234 ...... 24
B
Baba v Sheehan [2019] NSWSC 1281 ...... 263
BAC Holdings Ltd v FCT [2020] FCA 413 ...... 603
Baker v Campbell [1983] HCA 39 ...... 20, 25, 26
Bamford; FCT v [2010] HCA 10 ...... 323
Bargwanna; FCT v [2012] HCA 11 ...... 446
Barnes v FCT [2007] FCAFC 88 ...... 25
Belfield v Belfield [2012] NSWCA 415 ...... 641
Bellinz v FCT (1998) 39 ATR 198 ...... 40
Bernard & Bernard [2019] FamCA 421 ...... 394–397
BHP Billiton Ltd; FCT v [2019] FCAFC 4 ...... 455
BHP Billiton Ltd v FCT [2020] HCA 5 ...... 541
Binetter v FCT [2016] FCAFC 163 ...... 604
Bosanac v FCT [2019] FCAFC 116 ...... 111, 112
Bourne and FCT [2020] AATA 190 ...... 477
BP Australia Ltd v FCT [1965] UKPCHCA 2 ...... 329, 330, 617
Brassey v Chalmers [1852] EngR 995 ...... 264
Brine v Carter [2015] SASC 205 ...... 41, 42, 506
Burgess v Burgess [2018] WASC 279 ...... 41–43
Burton v FCT [2019] FCAFC 141 ...... 169
Byrnes v Kendle [2011] HCA 26 ...... 446
Bywater Investments Ltd v FCT; Hua Wang Bank Berhad v FCT [2016] HCA 45 ...... 90, 236
C
C v W (No. 2) [2016] NSWSC 945 ...... 640
Cameco Corporation v The Queen [2018] TCC 195 ...... 333, 371
Cameron Brae Pty Ltd v FCT [2007] FCAFC 135 ...... 172
Cameron v FCT [2012] FCAFC 76 ...... 215
Campbell and FCT [2019] AATA 2043 ...... 110, 433
Campbell v TL Clacher No. 2 Pty Ltd [2019] QSC 218 ...... 271–274
Caratti v The Queen [2000] WASCA 279 ...... 89
Carter v Northmore Hale Davy & Leake [1995] HCA 33 ...... 24
Case H33, 76 ATC 285 ...... 81
Cassaniti; FCT v [2018] FCAFC 212 ...... 84–88
Castagna v R; Agius v R [2019] NSWCCA 114 ...... 58
Cavill Hotels Pty Ltd, Re [1998] 1 Qd R 396 ...... 372
CBA Investments Ltd v Northern Star Ltd [2002] NSWCA 94 ...... 65
CDPV Pty Ltd v Commr of State Revenue [2017] VSCA 89 ...... 144–146
CDPV Pty Ltd v Commr of State Revenue (Vic) (2016) 103 ATR 385 ...... 88
Chacmol Holdings Pty Ltd v Handberg [2005] FCAFC 40 ...... 446
Chevron Australia Holdings Pty Ltd v FCT [2017] FCAFC 62 ...... 332
Chevron Australia Holdings Pty Ltd v FCT (No. 4) [2015] FCA 1092 ...... 85, 89
Chhua and FCT [2020] AATA 832 ...... 604
Chief Commissioner of State Revenue (NSW) v Dick Smith Electronics Holdings Pty Ltd [2005] HCA 3 ...... 47
Chief Commissioner of State Revenue (NSW) v Metricon Qld Pty Ltd [2017] NSWCA 11 ...... 145
Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Ltd (2003) 216 CLR 161 ...... 88
Citibank Ltd; FCT v (1989) 20 ATR 292 ...... 21, 25
CityLink Melbourne Ltd; FCT v [2006] HCA 35 ...... 329, 617
Clark; FCT v [2011] FCAFC 5 ...... 445
Clements, Dunne & Bell Pty Ltd v Commr of Australian Federal Police (2001) 48 ATR 650 ...... 22, 25
Cliffs International Inc v FCT [1979] HCA 8 ...... 616
Coles Myer Ltd v Commr of State Revenue (Vic) [1998] VSC 288 ...... 480
Collier v Hicks [1831] EngR 686 ...... 268
Colonial First State Investments Ltd v FCT [2011] FCA 16 ...... 381, 382, 630
Colonial Mutual Life Assurance Society Ltd v FCT [1953] HCA 68 ...... 618
Commercial Nominees of Australia Ltd; FCT v [1999] FCA 1455 ...... 445
Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 ...... 24, 25
Commissioner of State Revenue v Placer Dome Inc [2018] HCA 59 ...... 27–30, 481
Commissioner of State Revenue v Rojoda Pty Ltd [2020] HCA 7 ...... 545, 546
Commissioner of State Revenue v The Optical Superstore Pty Ltd [2018] VSC 524 ...... 251
Commissioner of State Revenue v The Optical Superstore Pty Ltd [2019] VSCA 197 ...... 248–251
Commissioner of State Revenue v Victoria Gardens Developments Pty Ltd [2000] VSCA 233 ...... 508, 509
Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46 ...... 389, 391
Comptroller of Stamps v Yellowco Five Pty Ltd [1993] VicRp 90 ...... 508, 509
Consolidated Media Holdings; FCT v [2012] HCA 55 ...... 451
Consolidated Press Holdings Ltd; FCT v [2001] HCA 32 ...... 622
Construction, Forestry, Mining and Energy Union v Port Kembla Coal Terminal Ltd [2015] FCA 282 ...... 21, 25
Coombes (No. 2); FCT v (1999) 92 FCR 240 ...... 21
Coshott v FCT [2015] FCAFC 71 ...... 296
Council of the City of Newcastle v Royal Newcastle Hospital [1957] HCA 15 ...... 354, 451
Council of the City of Newcastle v Royal Newcastle Hospital [1959] UKPCHCA 1 ...... 451
Currie v Dempsey (1967) 69 SR (NSW) 116 ...... 88
Curtis Brown Ltd (as Agents for Stella Benson) v Jarvis (1929) 14 TC 744 ...... 490
D
Dagenmont Pty Ltd v Lugton [2007] QSC 272 ...... 447
Dalco; FCT v (1990) 168 CLR 614 ...... 84
Damjanovic v Maley [2002] NSWCA 230 ...... 269
Daniels Corporation International Pty Ltd v ACCC [2002] HCA 49 ...... 24, 25
Davidson and Davidson (1991) FLC ¶92-197 ...... 397
Davis Investments Pty Ltd v Commr of Stamp Duties (NSW) (1958) 100 CLR 392 ...... 47
Deal v Father Pius Kodakkathanath [2016] HCA 31 ...... 611
Deloitte Touche Tohmatsu v DCT (1998) 40 ATR 435 ...... 25
Dempsey and FCT [2014] AATA 335 ...... 305
Dickinson v Minister of Pensions [1953] 1 QB 228 ...... 88
Donoghue; FCT v [2015] FCAFC 183 ...... 25
Douglass v FCT [2019] FCA 1246 ...... 167, 195
DXGQ and FCT [2020] AATA 807 ...... 604
E
Easterbrook v Young [1977] HCA 16 ...... 501
Eichmann; FCT v [2019] FCA 2155 ...... 353–355, 450–452
Eichmann and FCT [2019] AATA 162 ...... 353
Ellison v Sandini Pty Ltd [2018] FCAFC 44 ...... 376, 482
Elsawi and Tax Practitioners Board [2020] AATA 998 ...... 605
Energy Resources of Australia Ltd; FCT v [1996] HCA 10 ...... 172
Engineering Manager and FCT [2014] AATA 969 ...... 305
Ensham Resources Pty Ltd v AIOI Insurance Co Ltd (2012) 209 FCR 1 ...... 25
Esquire Nominees Ltd v FCT [1973] HCA 67 ...... 489
Essex and Essex [2009] FamCAFC 236 ...... 397
Esso Australia Resources Ltd v FCT (1999) 201 CLR 49 ...... 20, 21, 24, 25
Euroasian Holdings Pty Ltd v Ron Diamond Plumbing Pty Ltd (in liq) [1996] FCA 1262 ...... 430
F
Favotto Family Restaurants Pty Ltd v Chief Commr of State Revenue [2020] NSWSC 120 ...... 479, 482
First Master Capital Pty Ltd v Chief Commr of State Revenue [2019] NSWCATAD 35 ...... 45–47
Fischer v Nemeske [2016] HCA 11 ...... 427–430
Fitzwood Pty Ltd v Unique Goal Pty Ltd (in liq) [2001] FCA 1628 ...... 447
Flegg and FCT [2007] AATA 1336 ...... 81
Fletcher v FCT [1991] HCA 42 ...... 430
Fortunatow v FCT [2019] FCA 1247 ...... 167, 195, 215
Freelance Global Ltd v Chief Commr of State Revenue [2014] NSWSC 127 ...... 249
Fundy Settlement v Canada [2012] 1 SCR 520 ...... 90
G
George; DCT v 2002 ATC 4930 ...... 495
George v FCT (1952) 86 CLR 183 ...... 84, 88
Glencore International AG v FCT [2019] HCA 26 ...... 476
Glencore Investment Pty Ltd v FCT [2019] FCA 1432 ...... 332–334, 371
Glengallan Investments Pty Ltd v Arthur Andersen [2001] QCA 115 ...... 25
Global Custodians Ltd v Mesh [2002] NSWSC 283 ...... 446
Gonciarz v Bienias [2019] WASC 104 ...... 41–44
Gould and Tax Practitioners Board [2019] AATA 1056 ...... 6
GP International Pipecoaters Pty Ltd v FCT (1990) 170 CLR 124 ...... 617
Grant v Downs [1976] HCA 63 ...... 20, 24, 25
Greenhatch; FCT v [2012] FCAFC 84 ...... 240
Greig v FCT [2020] FCAFC 25 ...... 543
Grofam Pty Ltd v Australia and New Zealand Banking Group Ltd (1993) 43 FCR 408 ...... 25
Guest v FCT [2007] FCA 193 ...... 89
Guss v DCT [2006] FCAFC 88 ...... 35–37, 40
H
Hallstroms Pty Ltd v FCT [1946] HCA 34 ...... 617
Handsley and FCT [2019] AATA 917 ...... 6
Harding; FCT v [2019] HCATrans 191 ...... 302, 305
Harding v FCT [2018] FCA 837 ...... 303
Harding v FCT [2019] FCAFC 29 ...... 90, 302–304
Haritos v FCT [2015] FCAFC 92 ...... 85
Harmer; FCT v (1990) 21 ATR 623 ...... 628
Harris and Harris [1991] FamCA 124 ...... 397
Harris & Dewell [2018] FamCAFC 94 ...... 395
Hart; FCT v [2003] HCATrans 452 ...... 623
Hart; FCT v [2004] HCA 26 ...... 622
Hart v FCT [2019] FCAFC 179 ...... 293
Healius Ltd v FCT [2019] FCA 2011 ...... 351, 617
Herdegen v FCT [1988] FCA 419 ...... 630
Hii v FCT [2019] FCA 1589 ...... 268–270
Hii v FCT [2019] HCATrans 97 ...... 268–270
Hill and Tax Practitioner Board [2020] AATA 678 ...... 543
Hill (Viscount) v Hill (Dowager Viscountess) [1897] 1 QB 483 ...... 446
Hodge v Griffiths [1940] Ch 260 ...... 317
Howard and FCT [2019] AATA 1910 ...... 111
Howard v FCT [2012] FCAFC 149 ...... 630
Hua Wang Bank Berhad v FCT [2014] FCA 1392 ...... 6
I
ICAC v Cunneen (2015) 256 CLR 1 ...... 40
ICM Agriculture Pty Ltd v The Commonwealth [2009] HCA 51 ...... 329
In the marriage of Goodwin [1990] FamCA 147 ...... 397
In the matter of the Alan Synman Family Trust [2013] VSC 364 ...... 446
Inland Revenue Commissioners v Gray [1994] STC 360 ...... 547
International Combustion Ltd v IR Commrs (1932) 16 TC 532 ...... 490
International Indigenous Football Foundation Australia Pty Ltd; FCT v [2018] FCA 528 ...... 131, 132
Ioppolo & Hesford v Conti [2013] WASC 389 ...... 502, 506, 574
Ioppolo v Conti [2015] WASCA 45 ...... 574
J
JEL and DDF [2001] FamCA 1353 ...... 397
Jenkins v Ellett [2007] QSC 154 ...... 372, 444
JMA Accounting Pty Ltd v Carmody 2004 ATC 4916 ...... 25
John v FCT [1989] HCA 5 ...... 290
Jones v Dunkel [1959] HCA 8 ...... 86, 96
Jordan, Commissioner of Taxation v Second Commr of Taxation [2019] FCA 1602 ...... 235
Josip Dekanic and Tax Agents’ Board of New South Wales [1982] AATA 195 ...... 543
K
Kafataris v DCT [2008] FCA 1454 ...... 381
Karger v Paul [1984] VicRp 13 ...... 271, 503, 504, 506, 507
Katz v Grossman [2005] NSWSC 934 ...... 505
Kearns v Hill (1990) 21 NSWLR 107 ...... 372, 444, 446
Kelly and Kelly (No. 2) [1981] FamCA 78 ...... 397
Kennedy v Wallace [2004] FCAFC 337 ...... 25
Kennon v Spry [2008] HCA 56 ...... 397
Koitaki Para Rubber Estates Ltd v FCT (1941) 64 CLR 241 ...... 91
Krok v FCT [2015] FCA 51 ...... 22
L
Leda Manorstead Pty Ltd v Chief Commr of State Revenue (NSW) [2010] NSWSC 867 ...... 147
Lemongrove Services Pty Ltd v Rilroll Pty Ltd [2019] NSWCA 174 ...... 320
Le’Sam Accounting Pty Ltd and Tax Practitioners Board [2020] AATA 890 ...... 604
Linfox Transport (Aust) Pty Ltd v Arthur Yates & Co Ltd [2003] NSWSC 876 ...... 89
Londonderry’s Settlement, Re [1965] Ch 918 ...... 274
Ludekens; FCT v [2013] FCAFC 100 ...... 131
M
Ma; FCT v (1992) 37 FCR 225 ...... 85
Mann v Carnell (1999) 201 CLR 1 ...... 25
Mansell v Mansell [1732] EngR 187 ...... 264
Marsella v Wareham (No. 2) [2019] VSC 65 ...... 43, 274, 502–507
Mayor of Wellington v Mayor of Lower Hutt [1904] AC 773 ...... 9
McIntosh v McIntosh [2014] QSC 99 ...... 41, 42, 506
McKenzie v McKenzie [1971] P 33 ...... 268
MD Commercial Pty Ltd v Commr of State Revenue [2019] VSCA 295 ...... 508–510
Melbourne Apartment Project Pty Ltd (as Trustee for Melbourne Apartment Project) v FCT [2019] FCA 2118 ...... 350
Mercanti v Mercanti [2015] WASC 297 ...... 263, 444, 446
Mercanti v Mercanti [2016] WASCA 206 ...... 274, 446
Messenger Press Pty Ltd; FCT v [2013] FCAFC 77 ...... 172, 173
Miley; FCT v [2017] FCA 1396 ...... 253
Miley and FCT [2019] AATA 5540 ...... 352
Mills v FCT [2012] HCA 51 ...... 622
Mills v Meeking [1990] HCA 6 ...... 510
Minera Las Bambas SA v Glencore Queensland Ltd [2018] EWHC 1658 ...... 61–65
Minera Las Bambas SA v Glencore Queensland Ltd [2019] EWCA Civ 972 ...... 61–65
Mingos v FCT [2019] FCA 834 ...... 59, 95–97, 320–322
Minister for Immigration and Multicultural and Indigenous Affairs v SGLB (2004) 78 ALD 224 ...... 25
Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72 ...... 389
Mitsubishi Electric Australia Pty Ltd v Victorian WorkCover Authority (2002) 4 VR 332 ...... 25
Montevento Holdings Pty Ltd v Scaffidi [2012] HCA 48 ...... 264
Montifiore v Browne [1858] EngR 1053 ...... 264
Mordecai v Mordecai (1988) 12 NSWLR 58 ...... 506, 507
Moreton Resources Ltd and Innovation and Science Australia [2018] AATA 3378 ...... 124, 126–128
Moreton Resources Ltd v Innovation and Science Australia [2019] FCAFC 120 ...... 126–128
Morton v Chief Adjudication Officer [1988] IRLR 444 ...... 63
Muir v Inland Revenue Commrs [1966] 1 WLR 1269 ...... 448
Murry; FCT v [1998] HCA 42 ...... 27–30, 481
Mussalli v FCT [2020] FCA 544 ...... 603
Myer Emporium Ltd; FCT v [1987] HCA 18 ...... 513
N
Narumon Pty Ltd, Re [2018] QSC 185 ...... 43, 641
Nathan v FCT [1918] HCA 45 ...... 489, 628
Norman and Tax Practitioners Board [2020] AATA 640 ...... 543, 605
NW Frozen Foods Pty Ltd v ACCC [1996] FCA 1134 ...... 389
O
Oceanic Life Ltd v Chief Commr of Stamp Duties (NSW) [1999] NSWCA 416 ...... 114
Ogden & Ogden [2010] FMCAfam 865 ...... 394
On Call Interpreters and Translators Agency Pty Ltd v FCT (No. 3) [2011] FCA 366 ...... 92
ONE.TEL Ltd v DCT [2000] FCA 270 ...... 22
Optical Superstore Pty Ltd v Commr of State Revenue (Review and Regulation) [2018] VCAT 169 ...... 248–251
Orica Ltd v FCT [2015] FCA 1399 ...... 623
Origin Energy Ltd v FCT (No. 2) [2020] FCA 409 ...... 602, 615–617
Oswal (Radhika Pankaj) v FCT (unreported, 10 June 2016) ...... 625–627
O’Toole v Scott [1965] AC 939 ...... 268
Oxford Instruments UK 2013 Ltd v Commrs for Her Majesty’s Revenue and Customs [2019] UKFTT 0254 (TC) ...... 619–623
P
Partridge v Equity Trustees Executors and Agency Co Ltd [1947] HCA 42 ...... 507
Pavihi; FCT v [2019] FCA 2056 ...... 388
Peter Greensill Family Co Pty Ltd (trustee) v FCT [2020] FCA 559 ...... 607, 625, 626
Peter Greensill Family Co Pty Ltd (trustee) v FCT (No. 2) [2020] FCA 597 ...... 607, 611
Pike v FCT [2019] FCA 2185 ...... 345
Pintarich v DCT [2017] FCA 944 ...... 31–39
Pintarich v DCT [2018] FCAFC 79 ...... 31–39
Pintarich v DCT [2018] HCASL 322 ...... 31
Placer Dome case: Commr of State Revenue v Placer Dome Inc [2018] HCA 59 ...... 27–30
Pollitt v R [1992] HCA 35 ...... 319
Potts v Miller [1940] HCA 453 ...... 171
Pratt Holdings Ltd; FCT v [2004] FCAFC 122 ...... 21, 24
Pratt Holdings Pty Ltd v FCT [2005] FCA 1247 ...... 24, 25
Price v FCT [2019] FCA 543 ...... 84, 87
Price v Underwood (No. 2) [2008] FamCA 267 ...... 641
Prudential case: R (on the application of Prudential plc) v Special Commr of Income Tax [2013] UKSC 1 ...... 23, 26
Q
Quality Publications Australia Pty Ltd v FCT [2009] FCA 1293 ...... 25
R
R (on the application of Prudential plc) v Special Commr of Income Tax [2013] UKSC 1 ...... 23, 26
Radhika Pankaj Oswal v FCT (unreported, 10 June 2016) ...... 625–627
Ramsden v FCT [2004] FCA 632 ...... 317
RBPK and Innovation and Science Australia [2018] AATA 1404 ...... 133
RCI Pty Ltd v FCT (2009) 76 ATR 591 ...... 25
Republic of Nauru v WET040 [No. 2] [2018] HCA 60 ...... 171
Ricegrowers Co-operative Mills Ltd v Bannerman and Trade Practices Commission (1981) 38 ALR 535 ...... 35, 36
Rigoli and FCT [2015] AATA 169 ...... 89
Rigoli v FCT [2016] FCAFC 38 ...... 85
Rinehart v Hancock Prospecting Pty Ltd [2019] HCA 13 ...... 377
Rio Tinto Ltd; FCT v (2006) 63 ATR 79 ...... 25
Ritson, In re; Ritson v Ritson [1899] 1 Ch 128 ...... 548
Roberts and Smith; FCT v [1992] FCA 363 ...... 429
Rojoda Pty Ltd and Commr of State Revenue [2017] WASAT 35 ...... 548
Rojoda Pty Ltd v Commr of State Revenue [2018] WASCA 224 ...... 548
Ronpibon Tin NL and Tongkah Compound NL v FCT [1949] HCA 15 ...... 133
Roszkiewicz and FCT [2019] AATA 931 ...... 7
Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5 ...... 446
Rus and FCT [2018] AATA 1854 ...... 354
Ryan Wealth Holdings Pty Ltd v Baumgartner [2018] NSWSC 1502 ...... 265, 386
S
Saunig; DCT v 2002 ATC 5135 ...... 495
Scaffidi v Montevento Holdings Pty Ltd [2011] WASCA 146 ...... 264
Scott and ASIC [2009] AATA 798 ...... 6
SDRQ and FCT [2019] AATA 2003 ...... 320–322
Semunigus v Minister for Immigration and Multicultural Affairs [1999] FCA 422 ...... 35, 37, 38
Semunigus v Minister for Immigration and Multicultural Affairs (2000) 96 FCR 533 ...... 35
Sharpcan Pty Ltd; FCT v [2019] HCA 36 ...... 292, 328–331, 617
Shin Kobe Maru v Empire Shipping Co Inc (1994) 181 CLR 404 ...... 40
Shmuel and Tax Practitioners Board [2019] AATA 2168 ...... 111
Sinclair and FCT [2010] AATA 902 ...... 23
Skeats’ Settlement, Re (1889) 42 Ch D 522 ...... 264
Slater Holdings Ltd; FCT v [1984] HCA 78 ...... 171
Smorgon v FCT (1979) 9 ATR 483 ...... 25
SNF (Australia) Pty Ltd v FCT [2010] FCA 635 ...... 333
Sole Luna Pty Ltd as Trustee for the PA Wade No. 2 Settlement Trust v FCT [2019] FCA 1195 ...... 170
Spencer v Commonwealth [1907] HCA 82 ...... 252
Spotless Services Ltd; FCT v 95 ATC 4775 ...... 489
Spotless Services Ltd; FCT v (1996) 186 CLR 404 ...... 622
Stanford v Stanford [2012] HCA 52 ...... 641
Steele v FCT [1999] HCA 7 ...... 73
Stein and Stein (1986) FLC ¶92-804 ...... 397
Stewart v FCT [2010] FCA 402 ...... 25
Stockton v FCT [2019] FCA 1679 ...... 292, 304, 306
Sturt Football Club Inc v Commr of State Taxation [2010] SASC 279 ...... 481
Swanson Superannuation Fund case: Marsella v Wareham (No. 2) [2019] VSC 65 ...... 43, 274, 502–507
SWPD and FCT [2020] AATA 555 ...... 542
T
Taylor v DCT [1969] HCA 25 ...... 628
Texas Co (Australasia) Ltd v FCT [1940] HCA 9 ...... 430
Thomas; FCT v [2018] HCA 31 ...... 88, 141
Thomas v FCT [2015] FCA 968 ...... 141
Thorne v Kennedy [2017] HCA 49 ...... 376
Tillmanns Butcheries Pty Ltd v Australasian Meat Industry Employees’ Union [1979] FCA 85 ...... 114
Tooheys Ltd v Commr of Stamp Duties (NSW) [1961] HCA 35 ...... 114
Trade Practices Commission v CSR Ltd [1990] FCA 762 ...... 391
Trani v Trani [2018] VSC 274 ...... 274
Trustee for the Estate of the late AW Furse No. 5 Will Trust v FCT (1990) 21 ATR 1123 ...... 375, 437
Trustee for the Michael Hayes Family Trust; FCT v [2019] FCAFC 226 ...... 352
Trustee for the Seabreeze Estate Unit Trust and FCT [2019] AATA 1395 ...... 59
Trustee for the Whitby Trust and FCT [2019] AATA 5637 ...... 417
Tyco Australia Pty Ltd v FCT [2007] FCA 1055 ...... 617
U
Ultimate Vision Inventions Pty Ltd and Innovation and Science Australia [2019] AATA 1633 ...... 129, 133
Union-Fidelity Trustee Co of Australia Ltd v FCT [1969] HCA 36 ...... 173, 628
United Aircraft Corporation; FCT v [1943] HCA 50 ...... 489
V
VCJN and FCT [2019] AATA 968 ...... 7
Victoria Power Networks Pty Ltd v FCT [2019] FCA 77 ...... 453
Visy Industries Holdings Pty Ltd v ACCC [2007] FCAFC 147 ...... 25
W
W Nevill & Co Ltd v FCT (1937) 56 CLR 290 ...... 623
Wade; FCT v (1951) 84 CLR 105 ...... 40
Walstern v FCT [2003] FCA 1428 ...... 172
Walton v R [1989] HCA 9 ...... 319
Waterford v Commonwealth [1987] HCA 25 ...... 24, 25
White Industries Australia Ltd v FCT (2007) 160 FCR 298 ...... 25
White Rock Properties Pty Ltd v Commr of State Revenue [2015] VSCA 77 ...... 508, 509
Whiting; FCT v [1943] HCA 45 ...... 628
Wilcox; FCT v 1982 ATC 4411 ...... 81
Wingecarribee Shire Council v Lehman Brothers Australia Ltd (in liq) (No. 5) [2011] FCA 245 ...... 25
Wood v Capita Insurance Services Ltd [2017] AC 1173 ...... 63
Wooster v Morris [2013] VSC 594 ...... 502, 505, 574
WR Carpenter Holdings Pty Ltd v FCT [2008] HCA 33 ...... 333
Authors
A
Alfonsi, N
Issues for large superannuation funds ...... 196
Ananda, A
Tax Counsel’s Report
– JobKeeper program ...... 600
– Legal professional privilege under fire? ...... 4
– Tax debt disclosure ...... 164
– Trade-offs and the federal Budget ...... 288
Ashworth, C
Deceased estates, real property and real issues ...... 307
B
Backhaus, S
Superannuation
– Executors, SMSFs and conflicts of duty ...... 41
Baghdasarayan, E
Alternative Assets Insights
– PCG 2019/D3: a way forward on the ALDT ...... 218
– TA 2020/1: intangible assets ...... 514
Banister, P
The black economy measures: how they affect you and your clients ...... 181
Bell, K
In-house facilitation, test cases and the AAT Small Business Division ...... 135
Bembrick, P
Mid Market Focus
– Think you’re selling shares in a small business? Guess again ...... 241
– When is a company carrying on a business? ...... 11
Bevan, C
Difficulties in settling disputes with the Commissioner of Taxation ...... 31
Blissenden, M
Residence tests for individuals: impact of the Harding decision ...... 302
Brandon, G
Mid Market Focus
– ASX listed junior exploration companies and tax losses: part 1 ...... 174
Briglia, P
A Matter of Trusts
– SMSFs and the use of bare trusts ...... 629
Brydges, N
A Matter of Trusts
– Residency of a trust, “don’t get it wrong” ...... 90
Bugden, L
Alternative Assets Insights
– Foreign superannuation funds and sovereign immunity ...... 454
Burgess, M
Tax and estate planning in 2020: what has changed? ...... 372
Burnett, C
International tax: “pillars” of strength or ruins in the making? ...... 365
Burns, A
Mid Market Focus
– Black economy measures increase taxpayers’ compliance ...... 118
– Tax and natural disasters ...... 421
Butler, D
Superannuation
– Downsizer contributions: basics, tips and traps ...... 211
– Executors, SMSFs and conflicts of duty ...... 41
– How the CGT rules work when a pension is in play ...... 511
– Is the SG system in need of an urgent overhaul? ...... 92
– NALI warning: LCR 2019/D3 ...... 325
– SMSF investment strategies: are they a financial product? ...... 265
– SMSF succession: minimising risk ...... 573
– SMSFs and rent relief due to COVID-19 ...... 632
– SMSFs investing via unit trusts ...... 142
– What is a reversionary pension? ...... 447
– When SMSF advice is unlawful ...... 384
C
Calokerinos, W
Reliability of evidence in tax disputes ...... 319
Campbell, S
A Matter of Trusts
– TD 2019/D6 and TD 2019/D7: (further) unintended consequences? ...... 323
Cardan, T
The director penalty regime and its extension to GST ...... 491
Cardwell, J
Member Profile ...... 19
Caredes, S
Tax Counsel’s Report
– Guidance for tax and superannuation laws ...... 108
– Is 40 the new 30? ...... 474
– Is the turbulence over? ...... 56
– Success breeds success ...... 415
Castelyn, D
Privilege or concession: the modern tax adviser’s challenge ...... 20
Cheah, W
Alternative Assets Insights
– ATO guidance on non-concessional MIT income ...... 99
Chu, H
Assessing market value ratios for roll-over relief provisions ...... 252
The Placer case (2018) from a valuation perspective ...... 27
Clements, J
Constructive ownership under the WA Duties Act ...... 568
Coia, E
Origin: an electric shock ...... 615
Colaluca, M
A Matter of Trusts
– Reg 13.22C unit trusts – opportunity or burden? ...... 209
Collins, P
Alternative Assets Insights
– Glencore v FCT: transfer pricing decision ...... 332
Connor, L
Member Profile ...... 180
Cormick, R
Member Profile ...... 246
Crosland, V
Alternative Assets Insights
– Significant global entities ...... 392
Crowley, A
Discretionarytrusts, non-TAP gains, and foreign beneficiaries ...... 624
D
De Zilva, N
Reconsidering the Commissioner’s remedial power ...... 359
Dodds, N
Icing, spreads and tax avoidance purposes ...... 619
Donald, A
Member Profile ...... 357
Donlan, T
Successful Succession
– Foreign person: potential discretionary trust beneficiary ...... 577
– The power, the attorney and the conflict transaction ...... 639
Donoghue, J
The director penalty regime and its extension to GST ...... 491
E
Einsiedel, L
Successful Succession
– Walls close in on trustee discretion ...... 271
F
Fettes, W
Superannuation
– How the CGT rules work when a pension is in play ...... 511
– SMSF succession: minimising risk ...... 573
Figot, B
Superannuation
– NALI warning: LCR 2019/D3 ...... 325
– SMSF investment strategies: are they a financial product? ...... 265
– SMSFs and rent relief due to COVID-19 ...... 632
– What is a reversionary pension? ...... 447
Folan, R
Tax Education
– How tax study can have a real impact ...... 179
– Not just another program ...... 69
– Tax Agent Program: advance your knowledge ...... 244
– The challenge in the juggle ...... 14
– The CTA Program: a good foundation for YTPs ...... 120
Forsyth, A
Mid Market Focus
– ESIC tax incentives: how well are they understood? ...... 66
Freshwater, L
Death and income tax – some discrete issues: part 1 ...... 431
Death and income tax – some discrete issues: part 2 ...... 496
G
Godber, P
President’s Report
– Influential leaders to address The Tax Summit 2020 ...... 412
– Looking ahead with 2020 vision ...... 346
– Members are carrying a heavy load ...... 598
– Operating in a COVID-19 world – together ...... 534
– Reflections from The Tax Summit 2020 ...... 472
Gunthorpe, B
Resolving R&D disputes ...... 124
H
Hanna, N
Applying Subdiv 207-B and Div 6 to franked distributions ...... 138
Hanrahan, S
Alternative Assets Insights
– COVID-19: real estate and infrastructure tax issues ...... 636
Harper, P
Structuring cross-border transactions: part 1 ...... 486
Structuring cross-border transactions: part 2 ...... 562
Hennebry, E
A Matter of Trusts
– Interpreting and varying trust deeds ...... 444
Houseman, N
Alternative Assets Insights
– PCG 2019/D3: a way forward on the ALDT ...... 218
Hurst, G
CEO’s Report
– With a view to the future ...... 55
– Another eventful year at The Tax Institute ...... 287
– From strength to strength with our members ...... 535
– Progress is impossible without change ...... 3
– Reaching the summit through considered investments ...... 413
– Recognising our family of members ...... 231
– Recognising the resilience of our members ...... 599
– Stepping into a season of new beginnings ...... 107
– The best is yet to come ...... 347
– At the heart of a thriving tax community ...... 473
– ’Tis the season for CPD ...... 163
J
Jaques, J
Member Profile ...... 551
Jones, D
Mid Market Focus
– Testamentary trusts: reforms at a trickle ...... 297
K
Kenny, P
Residence tests for individuals: impact of the Harding decision ...... 302
Krunic, D
Are all dwellings “substantial and permanent structures”? ...... 203
No restrictions to negative gearing? Think again! ...... 73
L
Landsberg, S
Alternative Assets Insights
– ATO views on cross-border debt issues ...... 148
Lonergan, W
The Placer case (2018) from a valuation perspective ...... 27
M
Malone, J
Alternative Assets Insights
– TA 2020/1: intangible assets ...... 514
Marateo, D
SA land tax developments: aggregation avalanche ...... 254
McEvoy, R
Payroll tax game changer? Optical Superstore decision ...... 248
McKee, M
Payroll tax game changer? Optical Superstore decision ...... 248
Monotti, W
A Matter of Trusts
– The appointor: common problems ...... 263
Montani, D
Foreign residents and the main residence exemption no more ...... 439
Limiting deductions for “vacant land” ...... 552
Morgan, A
Privilege or concession: the modern tax adviser’s challenge ...... 20
Morris, M
Death and income tax – some discrete issues: part 1 ...... 431
Death and income tax – some discrete issues: part 2 ...... 496
N
Neilson, T
President’s Report
– A nation of (sometimes reluctant) gamblers ...... 162
– Getting involved will ensure your voice is heard ...... 2
– Not goodbye, but reflection and thanks ...... 286
– The music of the spheres ...... 106
– What constitutes a “tax professional”? ...... 54
– Why tax is much more than technical skills ...... 230
Nickless, J
Alternative Assets Insights
– PCG 2019/D3: a way forward on the ALDT ...... 218
Noah, K
Superannuation
– Is the SG system in need of an urgent overhaul? ...... 92
Norbury, M
Tax Cases
– Aggregation and duty ...... 45
– Eichmann and the store on vacant land ...... 450
– Fortunatow and personal services income ...... 215
– Is it a capital or an income expense? ...... 328
– Pavihi – the helpful bank teller ...... 388
– Subjective intention and land tax ...... 144
– The case of the knight’s advocate ...... 268
– Who owned the residence? ...... 95
P
Pandey, R
In-house facilitation, test cases and the AAT Small Business Division ...... 135
Pane, T
Icing, spreads and tax avoidance purposes ...... 619
Pascale, J
SA land tax developments: aggregation avalanche ...... 254
Trust revaluation strategies … revisiting the practice ...... 427
Paynter, H
Resolving R&D disputes ...... 124
Peiros, K
Successful Succession
– Family law asset protection of a testamentary trust ...... 394
– Foreign person: potential discretionary trust beneficiary ...... 577
– Main residence and pre-CGT dwellings exemptions ...... 151
– The power, the attorney and the conflict transaction ...... 639
Phung, J
Mid Market Focus
– The application of GST to sales of real property ...... 483
Pinto, D
Privilege or concession: the modern tax adviser’s challenge ...... 20
Q
Quigley, B
Senior Adviser’s Report
– Review of the Tax Practitioners Board ...... 232
– Tax reform can’t wait ...... 348
– We’re all in this together ...... 538
R
Raspin, I
Death and income tax – some discrete issues: part 1 ...... 431
Death and income tax – some discrete issues: part 2 ...... 496
Redenbach, G
The onus of proof following the Cassaniti decision ...... 84
Reeves, J
Member Profile ...... 122
Rocher, K
Successful Succession
– Main residence and pre-CGT dwellings exemptions ...... 151
Rogaris, N
Alternative Assets Insights
– COVID-19: real estate and infrastructure tax issues ...... 636
– Foreign superannuation funds and sovereign immunity ...... 454
S
Sahyoun, C
Alternative Assets Insights
– ATO guidance on non-concessional MIT income ...... 99
Savvas, K
Member Profile ...... 301
Scotland, J
Alternative Assets Insights
– ATO guidance on non-concessional MIT income ...... 99
Slegers, P
SA land tax developments: aggregation avalanche ...... 254
Trust revaluation strategies … revisiting the practice ...... 427
Sokolowski, P
Member Profile ...... 72
Somers, R
Structuring cross-border transactions: part 1 ...... 486
Structuring cross-border transactions: part 2 ...... 562
Spencer, L
A Matter of Trusts
– Trusts and the franking credits trap: can we fix it? ...... 380
Stoyanova, T
Alternative Assets Insights
– Significant global entities ...... 392
T
Tam, G
Payroll tax game changer? Optical Superstore decision ...... 248
Tan, D
A Matter of Trusts
– Transfer to a trustee found to be non-dutiable ...... 508
TaxCounsel Pty Ltd
Tax News – what happened in tax?
– June 2019 ...... 5
– July 2019 ...... 57
– August 2019 ...... 109
– September 2019 ...... 166
– October 2019 ...... 233
– November 2019 ...... 289
– December 2019 ...... 349
– February 2020 ...... 416
– March 2020 ...... 475
– April 2020 ...... 539
– May 2020 ...... 601
Tax Tips
– A transfer of goodwill? ...... 479
– Active asset test ...... 353
– CGT choices: timing issues ...... 419
– CGT main residence: adjacent land issues ...... 8
– Declaration of trust ...... 545
– Foreign residents and CGT ...... 607
– Tax indemnities ...... 61
– Testamentary trusts and minors ...... 238
– Vacant land: the deduction amendments ...... 113
– Vacant land deductions ...... 294
– Were there loans? ...... 170
Thomson, C
Issues for large superannuation funds ...... 196
V
van Zyl, C
SMSF death benefit distributions: lessons from Marsella v Wareham ...... 502
Varrasso, A
Member Profile ...... 614
Villios, S
Residence tests for individuals: impact of the Harding decision ...... 302
W
Wallis, C
Elections: outlays by candidates, and gifts and donations for candidates ...... 76
Wilson, B
Deceased estates, real property and real issues ...... 307
PK ePDU OEBPS/bm03.xhtmlThe Tax Institute would like to thank the following presenters from our May CPD sessions. All of our presenters are volunteers, and we recognise the time that they have taken to prepare for the paper and/or presentation, and greatly appreciate their contribution to educating tax professionals around Australia.
Matthew Andruchowycz, CTA
Shelley Banton
David Bond, CTA
Anthony Bradica, CTA
Todd Bromwich
Michael Butler, CTA
David Catanese
Adam Dimac
Dana Fleming, CTA
Michael Flynn, QC, CTA (Life)
Adam Gerard
Sevan Gore
Claire Horan
Alexis Kokkinos, ATI
Vincent Licciardi
Matthew McKee, FTI
Darrel McMahon
Sean Neary, FTI
Andrew Noolan, CTA
Tracey Norris
Scott Pease
Sharon Quennell
Lucas Roe
Jemma Sanderson, CTA
Shirley Schaefer
Greg Travers, CTA
Louise Van Wyk, FTI
Rishi Wijay
Yan Wong
A message from The Tax Institute’s Former President Tim Neilson
Like many others in The Tax Institute I was shocked by the news that Paul Drum, long time General Manager, Policy and Advocacy at CPA Australia, has passed away.
I had the privilege of Paul’s company and collaboration over a number of years at the National Tax Liaison Group, being “in lockup” with him during Budget time, and on many other occasions where two or more devotees of tax were gathered together.
Paul was the archetype of a good advocate in tax policy and administration. He had a deep knowledge of the tax system and great empathy and understanding of the needs of those who strive within it. He was resourceful and persistent in pursuit of anything which he saw as a desirable improvement to the Australian tax landscape, but also patient, tactful and understanding with those who were yet to be persuaded by his eloquence on any such matter.
He worked very effectively in an exemplary collegiate way with those of us who were representing the Institute in pursuit of making the tax system as good as it can possibly be.
He was also engaging, warm and genuinely interested in others, not just professionally but personally as well.
I’ll very much miss Paul’s easy-going charm on social occasions, and the whole Australian tax community will be the poorer for the loss of his truly outstanding contribution to the fabric and the people of the Australian tax system.
Our thoughts are with Paul’s family during this time.
Taxation in Australia®
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by TaxCounsel Pty Ltd
The following points highlight important federal tax developments that occurred during May 2020. A selection of the developments is considered in more detail in the “Tax News – the details” column on page 601 (at the item number indicated).
A legislative instrument made under the Tax Agent Services Act 2009 expands the concept of a BAS service to cover certain services provided under the legislation that was enacted to give effect to the government’s coronavirus response package (TAS 2020/1). See item 1.
The Commissioner has released a practical compliance guideline that details the approaches that the ATO will accept for the purposes of individuals claiming deductions in relation to the expenses of working from home as a result of the COVID-19 measures, including a temporary short-cut method of calculating additional running expenses from 1 March 2020 until at least 30 June 2020 (PCG 2020/3). See item 2.
The Commissioner has issued a practical compliance guideline that provides guidance on how the ATO will apply its compliance resources to schemes to obtain access to the coronavirus economic response payment (the JobKeeper payment), or an increased amount of a JobKeeper payment (PCG 2020/4). See item 3.
The Federal Court (Thawley J) has held that “capacity charges” payable under an agreement for the exclusive supply of electricity and which were, in substance, paid up-front in a lump sum were outgoings of capital or of a capital nature and, so, not allowable as general deductions (Origin Energy Ltd v FCT (No. 2) [2020] FCA 409). See item 4.
The Federal Court (Jagot J) has held that payments identified as “prepaid rent” and which were paid when entering into lease and licence arrangements in relation to the operation of a number of McDonald’s restaurants were outgoings of capital or of a capital nature and, so, were not deductible as general deductions (Mussalli v FCT [2020] FCA 54). See item 5.
In a recent case involving an appeal against a decision of the Commissioner on a private ruling application in relation to the operation of the capital expenditure project provisions (Subdiv 40-I ITAA97), the Federal Court (Logan J) has held that the appeal was not competent but that, if it were, there was only one project, and not two as contended for by the taxpayer (BAC Holdings Ltd v FCT [2020] FCA 413). See item 6.
In preliminary proceedings, the AAT (constituted by Deputy President Steward J) has refused an application by a taxpayer (that was challenging transfer pricing assessments in the Federal Court (to be heard by Steward J)) that the determination of its objections to the associated assessments to administrative penalties be deferred until the proceedings in relation to the transfer pricing objections had been decided (DXGQ and FCT [2020] AATA 807). See item 7.
The AAT has set aside a summons issued on the application of the taxpayer to a now retired ATO officer in relation to the formation of the opinion that there had been fraud or evasion on the part of the taxpayer which justified the issue of amended assessments to the taxpayer for the 2007 to 2010 income years outside the normal assessment amendment period (Chhua and FCT [2020] AATA 832). See item 8.
In recent decisions, the AAT was called on to consider issues relating to the review of decisions of the Tax Practitioners Board made in relation to the cancellation of two agents’ registrations. See item 9.
The AAT has dismissed a challenge to the disallowance of an input tax credit claimed in relation to the purchase of certain vacant land on the basis that the taxpayer was not carrying on an enterprise when the land was acquired and, so, the acquisition was not a creditable acquisition (304 Wanda Street Pty Ltd and FCT [2020] AATA 921). See item 10.
The Federal Court (Thawley J) has held that a non-resident beneficiary was assessable on distributions by a resident trust which were sourced from capital gains made by the trust from the disposal of shares which were not taxable Australian property. The decision (Peter Greensill Family Co Pty Ltd (trustee) v FCT [2020] FCA 559) is considered in the Tax Tips column in this issue of the journal at page 607.
PK OPp OEBPS/chapter02.xhtmlby Peter Godber, CTA
President Peter Godber on how we are helping tax practitioners to navigate the unprecedented burden of COVID-19.
I can’t recall hearing feedback from members like there has been in the weeks since the introduction of the JobKeeper rules.
At the pointy end when the regime was about to start and the cash was to flow to employers, there was still uncertainty about how the alternative decline in turnover tests worked in specific circumstances, how you calculated comparable turnover, and at the very end, how you applied the service entity rules and the other rules announced within a week of the initial employer cash payment obligations being due.
Treasury and the ATO were trying hard to get rules and guidance out, businesses wanted answers — and who was in the middle trying to make it all work? It was the advisers and tax agents, many of whom are our members.
Members have carried the heavy load of applying the new and sometimes uncertain rules while satisfying clients who have had to make significant cash payments to employees. On top of the usual pre-15 May compliance workloads, we have had a rather unprecedented burden, and that has been acknowledged.
Through our participation in the National Tax Liaison Group with other leading professional bodies, we have been close to the roll-out of the federal government stimulus measures and, in particular, the JobKeeper rules. There is no doubt that the regulatory bodies have received responsive consultation and assistance, and through that process, we have been attuned to what should be the bigger issues and concerns, both technical and practical, on behalf of members. Where we have had to represent concerns directly, we have done so. However, the joint bodies’ work has been respected and effective.
That doesn’t mean the position members have found themselves in as intermediaries in the system was in any way healthy. Members need great support and understanding in times like these. I think we are being heard. Tax return lodgment deadline deferrals and some administrative concessions have been announced. However, it is non-stop when it comes to identifying practical matters of concern in extreme times like the present.
There is always a lot to do to continue to improve our tax system, but the impact of pressures on the health and wellbeing of members is often not fully understood. We are doing our best, but these COVID-19 times have highlighted the many professional challenges for members — complexity in the rules, dealing with clients under pressure, and tight deadlines.
The Tax Institute is dedicating more resources to help members in an increasingly uncertain world. The new member portal, an increase in technical resources, and the online streaming of events are all part of it. For example, we have done our best to roll out informative webcast sessions on JobKeeper at no cost to members.
We are developing additional strategies to help us keep abreast of the needs of our members. In response, we will tailor our content and delivery of knowledge. Our engagement with members in future will hopefully present greater opportunities for dialogue among members, individually and as part of small communities. Sharing thoughts, experiences and questions will help us in a challenging professional environment.
No doubt you will be pleased to hear that we are reviewing our website, and our member interfaces, and committing to invest more in our knowledge content management and accessibility. This is all to support members. Timely access to knowledge is critical.
Our internal leadership team is working hard with National Council to bed down our strategies for the next few years, and they will be important years for the growth of the Institute. We are putting down the roadmap now, and we will come out at the end of our COVID-19 limitations with shared enthusiasm about the year or two ahead of us — all for the greater benefit and education of our members.
For now, everyone at The Tax Institute wishes our members the best in staying healthy during these COVID-19 times.
PK HSPnqaW W OEBPS/chapter03.xhtmlby Giles Hurst
CEO Giles Hurst offers support to members in all aspects of their professional endeavours as we aim for a “new normal”.
This month, it appears that there is light at the end of the COVID-19 tunnel, although our optimism remains cautious and we recognise that our community is not out of the woods just yet.
Each of our members has faced, is facing or will face challenges during this time — some big, some small, some shared, some intensely personal. No matter what your pressure points are, we’re here to support you in all aspects of your professional endeavours.
For many members, this means assistance in understanding and applying new stimulus measures and rules for your clients. We are supporting you with a range of free webinars on key stimulus topics, including the much-discussed JobKeeper and cash flow boost schemes.
We continue to receive positive feedback on the value of these events and the impact that they have on your practice. We’re rolling out a number of new webinar series to cover other essential topics and will continue to do so as needed. This is made possible in no small part by the volunteers, committee members and speakers who continue to support us, despite facing their own challenges. Ours is a community that is good because it is fuelled by people who do good. Thank you to all who are a part of it.
Last month, Robyn Jacobson, chartered tax adviser and registered tax agent, joined us as Senior Advocate and we have all already benefitted from her expertise and passionate advocacy.
As you are likely aware, Andrew Mills, CTA (Life), has also recently joined the Institute as Director, Tax Policy and Technical. Andrew was Second Commissioner at the Australian Taxation Office until the end of last year and has long been an involved supporter of The Tax Institute, serving as president in 2006-07. We are honoured to have him step into this new role at such a crucial time.
Bringing 40 years’ experience to the team, Andrew’s appointment, like Robyn’s, forms part of our commitment to support the voice of tax professionals amid COVID-19 and in the future.
There has never been a more important time to stay connected to your Institute. As I write this, membership renewals are flowing in. This is perhaps testament to the sense of optimism our members feel towards their profession, The Tax Institute and the road to recovery that we are currently paving. Over the coming weeks and months, we will be sharing a range of practical tools, templates and resources to further strengthen the value we deliver to you.
Recently, talk has turned to getting back to “normal” in our professional and personal lives as the COVID-19 situation is slowly coming under control. Restrictions on gatherings and social distancing have eased somewhat and are likely to continue doing so. I sincerely hope these developments have helped to lift some of the pressures that our members are feeling.
The question for all of us now is just what “normal” might look like — for our profession, the economy and, indeed, the world.
I believe the way we work may never go back to exactly how it was before, but I’m hopeful that, as an organisation, The Tax Institute and its members will come out on the other side stronger than before. After all, it takes pressure to make a diamond.
Practically speaking, our plans are progressing with the caution that a global event of this significance demands.
We are looking forward to being able to once again hold face-to-face events — albeit in small groups to begin with. Our team has successfully brought events and education online, but it will be a treat to see our members in person again. Keep an eye on your inbox for more information on when and how this will happen.
The Institute is also planning for a gradual return to our office locations around Australia, with one eye always on the safety of our people, and the practical question of getting to, and being at, work while remaining at an appropriate social distance.
I hope you are starting to see your own “new normal” emerge as well, and I have no doubt that the resilience that has shaped our profession will continue to carry us into the future. My admiration and support go out to you all.
There has never been a more important time to stay connected to your Institute.
As we approach the end of the financial year, we invite you to renew your membership.
Your ongoing support means we can continue to enhance the value we deliver to members, which includes:
– Free COVID-19 Stimulus Package and Taxing Times webinars
– Free monthly Tax Update paper
– Access to over 30 free CPD hours over the past year
Renewing your membership couldn’t be easier and can be done online via your member portal.
PK POm m OEBPS/chapter04.xhtmlby Angie Ananda, CTA
The objective of the JobKeeper program is to keep Australians in jobs and to support businesses affected by the coronavirus. Recent amendments are discussed below.
Under the JobKeeper program, eligible employers will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020.
Generally, eligible employers (including not-for-profits) will be eligible for the subsidy if:
– their business has an aggregated turnover of less than $1b (for income tax purposes) and they estimate that their GST turnover has fallen, or will likely fall, by 30% or more; or
– their business has an aggregated turnover of $1b or more (for income tax purposes) and they estimate that their GST turnover has fallen, or will likely fall, by 50% or more; and
– their business is not subject to the major bank levy.
The basic turnover test is satisfied where your projected GST turnover for the turnover test period falls short of your current GST turnover for the relevant comparison period, by the specified percentage (generally 30%).
There has been much confusion and difficulty in relation to satisfying the basic turnover test. As a result, further guidance has been released and alternative tests have been formulated.
Given the necessary speed at which the JobKeeper provisions were legislated, it perhaps should have been expected that there would be amendments and additions to the rules. On balance, I think it is fair to say that, in the world of COVID-19, it was more important to get the basic rules in place and deal with issues as they arise.
The most recent legislative instrument is discussed below.
The Coronavirus Economic Response Package (Payments and Benefits) Amendment Rules (No. 2) 2020 clarify certain elements of the JobKeeper program. This instrument:
– provides a modified decline in turnover test for certain group structures;
– adjusts the way in which Commonwealth payments are treated when calculating a university’s turnover;
– extends the JobKeeper scheme to certain charities;
– adjusts the way in which payments made by the government and the United Nations are treated when calculating a charity’s turnover;
– includes a notification requirement to confirm that all employees of a participating entity must be given the opportunity to agree to be nominated;
– imposes additional requirements that must be met for children to be eligible nominees;
– extends the JobKeeper scheme to include certain religious practitioners; and
– makes various consequential and minor technical amendments.
Our members have had many questions in relation to two of the issues that have been addressed by this instrument, namely, group structures and children. The Tax Institute has worked hard alongside other professional bodies and the National Tax Liaison Group to bring changes about in these areas.
Some groups are structured in a way such that most or all of the employees are employed by one “employer” entity. Such entities are unlikely to be able to satisfy the basic decline in turnover test under the JobKeeper provisions, even though the group to which they belong may have experienced a significant decline in the turnover.
This issue has been addressed in this instrument which provides a modified decline in turnover test for an employer entity (modified test). The modified test applies in addition to the basic test. That is, an employer entity can satisfy the decline in turnover test either by satisfying the basic test or the modified test.
Under the modified test:
– instead of using the employer entity’s projected GST turnover for the turnover test period, the sum of the projected GST turnovers for that period of each test member is used; and
– instead of using the employer entity’s current GST turnover for a relevant comparison period, the sum of the current GST turnovers for that period of each test member is used.
The instrument provides that children aged 16 or 17 years are only eligible for JobKeeper if, in addition to the general requirements, they:
– are “independent” as defined under the Social Security Act 1991 (Cth); or
– were not studying full-time as defined in the Social Security Act 1991.
The objective of the amendments is to ensure that 16- and 17-year-olds undertaking full-time study on 1 March 2020 cannot be eligible employees or business participants and are encouraged to continue to engage in full-time education.
Given the nature and timing of the JobKeeper program, it was inevitable that amendments were going to be made — and more may be required. It is important that we keep working with all stakeholders, including the ATO and Treasury, to ensure the best possible outcomes for our members and the tax system.
PK V{PP P OEBPS/chapter05.xhtmlby TaxCounsel Pty Ltd
The following points highlight important federal tax developments that occurred during May 2020.
A legislative instrument made under the Tax Agent Services Act 2009 (Cth) (TASA09) expands the concept of a BAS service to cover certain services provided under the legislation that was enacted to give effect to the government’s coronavirus response package (TAS 2020/1).
As a result of the legislative instrument, BAS agents can now legally support Australian businesses by ascertaining and advising about their entitlements and liabilities under the new JobKeeper payment and cashflow support for business initiatives.
The Commissioner has released a practical compliance guideline that details the approaches that the ATO will accept for the purposes of individuals claiming deductions in relation to the expenses of working from home as a result of the COVID-19 measures, including a temporary short-cut method of calculating additional running expenses from 1 March 2020 until at least 30 June 2020 (PCG 2020/3).
Under the short-cut method, employees and business owners can claim a deduction of 80 cents for each hour that they work from home due to COVID-19 as long as they are:
– working from home to fulfil their employment duties and not just carrying out minimal tasks, such as occasionally checking emails or taking calls; and
– incurring additional deductible running expenses as a result of working from home.
A separate or dedicated area of the home (such as a private study) does not need to be set aside for working.
The short-cut method rate covers all additional running expenses, including:
– electricity for lighting, cooling or heating and running electronic items used for work (for example, a computer), and gas heating expenses;
– the decline in value and repair of capital items, such as home office furniture and furnishings;
– cleaning expenses;
– phone costs, including the decline in value of a handset;
– internet costs;
– computer consumables, such as printer ink;
– stationery; and
– the decline in value of a computer, laptop or similar device.
While a taxpayer does not have to incur all of these expenses, the taxpayer must have incurred additional expenses in some of those categories as a result of working from home due to COVID-19. Also, a record (for example, timesheets or diary notes) must be kept of the number of hours worked from home as a result of COVID-19. If the shortcut method is used, the note “COVID-hourly rate” must be included in the taxpayer’s 2019-20 tax return.
If the short-cut method is used to claim a deduction for additional running expenses, a further deduction cannot be claimed for any of the listed expenses.
The guideline, however, does not cover occupancy expenses (such as rent, mortgage interest, property insurance and land taxes). These will not become deductible only because the taxpayer is required to work from home temporarily as a consequence of COVID-19. Occupancy expenses are only deductible if part of the home has the character of a place of business (as to which see TR 93/30).
The Commissioner has issued a practical compliance guideline that provides guidance on how the ATO will apply its compliance resources to schemes to obtain access to the coronavirus economic response payment (the JobKeeper payment), or an increased amount of a JobKeeper payment (PCG 2020/4).
An entity’s entitlement to an amount of a JobKeeper payment that results or would result from such schemes may be denied in whole or in part under s 19 of the Coronavirus Economic Response Package (Payments and Benefits) Act 2020. When deciding whether to apply compliance resources, the Commissioner’s predominant considerations will be the occasion for and result of the scheme in the context of the entity and its external operating environment. In particular, the Commissioner will be concerned with an entity that accesses or increases JobKeeper payment entitlements:
– where the entity’s business is not significantly affected by external environmental factors beyond its control; and/or
– in excess of those that would maintain pre-existing employment relationships.
However, if:
– the external operating environment is affected by factors beyond the control of the entity (and its related parties);
– that affected external operating environment significantly impacts the business of the entity or another entity in which the entity’s employees serve; and
– the entity enters into the scheme in response to that impact and satisfies the decline in turnover test; and
– the JobKeeper payment that the entity receives is for individuals who were employed by the entity and serving in the significantly impacted business prior to that time and who remain employed as a result of that JobKeeper payment,
the Commissioner generally will not apply his compliance resources to consider the application of s 19.
The Commissioner’s application of compliance resources will be driven by the substance of the outcome achieved, more than the type of arrangement entered into.
For the avoidance of doubt and for the guideline to apply, the entity does not need to show that COVID-19 was the factor beyond the control of the entity (and its related parties) that affected the entity’s external operating environment.
The guideline gives a number of examples of the application of the general principles to particular scenarios.
The Federal Court (Thawley J) has held that “capacity charges” payable under an agreement for the exclusive supply of electricity and which were, in substance, paid up-front in a lump sum were outgoings of capital or of a capital nature and, so, not allowable as general deductions (Origin Energy Ltd v FCT (No. 2)1).
In May 2008, the New South Wales Government announced its intention to implement recommendations in respect of the electricity industry in NSW, including that the state divest itself of the generation businesses of each of the three state-owned generators, including Eraring Energy (a statutory state-owned corporation), and the retail arms of its three electricity businesses.
In November 2008, the NSW Government adopted a revised strategy which would see the state withdrawing from electricity retailing and transferring to the private sector the right to trade the output of publicly owned generators. Under this strategy, the state announced that it would continue to own and operate its power stations, as well as the transmission and distribution lines, but would “exchange the risk and volatility of earnings from [the state’s] wholesale electricity trading for secure, predictable payments by the private sector (in return for the right to buy and sell wholesale electricity)”. The NSW Government stated that it would recover revenue, for the trading rights, sufficient to cover the costs of electricity production and delivery over the term of the trading rights contract, and that the relevant agreement might include an upfront component.
Against this context, on 1 March 2011, Origin Energy Electricity Ltd (OEEL) and Eraring Energy entered into two agreements, called “GenTrader Agreements”. One agreement related to the Eraring power station, a large coal-fired power station. The other related to the “Shoalhaven Scheme” which was a “pumped storage hydro scheme” involving the Kangaroo Valley and Bendeela pumping and power stations.
Under the GenTrader Agreements, OEEL agreed to pay a number of charges to Eraring Energy, including substantial “capacity charges”. Under “deposit deeds”, OEEL placed interest-bearing deposits of $856,000,000 (Eraring) and $11,080,000 (Shoalhaven) with the NSW Treasury. These represented the net present value of all of the annual capacity charges payable under the GenTrader Agreements for the term of those agreements, being 22 and 28 years.
In the case of Eraring Energy, the capacity charges were $145,385,320 in the first full year. They reduced each year, at a rate of approximately 85% of the prior year’s charge, such that the capacity charges in the last year were $7,222,996. Shoalhaven’s payments were similarly “front-loaded”. OEEL authorised and directed NSW Treasury to pay each year, out of the security deposit, the relevant capacity charge to Eraring Energy.
Origin Energy Ltd (Origin), the head company of the consolidated group of which OEEL was a member, contended that the capacity charges were deductible in full as general deductions (under s 8-1 of the Income Tax Assessment Act 1997 (Cth) (ITAA97)) in each of the income years in which those charges were incurred. Origin also contended that, if the amounts were not deductible because they represented capital expenditure, the charges were deductible as “black hole” expenditure over five years under s 40-880 ITAA97. Origin contended that the capacity charges were paid for the acquisition of electricity from Eraring Energy under the GenTrader Agreements, which it referred to as long-term “supply contracts”.
The Commissioner, however, contended that the capacity charges were capital in nature because the advantage sought by incurring the expenditure was an extension of OEEL’s profit-making structure, not simply the annual supply of electricity to OEEL for on-sale.
Thawley J held that the capacity charges were not deductible under s 8-1 ITAA97 because they were outgoings of capital or of a capital nature. In his Honour’s view, a number of factors indicated that the expenditure was an affair of capital. The overarching reason for this conclusion was that the advantage sought by the expenditure was an acquisition of a new or extended profit-making structure. OEEL acquired the right to trade the entire output of the power stations for an extended period and to profit from that structure having regard to the various risks and opportunities acquired. OEEL’s profit-making structure was significantly extended and altered for an extended term, with the ability to further extend the term.
The expenditure was not properly characterised as being merely for the yearly acquisition of electricity by OEEL for on-sale at a profit, even if that was a part of what was acquired by the expenditure. As a matter of practical and business reality, what OEEL sought to achieve was the acquisition of a business structure constituted by the right to trade the entire output of the power stations, the operation of which would be managed by the owner, but over which OEEL had significant elements of control and in respect of which it bore risk and gained opportunities for profit.
In relation to s 40-880 ITAA97, Thawley J held that the expenditure fell within one or other of the exclusions contained in s 40-880(5)(d) (expenditure in relation to a lease or other legal or equitable right) or (f) (expenditure that could, apart from s 40-880 be taken into account when working out the amount of a capital gain or capital loss from a CGT event).
The Federal Court (Jagot J) has held that payments identified as “prepaid rent” and which were paid when entering into lease and licence arrangements in relation to the operation of a number of McDonald’s restaurants were outgoings of capital or of a capital nature and, so, were not deductible as general deductions (Mussalli v FCT2).
McDonald’s Australia Ltd (MAL) offered Mr Mussalli leases and licences to operate McDonald’s Family Restaurants on a number of sites. The offers included the terms of a full lease and licence (FLL) which varied depending on whether MAL owned the premises (in which case, the term was 20 years) or leased the premises (in which case, the term was one day less than the head lease). By accepting MAL’s offer, the Mussalli Family Trust (MFT) agreed to a later entry into the FLL for each restaurant, including a seven-day cooling off period.
The letters of offer foreshadowed a number of required payments, including, under the FLL, a base rent amount payable monthly plus GST and a percentage rent amount calculated by reference to monthly gross sales plus GST. Each of the letters of offer also included a provision to the effect that the agreement included an option for the offeree to reduce the percentage rent, subject to a prepayment of rent plus GST on the day of handover.
Mr Mussalli accepted each of the offers to operate the restaurants, including to pay the “prepayment of rent” so as to reduce the percentage rent payable. The leases for the sites of these restaurants only referred to the reduced amount of percentage rent payable and did not refer to the option to reduce the percentage rent.
Subsequently, MAL made further offers to Mr Mussalli to operate a further three existing McDonald’s Family Restaurants. The FLLs for these restaurants were similar to the earlier FLLs, save that they provided that, if the lessee exercised the prepayment option, the percentage rent payable by the lessee for the term would be reduced to the amount calculated in accordance with a specified method.
The trustee of the MFT claimed deductions in respect of the upfront amounts under s 8-1 ITAA97, but with the deductions spread over 10 years (s 82KZMD of the Income Tax Assessment Act 1936 (Cth) (ITAA36)).
Jagot J said that she accepted the Commissioner’s primary case that the payments were made to secure the rights to operate the businesses on better terms as to rent for the term of the FLLs and most likely longer. Further, this same conclusion would be reached if the transaction documents were considered in isolation or were considered in the context of the surrounding circumstances. Further, the same conclusion would be reached irrespective of the accounting evidence or with regard to the accounting evidence.
Jagot J also accepted the Commissioner’s contention that, in the case of each restaurant, the upfront payments secured the acquisition of a more profitable business structure by securing an enduring reduction in ongoing costs. The fact that the upfront payments were not refundable on termination of the FLLs suggested that they were not made to secure the right to occupy the premises under the lease and, rather, were capital in nature.
In a recent case involving an appeal against a decision of the Commissioner on a private ruling application in relation to the operation of the capital expenditure project provisions (Subdiv 40-I ITAA97), the Federal Court (Logan J) has held that the appeal was not competent but that, if it were, there was only one project, and not two as contended for by the taxpayer (BAC Holdings Ltd v FCT3).
The taxpayer (BACH) operated Brisbane Airport pursuant to a long-term lease from the Commonwealth. For many years, there had been an identified need to bolster the capacity of Brisbane Airport by the construction of a further runway parallel to the existing main runway. In 2007, BACH received approval to construct a new parallel runway (NPR) to meet this need. Construction of the NPR began in 2012.
On 23 August 2017, BACH applied to the Commissioner for a private ruling as to whether certain initial activities associated with the construction of the NPR were themselves a “project” for the purposes of Subdiv 40-I ITAA97 and, if so, when that “project” started to operate. The private ruling was sought in respect of the 2011 to 2017 income years.
By 12 April 2018, the Commissioner had made and issued assessments in respect of the 2011 to 2017 income years. Those assessments were, materially, predicated on a view of the meaning and effect of Subdiv 40-I which differed from that promoted by BACH in its private ruling application but which was consistent with the ruling made by the Commissioner in his private ruling.
The difference between BACH and the Commissioner was whether, as BACH contended in its private ruling application, the two phases of the construction of the NPR in effect comprised discrete “projects” for the purposes of Subdiv 40-I ITAA97 or whether, as the Commissioner came to conclude, the construction of the NPR was but one “project”, which would not commence to operate until the first aircraft landed or took off.
The primary contention advanced by BACH was that the relevant “project” was not the totality of the NPR project phases but instead a subset of those phases. The subset which it contended constituted a discrete “project” was the “geotechnical design of the NPR and related experimental land reclamation and monitoring activities”. As so defined, the alleged “project” excluded the latter part of the second project phase from the definition. In other words, the phase 2 runway and taxiway construction (including a new road access tunnel) was, inferentially, said to be a separate “project”. It was this characterisation of discrete initial and final “projects” which the Commissioner rejected in the ruling.
Logan J considered various challenges by the Commissioner to the competency of BACH’s objection grounds. However, what is of more significance are his Honour’s his views on the “project” point.
His Honour said that the internal pricing structures and the related agreements with users of BACH’s facilities, prior to the completion of the NPR, were not relevant to the determination of whether or not, for the purposes of Subdiv 40-I ITAA97, the “Phase 2 Runway and taxiway construction (including a new road access tunnel)” were discrete from a “project” constituted by the earlier activities, described as “the geotechnical design of the New Parallel Runway … and related experimental land reclamation and monitoring activities”. On the scheme facts as posited, the latter were not an end in themselves, only a means to an end, and that end was always the completed NPR. That was always the “project” for the purposes of Subdiv 40-I ITAA97. Axiomatically, an airfield, large or small, once constructed, commences to operate when the first aeroplane lands on it or takes off from it, whichever is the sooner. That, after all, is the purpose of constructing an airfield.
In preliminary proceedings, the AAT (constituted by Deputy President Steward J) has refused an application by a taxpayer (that was challenging transfer pricing assessments in the Federal Court (to be heard by Steward J)) that the determination of its objections to the associated assessments to administrative penalties be deferred until the proceedings in relation to the transfer pricing objections had been decided (DXGQ and FCT4).
In essence, the preliminary dispute before the AAT arose because the taxpayer would have preferred to find out whether it was successful, in whole or in part, in showing that the Commissioner’s primary tax assessments were excessive before it wished to prosecute the penalty review proceedings. Because it believed that it would succeed in showing this, there would never be a need to consider the issue of penalty. Costs and time would thereby be saved.
The Commissioner, however, disagreed and contended that the “usual” course should be adopted, that is, the penalty review proceedings should take place immediately after the completion of the trial of the primary tax proceeding. In other words, the Commissioner wished the penalty issue to be tried before the outcome of the proceeding in the Federal Court was known.
The Deputy President said that the usual case is that the issues of primary tax and penalty tax are dealt with at the one hearing. It is commonly accepted that this is the most efficient way of resolving related proceedings. In more recent times, taxpayers have often pursued the review of penalties separately in the AAT (to secure merits review, for example, of the Commissioner’s power to remit penalty tax), with issues of primary tax being dealt with in the Federal Court. In such cases, a judge of the Federal Court, who is also a presidential member of the tribunal, often hears both matters.
Steward J said that it may often be highly undesirable for issues of primary and penalty tax to be heard at the same time in a transfer pricing case where Div 13 ITAA36 has been applied. It can lead to the cross-examination of witnesses about their subjective reasons for undertaking an impugned transaction — such as a loan between related companies — in the middle of a trial about primary tax where that issue is entirely irrelevant. In such cases, there should be a strict demarcation between the court proceedings and the review by the AAT. Steward J said that there should not be any concurrent hearing; rather there should be consecutive hearings and that should be the case here.
The AAT has set aside a summons issued on the application of the taxpayer to a now retired ATO officer in relation to the formation of the opinion that there had been fraud or evasion on the part of the taxpayer which justified the issue of amended assessments to the taxpayer for the 2007 to 2010 income years outside the normal assessment amendment period (Chhua and FCT5).
Both the Commissioner and the former ATO officer applied to the AAT for the summons to be set aside. The particular opinion appeared to have been recorded in March 2013 and the former officer stated in an email of 9 December 2019 that he had no recollection of the matter.
The AAT said that the decision of the Full Federal Court in Binetter v FCT6 made it plain that the issue for the tribunal in the substantive proceedings would be whether the taxpayer had discharged the onus of showing that the opinion that there was fraud or evasion should not have been formed.
The question posed in the present application concerned the summons issued to the former employee. That was in the context of the provisions of the Administrative Appeals Tribunal Act 1975 (Cth) which provide, among other things, that the procedure of the tribunal is within its discretion, such proceedings to be conducted with as much expedition as a proper consideration of the matter permits, while allowing the tribunal to inform itself on any matter in such manner as it thinks appropriate.
Further, in the circumstances of the present application to set aside the summons directed to the former employee, the former employee’s statement made by email that he did not have “any recollection of these events of almost 7 years ago” was dispositive. There was no other evidence before the tribunal that the former employee had any other purpose in stating that he had no recollection of the events. Necessarily, his evidence would not assist in the review of the decision and determination of the principal application. Accordingly, the summons should be set aside and the former employee released from the obligation of attending to give evidence at the hearing.
In recent decisions, the AAT was called on to consider issues relating to the review of decisions of the Tax Practitioners Board (TPB) made in relation to the cancellation of two agents’ registrations. The AAT decisions are noted below.
In one decision, the AAT refused to grant a stay of the decisions of the TPB to cancel the tax agent registrations of an individual (Mr Rizkallah) and of a company (Le’Sam Accounting Pty Ltd) of which he was a director (Le’Sam Accounting Pty Ltd and Tax Practitioners Board7).
The applicants’ present troubles arose out of an incident in which somebody within the firm used the ATO Tax Agent Portal to access information about a former client without that client’s authority. The decision to access the information was particularly problematic in circumstances where Mr Rizkallah was the respondent in legal proceedings brought by the former client. The TPB was dissatisfied with Le’Sam Accounting Pty Ltd’s responses to its enquiries about the incident.
The TPB also decided that Mr Rizkallah no longer met the registration requirement under s 20-5(1)(a) TASA09 that he be a fit and proper person. The TPB made that decision after concluding Mr Rizkallah was ultimately responsible (in his capacity as the supervisor of the company’s operations and staff) for the unauthorised access to the ATO Tax Agent’s Portal.
Mr Rizkallah and the company applied for a review of the TPB’s deregistration decision and also for a stay of its decisions. In declining to grant a stay, the AAT considered the following factors: the prospects of success; the consequences for the applicants should a stay order be refused; the interests of other individuals; the public interest; the consequences for the respondent board if a stay were not ordered; and whether the application for review would be rendered nugatory if the stay were not ordered.
It may be noted that the issue of whether a decision of the TPB to cancel a tax agent’s registration should be stayed pending the hearing of the substantive application relating to the decision to cancel a registration has arisen in a number of cases. For a recent decision in which the AAT granted a stay, see Norman and Tax Practitioners Board.8
In the other case, the AAT affirmed the decision of the TPB to cancel the agent’s registration but reduced the four-year non-reapplication period imposed by the board to three years (Elsawi and Tax Practitioners Board9).
The tax agent conceded that certain conduct breached s 30-10(1) TASA09 (acting honestly and with integrity) and the AAT said that this conduct was sufficiently serious to merit termination on its own. The conduct represented one of the most serious forms of sanctionable conduct relevant to the practice of a tax agent. Including the conceded breaches, the AAT found that the tax agent did knowingly lodge multiple false BASs in relation to multiple clients. While the amounts that the tax agent received were ultimately paid back, this was a relatively minor matter in mitigation and did not exonerate him.
The AAT considered that the agent’s established contravening conduct did merit the application of a prohibition period but did not rise to the level meriting the maximum five-year period. After considering all of the circumstances, the AAT concluded that a three-year prohibition period was appropriate.
The AAT has dismissed a challenge to the disallowance of an input tax credit claimed in relation to the purchase of certain vacant land on the basis that the taxpayer was not carrying on an enterprise when the land was acquired and, so, the acquisition was not a creditable acquisition (304 Wanda Street Pty Ltd and FCT10).
304 Wanda Street Pty Ltd (Wanda) was incorporated on 12 April 2016. Shortly afterwards, it became registered for GST, but with effect from its date of incorporation. Wanda was the corporate trustee of the Wanda Street Trust which was established by deed dated 12 April 2016.
At that time, Wanda’s sole director and shareholder was Ms JA Kim. She was an “in-house” lawyer who worked at CAP Accounting/Accolade Advisory (Accolade) under the supervision of a Mr Sam Cassaniti, who was one of the two principal Wanda Street Trust beneficiaries.
In May 2016, a few weeks after its incorporation, Wanda acquired a vacant 14-hectare block of land at Pindimar, near Port Stephens in New South Wales, from Pindimar Holdings Pty Ltd (PindiHold). That company, also the trustee of a private trust, had Accolade’s office as its principal place of business and was then apparently controlled by another Accolade employee, its office manager Mr Michael Lowe.
Wanda’s acquisition of the land was the subject of a 30 May 2016, $700,000, contract for sale, and a same dated mortgage to Reliance Financial Services Pty Ltd (Reliance) which also operated from Accolade’s premises, and mainly lent to Accolade’s clients. Mr Sam Cassaniti and Accolade’s accountancy practice manager, Mr David Cassaniti, who was a former director of PindiHold and had recently resigned as a director of Reliance, organised the mortgage. The mortgage: (1) indicated that Wanda was acting as trustee of the Wanda Street Trust; (2) secured both a principal amount of $800,160 and the (unstated) balance of PindiHold’s (unparticularised) mortgage interest debt to Reliance; (3) contained a 10% daily compounding interest rate; and (4) required repayment by 30 June 2018 but did not impose any intervening periodic payment obligation.
Apart from the somewhat unusual obligations that Wanda assumed under the mortgage to Reliance, Wanda contributed nothing to the settlement of the purchase. Nor was there any evidence of it having made any subsequent repayment (of either principal or interest). Twenty-one months after the May 2016 purchase, Wanda lodged a development application relating to the land. That application was refused on 27 September 2018, though perhaps repeated, in an amended form, in February 2019.
After considering the evidence, the AAT said that the evidence established that Wanda had no funds of its own at the time of the property acquisition, had not been revealed to have generated any subsequent income, had never repaid any of the Reliance mortgage amount, and apparently had never enquired about, and had never known, at any time since 2016, the amount of the mortgage debt.
Wanda’s apparently total indifference to its financial circumstances (apart from its pursuit of the input tax credit claim) tended away from any reliable conclusion that Wanda could be regarded as having any particular enterprise intention when it acquired the property in May 2016, and as having then commenced an enterprise at the time of its acquisition of the property.
Although not necessary to do so, the AAT also held that the supply by PindiHold to Wanda was not a taxable supply.
TaxCounsel Pty Ltd
ACN 117 651 420
1 [2020] FCA 409.
2 [2020] FCA 544.
3 [2020] FCA 413.
4 [2020] AATA 807.
5 [2020] AATA 832.
6 [2016] FCAFC 163.
7 [2020] AATA 890.
8 [2020] AATA 640.
9 [2020] AATA 998.
10 [2020] AATA 921.
PK {PIެ OEBPS/chapter06.xhtmlby TaxCounsel Pty Ltd
A recent Federal Court decision considered how the ITAA36 and the ITAA97 operate where the trustee of a resident discretionary trust distributed to a foreign resident capital gains that had resulted from the disposal of shares.
The issue for decision by the Federal Court in Peter Greensill Family Co Pty Ltd (trustee) v FCT1 was whether the fact that a presently entitled beneficiary of a resident discretionary trust was a foreign resident immediately before a CGT event happened in relation to CGT assets (shares) of the trust that were not taxable Australian property, meant that the foreign resident capital gain disregarding provision in s 855-10(1) of the Income Tax Assessment Act 1997 (Cth) (ITAA97) was called into play.
Thawley J held that s 855-10(1) ITAA97 had no operation and that the beneficiary (or the trustee on the beneficiary’s behalf) was assessable.
Subsequent to the handing down of the judgment, the trustee taxpayer made an interlocutory application to the court seeking that the court review and reconsider the orders made and the reasons given in the judgment (Peter Greensill Family Co Pty Ltd (trustee) v FCT (No. 2)2) Thawley J dismissed the application.
The Peter Greensill Family Trust (PGFT) was a discretionary trust that was established by deed dated 21 January 2010 (trust deed). The trustee of the PGFT was Peter Greensill Family Co Pty Ltd (PGFC), a company that was incorporated in Queensland on 7 January 2010.
Alexander Greensill, a beneficiary of the PGFT, was at all relevant times a resident of the United Kingdom and not an Australian resident for the purposes of the Australian taxation laws.
From what is stated in the judgment, the relevant terms of the trust deed followed what would be expected in a typical discretionary trust deed and, relevantly, provided that:
– the trustee stood possessed of the trust fund and income of the trust fund for the benefit of the beneficiaries in accordance with the terms of the trust deed (cl 2.1);
– the trustee stood possessed of the income and capital derived by the trustee in any financial year on trust absolutely for the beneficiaries or any one or more of them to the exclusion of the other(s) and in such shares and proportions as the trustee might in its absolute discretion determine on or before the last day of the financial year (cl 3.1);
– a beneficiary was absolutely and presently entitled to an amount of income or another amount (including the capital component) if the trustee made a determination in the beneficiary’s favour of such income or capital (cl 3.4);
– the trustee might determine to what extent a receipt or an outgoing of the trust fund was income or capital (cl 3.6);
– until the vesting day, the trustee might apply the capital of the trust fund or any part of it for the benefit of any one or more of the beneficiaries either in cash or by in specie distribution of assets of the trust fund and otherwise on such terms and conditions as the trustee might in its absolute discretion decide (cl 4.2); and
– any determination of the trustee pursuant to various provisions (including cl 3.1) was to be recorded in a written minute signed by the trustee (cl 5.1).
On 4 November 2011, PGFC, as trustee of the PGFT, was issued 100 ordinary shares in Greensill Capital Pty Ltd (GCPL) for $0.267 ($0.00267 per share). GCPL was an Australian financial services company which owned Greensill Capital Management Co (UK) Ltd, Greensill Capital (UK) Ltd and other entities, both in Australia and overseas.
The following further transactions affected PGFC’s shareholding in GCPL in its capacity as trustee for the PGFT:
– on 15 December 2011, PGFC was issued a further 275 ordinary shares in GCPL for $0.73425 ($0.00267 per share);
– on 25 May 2012, 15 of the ordinary shares held by PGFC in GCPL were converted to B class shares;
– on 15 February 2013, 50,000,000 non-redeemable preference shares in GCPL were issued to PGFC for $500,000 ($0.01 per share);
– on 12 December 2014, 360 ordinary shares in GCPL held by PGFC were split into 360,000 ordinary shares, and 15 B class shares in GCPL held by PGFC were split into 15,000 B class shares. The amount paid per ordinary share and per B class share after the share split was $0.00000267; and
– on 5 April 2017, 54,444 ordinary shares in GCPL held by PGFC were converted to 54,444 B class shares.
During the income year ended 30 June 2015, PGFC (as trustee) disposed of a total of 37,680 ordinary shares in GCPL (which it had acquired for $0.1006056 ($0.00000267 per share)) for $13,074,987.25. As a result of these disposals, PGFC made capital gains from the happening of CGT event A1 totalling $13,074,628.
On 30 June 2015, PGFC (as trustee) made the following written resolutions:
– the net income of the trust for the year ended 30 June 2015 was to be the net income as determined under s 95 of the Income Tax Assessment Act 1936 (Cth) (ITAA36) excluding franking credits and any capital gains; and
– to the extent that the trustee had received and treated any capital gain earned during the year ended 30 June 2015 as capital of the trust and in accordance with cl 3.8 and cl 4.3 of the trust deed, any capital gain related to the sale of GCPL shares was distributed 100% to Alexander Greensill.
During each of the income years ended 30 June 2016 and 30 June 2017, PGFC (as trustee) disposed of further shares in GCPL. As a result of these disposals, PGFC (as trustee) made capital gains from the happening of CGT event A1 totalling $10,070,680 (for the income year ended 30 June 2016) and $35,213,910 (for the income year ended 30 June 2017).
Also, during the income year ended 30 June 2017, PGFC (as trustee) transferred in specie 54,444 B class shares in GCPL to Alexander Greensill in satisfaction of his absolute entitlement to those shares.3
For each of the 2016 and 2017 income years, PGFC (as trustee) made written resolutions that had the effect of distributing to Alexander Greensill 100% of any capital gain from the disposal of shares in GCPL. It seems that the resolution for the 2017 income year did not in express terms refer to the possible capital gain that would have arisen (as a result of CGT event E5 happening).
After a review of the tax affairs of the PGFT, the Commissioner issued assessments for the 2015, 2016 and 2017 income years to the trustee under s 98 ITAA36 (because Alexander Greensill was a non-resident at the end of each income year).4 The assessments were made on the basis that the capital gains distributed to Alexander Greensill, being deemed or attributable capital gains of Alexander Greensill under Subdiv 115-C ITAA97, were assessable to the trustee and were not disregarded under Div 855 ITAA97 (and s 855-10 ITAA97 in particular).
The Commissioner disallowed objections that were lodged by the trustee against the assessments and the trustee appealed to the Federal Court. The appeals were dismissed by Thawley J.
The relevant legislative provisions are somewhat intertwined and complex. They are set out below.
The provision that ultimately determined whether the trustee’s case rose or fell was s 855-10(1) ITAA97 which reads as follows:
“855-10 Disregarding a capital gain or loss from CGT events
(1) Disregard a capital gain or capital loss from a CGT event if:
(a) you are a foreign resident, or the trustee of a foreign trust for CGT purposes, just before the CGT event happens; and
(b) the CGT event happens in relation to a CGT asset that is not taxable Australian property.”
The practical effect of the provisions of Div 6E ITAA36 is that the beneficiaries of a trust and the trustee are not assessed under Div 6 ITAA36 in respect of capital gains of a trust estate. Beneficiaries and, where necessary, the trustee are taxed on capital gains of a trust estate through Subdiv 115-C ITAA 1997 (which comprises ss 115-200 to 115-230). That Subdivision applies if a trust estate has a net capital gain for an income year that is taken into account when working out the trust estate’s net income (as defined in s 95 ITAA36) for the income year (s 115-210(1) ITAA97).
The provisions of Subdiv 115-C ITAA97 which are of particular relevance are set out below:
“115-215 Assessing presently entitled beneficiaries
Purpose
(1) The purpose of this section is to ensure that appropriate amounts of the trust estate’s net income attributable to the trust estate’s capital gains are treated as a beneficiary’s capital gains when assessing the beneficiary, so:
(a) the beneficiary can apply capital losses against gains; and
(b) the beneficiary can apply the appropriate discount percentage (if any) to gains.
Extra capital gains
(3) If you are a beneficiary of the trust estate, for each capital gain of the trust estate, Division 1025 applies to you as if you had:
(a) if the capital gain was not reduced under either step 3 of the method statement in subsection 102-5(1) (discount capital gains) or Subdivision 152-C (small business 50% reduction) — a capital gain equal to the amount mentioned in subsection 115-225(1); and
(b) if the capital gain was reduced under either step 3 of the method statement or Subdivision 152-C but not both (even if it was further reduced by the other small business concessions) — a capital gain equal to twice the amount mentioned in subsection 115-225(1); and
(c) if the capital gain was reduced under both step 3 of the method statement and Subdivision 152-C (even if it was further reduced by the other small business concessions) — a capital gain equal to 4 times the amount mentioned in subsection 115-225(1).
…
(4) For each capital gain of yours mentioned in paragraph (3)(b) or (c):
(a) if the relevant trust gain was reduced under step 3 of the method statement in subsection 102-5(1) — Division 102 also applies to you as if your capital gain were a discount capital gain, if you are the kind of entity that can have a discount capital gain; and
(b) if the relevant trust gain was reduced under Subdivision 152-C — the capital gain remaining after you apply step 3 of the method statement is reduced by 50%.
Note: This ensures that your share of the trust estate’s net capital gain is taxed as if it were a capital gain you made (assuming you made the same choices about cost bases including indexation as the trustee).
(4A) To avoid doubt, subsection (3) treats you as having a capital gain for the purposes of Division 102, despite section 102-206.
Section 118-20 does not reduce extra capital gains
(5) To avoid doubt, section 118-20 does not reduce a capital gain that subsection (3) treats you as having for the purpose of applying Division 102.”
“115-220 Assessing trustees under section 98 of the Income Tax Assessment Act 1936
(1) This section applies if:
(a) you are the trustee of the trust estate; and
(b) on the assumption that there is a share of the income of the trust to which a beneficiary of the trust is presently entitled, you would be liable to be assessed (and pay tax) under section 98 of the Income Tax Assessment Act 1936 in relation to the trust estate in respect of the beneficiary.
(2) For each capital gain of the trust estate, increase the amount (the assessable amount) in respect of which you are actually liable to be assessed (and pay tax) under section 98 of the Income Tax Assessment Act 1936 in relation to the trust estate in respect of the beneficiary by:
(a) unless paragraph (b) applies — the amount mentioned in subsection 115-225(1) in relation to the beneficiary; or
(b) …
(3) To avoid doubt, increase the assessable amount under subsection (2) even if the assessable amount is nil.”
“115-225 Attributable gain
(1) The amount is the product of:
(a) the amount of the capital gain remaining after applying steps 1 to 4 of the method statement in subsection 102-5(1); and
(b) your share of the capital gain (see section 115-227), divided by the amount of the capital gain.
…”
“115-227 Share of a capital gain
An entity that is a beneficiary or the trustee of a trust estate has a share of a capital gain that is the sum of:
(a) the amount of the capital gain to which the entity is specifically entitled; and
(b) if there is an amount of the capital gain to which no beneficiary of the trust estate is specifically entitled, and to which the trustee is not specifically entitled — that amount multiplied by the entity’s adjusted Division 6 percentage of the income of the trust estate for the relevant income year.”
The applicant trustee’s position was that the capital gains distributed to Alexander Greensill were capital gains “from a CGT event” which were to be disregarded by the operation of s 855-10(1) ITAA97. It was submitted that Alexander Greensill’s “capital gains were from the happening of CGT events” to exempt assets, that is, assets that were not taxable Australian property. It followed, so it was contended, that there was no amount in respect of Alexander Greensill within s 115-220 ITAA97 on which the trustee was liable to be assessed under s 98 ITAA36.
As indicated above, the Commissioner’s position was that Alexander Greensill was deemed to have made capital gains as a result of s 115-215(3) ITAA97. Those deemed capital gains were not disregarded under s 855-10 ITAA97 and Alexander Greensill was assessable on his net capital gain for each income year, the calculation of which would include those deemed capital gains. The Commissioner also contended that the trustee was liable for the tax that had been assessed to it as trustee, regardless of whether s 855-10 ITAA97 applied to disregard the capital gains deemed to have been made by Alexander Greensill.
In dismissing the appeals for each income year, Thawley J said that the application of the relevant ITAA36 and ITAA97 provisions to the facts were in summary as follows:7
“(1) The PGFC (as trustee of the PGFT) made a capital gain in each of the income years ended 30 June 2015, 30 June 2016 and 30 June 2017. This capital gain arose because CGT events happened with respect to PGFC’s disposals of the shares. The net capital gain of the trust estate from the relevant CGT events was included in PGFC’s assessable income (s 102-5 ITAA97) and in the calculation of its net income for the particular income year.
(2) Section 855-10(1) ITAA97 did not apply so as to disregard any of the trust estate’s capital gains. First, the trust was not a foreign resident or the trustee of a foreign trust for CGT purposes (s 855-10(1)(a)). Secondly, the amount which s 115-220 ITAA97 required the trustee to be taxed on under s 98 ITAA36 was not a capital gain and could not fall within s 855-10(1). Section 115-220 ITAA97 requires an amount to be added to the assessment of a trustee under s 98 ITAA36, in part to facilitate recovery of tax in the case of non-resident beneficiaries. It was not a capital gain referred to in s 855-10(1) which was being added.
(3) Subdivision 115-C ITAA97 applied in relation to the trust estate’s capital gains, because the trust estate had a net capital gain in each of the relevant income years, which was taken into account in working out the trust estate’s net income (s 115-210(1); Div 6E ITAA36).
(4) Alexander Greensill, as a presently entitled beneficiary, was assessed under s 115-215 ITAA97. The purpose of that section ‘is to ensure that appropriate amounts of the trust estate’s net income attributable to the trust estate’s capital gains are treated as a beneficiary’s capital gains when assessing the beneficiary’ so that the beneficiary can apply any available capital losses or discount percentage against those gains (s 115-215(1)).
(5) The amount of the capital gains that the beneficiary is ‘treated’ by s 115-215 as having is determined by reference to the calculation under s 115-225(1), headed ‘Attributable gain’.
(6) The trustee was assessed under s 98 ITAA36 in accordance with s 115-220 ITAA97.”
His Honour went on to say8 that s 855-10(1) had no relevant application to the facts of the case. It did not operate to disregard any capital gain in the calculation of the amounts required to be calculated under ss 115-215 and 115-220 in Subdiv 115-C:
1. for Subdiv 115-C to apply to the PGFT at all, the PGFT must have a net capital gain, which required that it have capital gains that were not disregarded (s 115-210(1)). The opening words of s 115-220(2) refer to “each capital gain of the trust estate”, in this case being a reference to each capital gain of the PGFT. Section 855-10(1) did not apply to disregard the capital gains of a resident trust estate;
2. s 855-10(1) does not operate to disregard the amount which is the product of any calculation made under Subdiv 115-C. The amount calculated under s 115-220 is added to the assessment under s 98 ITAA36. It was not a capital gain as such to which s 855-10(1) could apply; and
3. an amount calculated under s 115-215 is not a capital gain from a CGT event. It is an amount which is calculated by reference to CGT events which occurred in respect of CGT assets of a trust.
Thawley J said, in relation to (1) and (2) above, that the trustee submitted that the reference in s 115-220(2) ITAA97 to “the amount mentioned in subsection 115-225(1) in relation to the beneficiary” meant Alexander Greensill’s capital gain as disregarded by s 855-10 ITAA97. In answer, Thawley J said that the statutory language did not permit that conclusion. The “amount of the capital gain” referred to in s 115-225(1)(a) ITAA97 is the capital gain of the trust estate in relation to which the section applies. It is not a reference to any capital gain of the beneficiary. Section 115-225(1)(a), read with the s 102-5 method statement, allowed for the trust estate’s capital gains to be reduced by its capital losses. This would not be achieved if s 115-225(1)(a) were understood as applying to capital gains and losses taken to have been made by the beneficiary.
Further, the reference to “your share of the capital gain” in s 115-225(1)(b) is a reference, inter alia, to “the amount of the capital gain to which the [beneficiary] is specifically entitled” (s 115-227(a)). The result of the calculation required by s 115-225(1) is simply an amount which the statute requires to be calculated. It is not a capital gain capable of being the subject of s 855-10(1).
His Honour said that the amount of “attributable gain” calculated under s 115-225(1) is used for the purposes of each of ss 115-215(3), 115-220(2) and 115-222(2) and (4). Each of those provisions uses the words “for each capital gain of the trust estate” and then refers to the amount mentioned in s 115-225(1). This confirms that “the capital gain” referred to in s 115-225(1)(a) is the capital gain of the trust estate. The function of s 115-225(1) is to apportion the capital gain of the trust estate among the trustee and beneficiaries of the trust estate according to their “share” as determined under s 115-227. That portion is then brought to tax under one of s 115-215, 115-220 or 115-222, as appropriate.
As to (3) above, his Honour said9 that, under s 115-215, the beneficiary is deemed to have a capital gain notwithstanding that a CGT event did not happen to an asset of the beneficiary (s 115-215(4A)). The ultimate object of this deeming, and the provision as a whole, was to permit the beneficiary to apply against the deemed capital gain any capital loss or capital gains discount available to that beneficiary (s 115-215(1)).
Thawley J said that the amount of each of the beneficiary’s deemed capital gains under s 115-215(3) is worked out by reference to the amount mentioned in s 115-225(1):10
“(1) First, it is necessary to apply steps 1 to 4 of the s 102-5 method statement to the trust estate’s capital gain. This involves reducing the trust estate’s capital gain by the trust estate’s capital losses and applying any discounts applicable to the trust estate. Section 115-225(1) then requires the beneficiary’s share of that capital gain to be calculated under s 115-227.
(2) Secondly, if there were reductions when applying the s 102-5 method statement — that is, if paragraph (b) or (c) of s 115-215(3) apply — it is necessary to ‘gross up’ the amount so calculated to reverse out any discounts that were taken into account when applying the s 102-5 method statement for the trust estate.”
The resulting capital gain, treated by s 115-215(3) as a capital gain of the beneficiary, is then included in the calculation of the beneficiary’s net capital gain under s 102-5. As mentioned, the express statutory point of this is to allow the beneficiary to apply his own capital losses and discounts (s 115-215(1)). The Commissioner correctly noted that the “gross up” provisions would not work properly if the capital gain in the trust estate’s hands was disregarded by reason of s 855-10.
When providing for the beneficiary’s deemed capital gains under s 115-215 to be reduced by the beneficiary’s capital losses under s 102-5, the provision is consistent with the regime in Div 6 ITAA36. A beneficiary to whom s 97 or 98A(1) applies has an amount added to his assessable income, which may then be reduced by his allowable deductions. However, a trustee taxed under s 98 (because a presently entitled beneficiary is a non-resident) is to be assessed on the relevant share of the net income without any deduction (s 98(3)). Any discrepancy between the trustee’s and the beneficiary’s tax liability is addressed by the credit and refund to the beneficiary in s 98A(2).
Thawley J said11 that it was true that Alexander Greensill had capital gains attributed to him under Subdiv 115-C for the purpose of permitting him to apply any capital losses or discounts available to him. However, that is not a “capital gain … from a CGT event” within the meaning of s 855-10(1).
His Honour went on to say that the meaning of a connecting word such as “from” depends on the context in which the word is used. When used as a term to indicate a connection between two matters, “from” has been interpreted as meaning that there must be a causal connection between the matters.12 The Oxford English Dictionary defines “from” as referring to an element of causation or derivation, defining “from” as denoting “derivation, source, descent” or “ground, reason, cause, or motive”. His Honour went on:13
“Causation plays a role, at the very least as a sine qua non in that there cannot be a capital gain without a CGT event, but causation is not the exclusive criterion by which the statutory question in s 855-10(1), whether a capital gain is ‘from’ a CGT event, is answered. The answer to the question involves an assessment of the degree of connection between the two subject matters for it to be said that one (the capital gain) is ‘from’ the other (a CGT event).
The use of the word ‘from’ indicates, in this statutory context, a greater degree of connection between the relevant matters than phrases such as ‘in relation to’ or ‘in respect of’ which have been held to ‘do no more … than signify the need for there to be some relationship or connection between two subject matters’: Australian Competition and Consumer Commission v Maritime Union of Australia [2001] FCA 1549.”
Thawley J concluded that the statutory context suggested that “from”, when used in s 855-10(1) in the phrase “from a CGT event”, should be understood as requiring a direct connection between the capital gain and the CGT event. It was not intended to apply to an amount which is “attributable to a CGT event” which occurred to another person, even where that other person is a trustee. Such an amount is not a capital gain “from” the event.
Later in his judgment, Thawley J said:14
“Understood in context, s 855-10(1) indicates that the capital gain to be disregarded is that which is made by an entity immediately as a consequence of the happening of a CGT event; a capital gain which is attributed to a beneficiary, because of a CGT event happening to a CGT asset owned by a trust, was not intended to fall within the phrase ‘a capital gain … from a CGT event’. The capital gain deemed to have been made by a beneficiary under s 115-215 of the ITAA 1997 is not a ‘capital gain … from a CGT event’ within s 855-10(1).”
His Honour noted that capital gains made by a beneficiary of a fixed trust might be disregarded under s 855-40 ITAA97. The language employed by that provision provided support for the understanding of s 855-10(1). It applies to a capital gain “you make in respect of your interest in a fixed trust” where, among other matters, the gain “is attributable to a CGT event happening to a CGT asset of a trust”. This language was quite different to the language of s 855-10 which requires the capital gain to be “from” a CGT event. The note to s 855-40(2) indicates that the provision operates with respect to the capital gain taken to have been made by a beneficiary under s 115-215 ITAA97. Section 855-10, which does not contain such a note, operates differently and does not provide for the disregarding of capital gains attributed to the beneficiary of a non-fixed trust under Subdiv 115-C. That Div 855 should be understood, through the process of statutory construction, as having been intended to operate in this way was, in his Honour’s view, supported by the legislative history and extrinsic material.
The decision of Thawley J in the Peter Greensill Family Co Pty Ltd case highlights the difficulties which the CGT provisions of the ITAA97 may give rise to as they apply to capital gains derived by a trust.
His Honour noted that s 855-10(1) ITAA97 would have applied if the beneficiary, rather than the trust, had owned and disposed of the shares, but the provision did not operate to disregard a capital gain of the trust attributed to the beneficiary under Subdiv 115-C ITAA97.
That the Commissioner took the position he did in the Peter Greensill Family Co Pty Ltd case is not surprising as it reflects views that he had expressed as far back as 2007 (see ID 2007/60). The Commissioner’s views in ID 2007/60 are repeated in TD 2019/D6.
It is submitted that there may possibly be an argument that, on the facts of the case, the disregarding of a capital gain that is mandated by s 885-10(1) ITAA97 is of the capital gains made by the trust on the disposal of the shares so that there would be no capital gain that could be the subject of the provisions of Subdiv 115-C ITAA97. On this argument, the capital gains would be treated as any capital gain that is disregarded, for example, a capital gain that is made from the happening of CGT event A1 that is disregarded because the particular asset was acquired pre-CGT (s 104-10(5) ITAA97).
The total amount of the capital gains involved in the case was in excess of $58m and it is therefore likely that an appeal to the Full Federal Court will be taken. That likelihood has increased having regard to the fact that the trustee brought an interlocutory application several days after the judgment was handed down seeking the court to exercise its power to review and reconsider its orders made and the reasons for its decision. As noted earlier, that application was dismissed by Thawley J.
TaxCounsel Pty Ltd
1 [2020] FCA 559.
2 [2020] FCA 597.
3 CGT event E5 would have happened when Alexander Greensill became absolutely entitled.
4 See s 98(2A) and (3) ITAA36. Relevantly, under those provisions, the trustee is assessable on so much of the beneficiary’s share of the net income of the trust estate as is attributable to a period when the beneficiary was not a resident and is also attributable to sources in Australia. Section 98A ITAA36 provides that, where a trustee is assessed as a result of the operation of s 98, the beneficiary is also to be assessed on a share of the net income, and the beneficiary receives a credit (and may receive a refund) to the extent that the trustee pays tax on the amount for which it is assessed as a result of the operation of s 98.
5 The heading to this Division is “Assessable income includes net capital gain”.
6 Section 102-20 ITAA97 relevantly provides: “You can make a capital gain or capital loss if and only if a CGT event happens.”
7 [2020] FCA 559 at [39].
8 [2020] FCA 559 at [40].
9 [2020] FCA 559 at [46].
10 [2020] FCA 559 at [47].
11 [2020] FCA 559 at [50].
12 Deal v Father Pius Kodakkathanath [2016] HCA 31.
13 [2020] FCA 559 at [52] and [53].
14 [2020] FCA 559 at [60].
PK IPY4U OEBPS/chapter07.xhtmlThe Tax Institute’s 2019 study period 3 CTA2A Advanced dux shares his views on the importance of study.
I started with Devenny Payne as a graduate in 2013 after completing a Bachelor of Commerce at The University of Melbourne. From there, I completed the CPA Program in 2015. Devenny Payne is a public accounting practice with the majority of clients in the small to medium range. We enjoy working with and helping these clients to better understand and evaluate their long-term goals.
The CTA2A Advanced course is good in that it reinforces many of the areas that we cover in public accounting. As some of the content goes into a lot of detail, some of which we do not see on a day-to-day basis, it is good to be able to flesh out the knowledge around the areas we do not work in extensively and to fully understand the logic behind some of the legislation.
The course helped to shore up my knowledge on the nuances and unintended consequences of trust distributions, especially with streaming.
I undertook CTA2A Advanced in order to build as much knowledge as possible while I am working. As accounting changes so rapidly, I believe that, as soon as you stop studying, you can become complacent and miss major changes that may affect clients.
I am currently working through CTA2B Advanced. Once I have completed this course, I am looking at options for my tax agent licence. After that, I will look into financial planning to see if that would be a good value add for where I want to go next.
I find that I need to stay disciplined and balanced to be able to manage work, study and my personal life. I have a set routine that I do for each subject to make sure I am where I need to be for each exam.
If you are going to commit to the CTA2A Advanced program, make sure you dedicate appropriate time so that your schedule allows you to work through the course systematically.
PK P1Ca OEBPS/chapter08.xhtmlThis month’s column features Adrian Varrasso, ATI, from MinterEllison, Victoria.
2010
I work in general corporate tax, largely specialising in transactional work (M&A, restructuring, demergers and capital management), with particular experience in infrastructure, property, and mining and resources, which covers debt/equity, cross-border tax issues, tax consolidation, CGT and everything in between, including employment tax related matters. I prefer to describe my areas of specialty as everything other than GST and stamp duty.
Despite the fact that my membership lapsed for a few years as a younger tax lawyer (and hence my Associate status rather than Fellow status), it has been the key membership to accompany a profession in tax. The Institute is the leading body for tax education and a fantastic base from which one can connect with fellow tax professionals, stay on top of the most recent tax developments, and be trained at the brilliantly organised and structured tax workshops and seminars throughout the year. And, in recent times, I also enjoy reading Senior Tax Counsel Bob Deutsch’s articles in TaxVine.
As mentioned, the training and updates on current tax reform (legislative, judicial and administrative) are instrumental to your ability to service your clients, as they expect that we are across all tax developments, which, given the volume of tax laws and the pace at which tax reform occurs, is quite an ask. But it is made achievable thanks to the support provided by being a member of The Tax Institute.
I satisfied my parents’ wishes. No, seriously, they had no involvement. I did Commerce/Law at university and didn’t want to be a lawyer. With an accounting major, I ended up in a Big 4 firm and had a choice of “tax” or “audit”. Audit didn’t sound very good. It was that simple. And to top it off, I became a lawyer.
Oh, that’s easy — one word, JobKeeper! What a nightmare.
Clearly, being selected by a phenomenal panel (I don’t say this just because they chose well, they’re very, very impressive) as the 2020 Corporate Tax Adviser of the Year. The best moment was immediately after the announcement, when the most brilliant tax advisers in the country came up to congratulate me in person. I sort of got swamped by a few — they know who they are — they made it very special!
Pre-isolation, I spent time outdoors, exercising, socialising and at children’s birthday parties. In isolation, I find a quiet space and have some time alone on Netflix/Stan.
Embrace it. Every research task and every ruling, case, explanatory memorandum you read will, in the long run, build into a very rewarding career. It is a very challenging area (it’s not easy, there aren’t many black and white answers, and the law and interpretation by judiciary and regulators change almost daily), which is what makes it special. You would be bored otherwise.
PK ]P ^ ^ OEBPS/chapter09.xhtmlby Enzo Coia, CTA, Partner, Deloitte
The Federal Court recently decided the case of Origin Energy Ltd v FCT (No. 2), with Thawley J handing down his judgment on 30 March 2020. The case concerned payments for the supply of electricity over a period of many years. The Commissioner was successful in arguing the payments were non-deductible on the basis they were capital in nature. The decision is consistent with recent tax cases that apply a pragmatic and purposive view of the facts rather than a literal interpretation of the legal agreements. Substance over form. The case also contains some helpful insights on the potential breadth (or lack of breadth) of s 40-880 of the Income Tax Assessment Act 1997, which allows deductions for certain business capital expenditure.
Origin Energy Ltd v FCT (No. 2) was recently decided in the Federal Court by Thawley J.1 Origin Energy Electricity Ltd (OEEL) and Eraring Energy entered into two agreements, called “GenTrader Agreements”. Under these agreements, OEEL agreed to pay Eraring Energy substantial “capacity charges” for the supply of electricity. Under “deposit deeds”, OEEL placed interest bearing deposits with the NSW Treasury. These represented the net present value of the annual capacity charges payable under the GenTrader Agreements for the term of those agreements, being 22 and 28 years.
Origin Energy Ltd (Origin), the head company of the consolidated group of which OEEL was a member, contended that the capacity charges were deductible in each of the years of income in which those charges were incurred under s 8-1 of the Income Tax Assessment Act 1997 (Cth) (ITAA97). Origin submitted that, from a legal, practical and business perspective, the contractual framework between Eraring Energy and Origin was that of a long-term agreement for the supply of electricity by Eraring Energy to OEEL pursuant to which OEEL agreed to purchase essentially all of the generation of Eraring Energy’s power plants, at the connection point between those power plants and the transmission system into the grid.
Origin also contended that, if the amounts were not deductible because they represented capital expenditure, the charges were deductible as “business capital” expenditure over five years under s 40-880 ITAA97.
The Commissioner contended that the capacity charges were capital in nature and therefore not deductible because the advantage sought by incurring the expenditure was an extension of OEEL’s profit-making structure, not simply the annual supply of electricity to OEEL for on-sale. The Commissioner submitted that OEEL bore risks which were inconsistent with the arrangements being classified as a long-term supply contract or analogous to OEEL’s tolling arrangements. The Commissioner submitted that Origin acquired the ability to dictate the timing and extent of electricity generation, and thus acquired, in effect, a significant part of Eraring Energy’s generation business.
The Commissioner also argued that the amounts were not deductible under s 40-880 as the expenditure was made in relation to a “legal or equitable right” or “could … be taken into account in working out the amount of a capital gain or capital loss”.
Thawley J held that the capacity charges were non-deductible under s 8-1 on the basis that the costs were capital in nature. His Honour also held that the expenditure was not deductible under s 40-880 and instead the capacity charges were properly taken into account under the capital gains tax regime.
The court found that there were several factors indicating that the expenditure was capital. These are set out principally in paras 87 and 88 of the judgment.
The court’s key reason in finding the payments to be non-deductible was that the advantage sought by the expenditure was an acquisition of a new or extended profit-making structure. It was held that OEEL acquired the right to trade the entire output of the power stations for an extended period and to profit from that structure having regard to the various risks and opportunities acquired. OEEL’s profit-making structure was significantly extended and altered for an extended term, with the ability to extend the term further. As such, the expenditure was not properly characterised as being merely for the yearly acquisition of electricity by OEEL for on-sale at a profit, even if that is a part of what was acquired by the expenditure. The court noted that this would oversimplify what the expenditure was for. In addition, such a characterisation fails to recognise that what OEEL sought to achieve by incurring the expenditure, as a matter of practical and business reality, was the acquisition of a business structure constituted by the right to trade the entire output of the power stations. Thawley J noted that, although the operation of the stations would be managed by the owner, OEEL had significant elements of control and in respect of which it bore risk and gained opportunities for profit.2
The court found that the overarching conclusion was supported by a consideration of the following matters:3
“(1) What had been Eraring Energy’s trading business was handed over to OEEL.
(2) OEEL had substantial control over when and how much electricity was to be generated.
(3) Whilst the power stations were managed and operated by Eraring Energy, OEEL had some involvement in the management and operation of the power stations.
(4) The effect of the contractual arrangements was for OEEL to acquire a number of business risks and opportunities consistent with acquiring a new or extended business structure. These included:
(a) OEEL took over the obligation to supply or procure the supply of coal and fuel to the Eraring power station.
(b) OEEL could request capital improvements and bore the cost of the upgrade to the Eraring power station generating units.
(c) The fixed and variable charges were structured in a way which meant that OEEL bore some of the risk in relation to generation of electricity.
(d) OEEL took on some of the risks associated with a failure to generate electricity.
(e) OEEL took on the obligation to take out substantial levels of insurance, including industrial and special risks insurance to cover loss and damage to the power stations themselves and any consequential losses.
(5) Although the capacity charges were recurrent in form, OEEL paid the whole of them up-front, a matter relevant to the weight to be given to the consideration that recurrent expenditure is often an indicator of expenditure on revenue account.
(6) The lengthy terms of the GenTrader Agreements (approximately 22 and 28 years) and the provisions for extension and termination of the agreements were also consistent with a conclusion that the capacity charges were on capital account.”
Origin submitted that the advantage from incurring the expenditure was to acquire electricity to on-sell it into the spot market, and not for the use or ownership of the means of production owned and operated by another. Origin submitted that OEEL “simply purchased electricity under a long-term agreement for sale in the course of its business”.4 It was said that the payment of capacity charges was not the payment of the purchase price of any asset acquired by OEEL or of any rights which comprised a new business.
Thawley J disagreed.
His Honour found that the expenditure was incurred to acquire a substantial extension to OEEL’s profit-making structure or a new profit-making structure.5 The practical business and legal consequence of the transactions was that OEEL acquired the right to trade the whole of the electricity generated by the power stations for 22 and 28 years. The contractual arrangements giving rise to that right were such that OEEL, through its trading activities, could control when and how much electricity was generated. OEEL also took on risks and opportunity with respect to Eraring Energy’s generation activities. The court held that the totality of the arrangements gave rise to a new or an extended business structure for Origin, which substantially extended its previous operations.5
The court addressed the issue of the once-off nature of the payment as compared to the periodicity on which amounts would be released from the deposit. The court held that the expenditure was, as a matter of substance, “one-off”. It said that, while the capacity charges were recurrent in form (usually an indicator that expenditure is on revenue account), the “fact is that OEEL paid all of the capacity charges for a period of 22 (Eraring) and 28 (Shoalhaven) years in advance”, and it noted that even:6
“… if one looked past the fact that the capacity charges were all paid in advance, to the recurrent form of them, once ‘expenditure can be truly characterized as the payment of consideration for a capital … advantage, it will be of a capital nature notwithstanding that the payments are recurrent’: Cliffs International Inc v Commissioner of Taxation [1979] HCA 8; (1979) 142 CLR 140 at 156.”
Having found that the expenditure was capital in nature, the court then turned to consider whether any amounts were deducible under the “business capital expenditure” provision s 40-880.
As far as relevant here, that section allows a deduction over five years for capital expenditure in relation to a taxpayer’s business. However, a deduction is not available if certain disqualifying reasons are met in respect of the expenditure. Two relevant disqualifications are if the expenditure:
– is in relation to a lease or a legal or equitable right (s 40-880(5)(d)); or
– could be taken into account when working out a capital gain or loss (s 40-880(5)(f)).
The court noted that it was not intended that s 40-880(2) always provide a deduction simply because the particular expenditure could not otherwise be taken into account.7
The court went on to accept the view that that the phrase “other legal or equitable right” in s 40-880(5)(d) is apt to cover:8
“(1) various rights to use, or access, or exploit land, including a profit-à-prendre, a profit-à-rendre and easements;
(2) comparable rights in relation to tangible chattels, such as chattel leases, bailments and licences; and
(3) comparable rights in relation to choses in action, an example of which might be a licence to use intellectual property within a particular geographical area.”
That is a potentially very broad range of cases which would result in non-deductibility under s 40-880.
The court tempered this by saying that whether or not s 40-880(5)(d) does cover such a right depends on the particular facts.
The court went further in noting that the exclusion might also apply in relation to a right where there is no particular underlying asset to which the right relates, such as a restrictive covenant or a franchise. Again, that reading is a potentially very restrictive reading of the scope of the section.
In conclusion, the court held that the GenTrader Agreements gave the taxpayer a bundle of contractual rights which amounted to a chose or choses in action, including what amounted in summary to the right on the part of OEEL to trade the entire output of the power stations for substantial terms of 22 and 28 years. As such, the rights acquired under the agreements fall within the concept of “other legal or equitable right”.
The court also found that the capacity charges were paid “in respect of acquiring” Origin’s rights in relation to directing the provision of the “contracted supply”, and therefore would be “taken into account in working out the amount of” a capital gain or capital loss for the purposes of Pt 3-1 and Pt 3-3 ITAA97.
The contractual rights, including specifically the right to trade, for the contractual term, the generated output of the power stations, produced at the levels directed by OEEL, were CGT assets. It followed that the capacity charges are not deductible under s 40-880(2) because of s 40-880(5)(f).
“Origin acquired the right to trade the whole of the electricity generated by the power stations for 22 and 28 years.”
The decision in Origin adds to the list of cases which reinforce the need to take a purposive view when asking, “what’s the payment really for?”, in order to determine the tax reflex. Thawley J’s judgment notes the primacy of that enquiry, where his Honour states:9
“The answer to the question what the money is really ‘for’ is not necessarily answered solely by reference to a ‘juristic classification of legal rights’: Hallstroms Pty Ltd v Federal Commissioner of Taxation [1946] HCA 34; (1946) 72 CLR 634 at 648. The answer ‘depends on what the outgoing is calculated to effect from a practical and business point of view’: Sharpcan at [18]; Hallstroms at 648. The primary question is the character of the advantage sought by the taxpayer in incurring the expenditure: GP International Pipecoaters Pty Ltd v Commissioner of Taxation (1990) 170 CLR 124 at 137.”
Very briefly, it seems that the way in which the decision in Origin was approached aligns with two recent cases. These are:
– Healius10 (currently on appeal) in which a taxpayer owned medical centres where it provided premises and services to doctors. The taxpayer entered into agreements with over 500 doctors and paid them lump sums for their practices and for them to operate exclusively with it. The agreements suggested that the payments were for “goodwill”; the accounting treatment also reflected a goodwill characterisation. The Commissioner assessed the taxpayer on the basis that the lump sum outgoings were capital and not deductible. The taxpayer successfully argued that the lump sum payments were deductible as they were part of a process by which it operated to obtain regular returns by means of regular outlay. Consequently, the Federal Court (Perram J) found that, notwithstanding that the payments were described in the contracts as relating to goodwill, they were in fact payments to win a customer. The lump sums did not acquire something that was part of the profit-yielding structure. The payments were expenditures made to meet the taxpayer’s continuous and recurrent struggle to enlist more doctors. As such, the court looked to the underlying commercial reality of the payments rather than their description in the legal agreements; and
– Sharpcan11 in which the High Court unanimously found that payments relating to gaming machine entitlements were in fact payments for the entitlements which were assets of enduring value acquired as the means of production, necessary for the structure of the business, and a barrier to entry. The High Court therefore held that the purchase price, although paid in instalments, was in the nature of a once-and-for-all outgoing for the acquisition of a capital asset, and thus not deductible under s 8-1 ITAA97. The High Court also found that no deduction was available under s 40-880 on the basis that the payments could be taken into account when calculating a capital gain (which is also consistent with the finding in Origin).
Origin and the cases referred to above highlight the importance of stepping back from the agreements and asking, “what’s the payment really for?”.12 Of course, the answer is not as easy as the question.
It seems that, after many decades of jurisprudence, it is still far too difficult to discern whether a payment is for a revenue purpose or a capital purpose. For example, when does a payment turn from being made to acquire a revenue stream (and deductible, as in Healius and other cases such as BP13 and Tyco14) compared to being paid to acquire a structure? The author is pleased to be in good company on the difficulty in coming to such answers. Professor Robert Deutsch recently noted15 the continuing use of this troublesome, difficult and, at times, artificial distinction between revenue and capital and whether it is time to revisit the whole dichotomy.
In the same article, Professor Deutsch’s conclusion is on point where notes:
“There must be a better, simpler, yet equitable way to get the right outcome without all this seemingly endless debate and argument!”
In practice, how easy is it to know whether a periodic payment gives the taxpayer the structure with which to operate its business? Such a payment would suggest an analogy to the acquisition of a capital asset (such as in Sharpcan). In the alternative, when would periodic licence fees in respect of the ability to operate very long-term infrastructure assets be deductible as no capital asset was acquired (such as in CityLink16)?
Reasonable people could form a view that Origin was really paying for long-term certainty of supply and that the payment terms provided surety to the counterparty.
Enzo Coia, CTA
Partner
Deloitte
The views expressed in this article are those of the author and are not attributed to Deloitte. The material published in this article should not be used or treated as professional advice.
1 Origin Energy Ltd v FCT (No. 2) [2020] FCA 409.
2 Origin at [87].
3 Origin at [88].
4 Origin at [176].
5 Origin at [177].
6 Origin at [180].
7 Origin at [190].
8 Origin at [193].
9 Origin at [86].
10 Healius Ltd v FCT [2019] FCA 2011.
11 FCT v Sharpcan Pty Ltd [2019] HCA 36
12 Thawley J at [85], citing Fullagar J in Colonial Mutual Life Assurance Society Ltd v FCT [1953] HCA 68.
13 BP Australia Ltd v FCT [1965] UKPCHCA 2.
14 Tyco Australia Pty Ltd v FCT [2007] FCA 1055.
15 Bob Deutsch, “Revenue v capital: 100 years of case law and still we often don’t know!”, TaxVine, 6 March 2020.
16 FCT v CityLink Melbourne Ltd [2006] HCA 35.
PK IP[ [ OEBPS/chapter10.xhtmlby Tony Pane, Consultant, and Nicholas Dodds, Associate, Thomson Geer
Various conceptions of purpose are fundamental to the tax laws in Australia. Consideration of purpose is either explicitly required, for example, when applying Pt IVA of the Income Tax Assessment Act 1936 (Cth), or implicit when making some other decision, such as determining whether an amount is incurred in gaining or producing assessable income. Statutory provisions may also raise difficult questions of gradation of purposes for a particular transaction – must the relevant purpose be dominant? Principal? Or merely not incidental? These questions, however, are not unique to Australia. This article explores a recent United Kingdom case regarding the application of a statutory anti-avoidance rule in a cross-border intra-group transaction and the tribunal’s approach to assessing the purpose of the transaction in that case, and offers relevant observations on purpose in an Australian context in light of the expanding number of domestic anti-avoidance provisions.
In a recent United Kingdom tax case, Oxford Instruments UK 2013 Ltd v The Commissioners for Her Majesty’s Revenue and Customs1 (Oxford Instruments), counsel for HMRC referred to the commercial advantage of the return, or spread, on a preference share investment made by Oxford Instruments UK 2013 Ltd (the taxpayer) as being merely “icing on the cake” in an arrangement entered into to secure tax deductions.2 Counsel for the taxpayer argued that the tax deductions were an effect, not a purpose, of the arrangement, and the taxpayer had the purpose of earning the spread and, in common with its parent, the purpose of achieving United States refinancing and leverage objectives (US objectives).3
From time to time, taxpayers suggest that taxation advantages the subject of a particular dispute are merely “icing on a cake” or a “cherry on top” of a transaction, arguing that the taxation advantage was simply an incidental, albeit enhancing, benefit of an arrangement entered into with another purpose in mind.4
Unfortunately for the taxpayer, characterisation of the particular arrangements by the First-tier Tribunal, Tax Chamber,5 as an optional extra step in this case led to the tribunal’s finding, in agreement with HMRC, that the end in view was the generation of tax deductions, and the commercial advantage of the spread was a mere decoration or, more accurately, a means to achieving the tax deduction end.6
In this article, the authors explore the tribunal’s approach to, and reasoning on, the identification of the end in view in Oxford Instruments and offer some observations on purpose as a criterion for the application of a recently expanded class of Australian anti-avoidance provisions.
Oxford Instruments essentially involved cross-border debt arrangements within a corporate group that resulted in tax savings in a high tax “borrower” country (in this case, the US) with minimal consequential tax liability in the lower tax “lender” country (in this case, the UK). In large part, the cross-border debt arose from ownership restructuring, with just under 25% of the cross-border debt refinancing an earlier working capital loan provided to the US sub-group.7 The 2013 cross-border loan arrangements (2013 arrangements) considered by the tribunal were largely the outcome of a tax planning exercise involving advice provided by Deloitte on optimal, tax-efficient refinancing options, with scope for additional leverage. For the purposes of this article, it is not necessary to outline the full factual context, nor to set out in detail all of the relevant UK and US tax rules/issues. The focus of the article is on the purpose criterion considered by the tribunal in respect of one element (step 8) of the 2013 arrangements.
Earlier elements or steps of the 2013 arrangements refinanced debt obligations of the US sub-group to a UK group member (UK lender) (US$60m in 2008 loan notes, issued as part of a 2008 internal recapitalisation, and a US$34m loan in 2009) and created new indebtedness associated with dropping a US shareholding held by another UK group member under a new US holding company (OI 2013 Inc.). These transactions resulted in cross-border debt of US$140m (2013 loan) owed by OI 2013 Inc. to the UK Lender, with a five-year term and an interest rate of 5.5%. The 2013 loan interest expense reduced the earnings and profits of the US sub-group and, given its circumstances, also reduced US tax payable. The differential between the US and UK corporate tax rates at the time and the group’s tax attributes in those two jurisdictions generated a material net tax saving. Interest income from the 2008 loan notes and 2009 loan had been fully sheltered by tax losses in the UK group, which were by 2013 nearly exhausted.
The critical element of the 2013 arrangements (step 8) from a UK tax perspective involved the taxpayer subscribing for preference shares in OI 2013 Inc., with the subscription amount satisfied by the taxpayer issuing a US$140m promissory note. The step 8 transactions and the relevant scheme context are depicted in Diagram 1.
The preference share coupon or dividend rate was set at 8.1%, and the promissory note interest rate was 5.5%. It is the loan relationship established by the promissory note that gave rise to the taxpayer’s UK tax deductions challenged by HMRC. The authors note in passing that, in order to obtain an HMRC clearance under UK anti-arbitrage rules, the taxpayer had voluntarily disallowed 25% of the UK interest deduction.8 The net UK tax effect of step 8 was to generate tax deductions used to partially offset interest income derived by the UK group on the 2013 loan. At that time, the UK group was projected to be out of tax losses by 2015. The preference share coupon was a non-taxable amount for the taxpayer, and the interest payable by the taxpayer to OI 2013 Inc. was not included in the US tax base because the taxpayer was treated as part of OI 2013 Inc. for US tax purposes, in what is now called a “hybrid mismatch”.
The question before the tribunal was whether the taxpayer’s promissory note had “an unallowable purpose” under s 441 of the UK Corporation Tax Act 2009 (CTA09); if so, any debit (the UK equivalent to a deduction in Australian tax law) arising from the promissory note was not to be brought into account.
Section 442 CTA09 defines “unallowable purpose” and, in broad terms, provides that a loan relationship has an unallowable purpose if the purposes for which the company is a party to the relationship, or enters into related transactions, include a purpose (“the unallowable purpose”) which is not among the business or other commercial purposes of the company. However, s 442(4) recognises that a purpose of securing a tax advantage for the company or another person (defined as a “tax avoidance purpose”) will only be regarded as a business or other commercial purpose if it is not the main purpose, or one of the main purposes, for the relevant person being a party to the relevant loan relationship (the promissory note).
In a nutshell, the tribunal had to consider the purpose or, if applicable, the purposes of the taxpayer for issuing the promissory note. The finding of an unallowable purpose has the consequence that deductions attributable thereto are not allowable for UK tax purposes.
The above oversimplifies the UK statutory context and the issues before the tribunal, but it provides sufficient context for the analysis which follows.
The tribunal’s analysis commenced with the uncontested proposition that the purpose test in this context, in contrast to the objective assessment of purpose contemplated by Australia’s general anti-avoidance rules, “involves a question of fact to be determined by reference to the subjective purpose of the [taxpayer]”9 for issuing the promissory note. The tribunal noted that the taxpayer, being a corporate entity, is to be attributed the purpose of the directors responsible for its governance.10 One of these directors, Mr Boyd, provided testimony before the tribunal about his intentions (and those of his fellow directors) at the time. Resolutions passed by the taxpayer’s board of directors also evidenced those intentions.11
The tribunal found that the issue of the promissory note was part of a scheme implemented by the taxpayer’s ultimate parent (Oxford Instruments Plc (OI Plc)) following advice (including design work) from Deloitte in order to achieve the US objectives. The promissory note (and the rest of step 8) was not required to achieve the US objectives, but it did seek to mitigate the UK tax impact resulting from the earlier scheme steps. The tribunal identified this UK tax objective as a secondary, and, critically, commercially optional objective of OI Plc.12 The tribunal found that, while the objectives of the broader scheme and the Deloitte advice informed the intentions of the taxpayer’s directors, there had been no abdication of fiduciary duties by the taxpayer’s directors to the board of OI Plc or to Deloitte.13
At the relevant time, the taxpayer’s directors had only recently taken office because the taxpayer had been established to play its designated role in the broader scheme (ie step 8). As noted above, that scheme was designed and implemented for OI Plc to achieve the US objectives at minimal consequential UK tax cost. It was not a scheme entered into to avoid or reduce a UK tax liability that, absent the scheme, was to be encountered. Further, the UK tax outcome resulting from step 8 of the scheme seems to simply be the product of deductions being allowed for costs incurred when making an investment that generates a commercial profit or spread.14 The directors’ resolution approving the preference share investment and the issue of the promissory note referred to commercial objectives of the scheme, including the US objectives and the spread to be earned on the preference share investment.15 There was no express reference to mitigating UK tax costs otherwise resulting from the earlier scheme steps.
From the evidence provided by Mr Boyd (who was also OI Plc’s group finance director), the tribunal had information before it concerning: the planning leading up to the formulation and implementation of the scheme (including details of an alternative scheme); the limited business role of the taxpayer; and tax law changes which led to the premature unwinding of the scheme in 2014 (used to affirm the findings made in respect of contemporaneous information).16 This factual background informed the findings about the intentions of the taxpayer’s directors and, therefore, of the taxpayer.
When looking at the intentions of the taxpayer’s directors for issuing the promissory note to acquire the preference shares, the tribunal found:17
1. OI Plc had two main purposes18 for the implementation of the scheme, the first and most significant19 being the achievement of the US objectives, and the second being the mitigation of the consequential UK tax consequences. Absent that second purpose, OI Plc would not have incorporated the taxpayer, and step 8 would not have occurred;
2. the taxpayer’s directors considered the approval of step 8 knowing that it was necessary to achieve OI Plc’s second main purpose after the achievement of the first main purpose. The US objectives had been achieved by earlier steps and did not explain why step 8 was approved;
3. the commerciality of the preference share investment decision, including the issue of the promissory note, was “built in” to step 8, or an “inevitable effect or known consequence” of step 8.20 Accordingly, while it may have been important for the taxpayer’s directors to be satisfied that the preference share investment stacked up commercially, it did not explain why they were approving the step 8 transactions. The tribunal concluded that the commercial profit generated by the preference share investment “was simply the means to justify the existence of the transactions which [the taxpayer] needed to implement in order to achieve its sole purpose”.21 Put another way, the achievement of that profit was not “a self-standing purpose in its own right”22 or, in yet another way, the commercial spread could not have been the end that the taxpayer had in view when it issued the promissory note because it “was simply an inherent immutable part of the package which was being offered to the directors … as a means of securing the tax advantage to which that package was expected to give rise and which the directors could either take or leave”;23 and
4. having concluded that the US objectives and the spread to be achieved on the preference shares were not purposes of the taxpayer’s directors, the only logical conclusion was that the sole purpose of the taxpayer with respect to the promissory note “was to play the role that had been allotted to it in the Scheme as a whole — namely, to generate, before taking into account the [voluntary 25% disallowance], the deductions needed to match the incremental net taxable income”24 that a UK group company was to earn as a result of the first seven steps of the scheme.
The taxpayer’s interest obligation under the promissory note offset in full the interest income to the UK group under the 2013 loan, with the UK group to receive an overall net amount equal to the gross dividends (or coupon) on the preference shares plus any dividends that may be declared on the ordinary shares in OI 2013 Inc., the holding company for the US sub-group. However, the offsetting interest amounts (before the voluntary disallowance) from a UK tax perspective did not have a US reflex because, from a US tax perspective, there is only an interest expense. This hybrid outcome (ie US non-recognition of the preference shares and promissory note) explained the scheme and the conclusion that the alleged commercial outcomes were merely the means to the challenged UK tax end. The tribunal’s findings essentially acknowledge that everyone involved, including the taxpayer’s directors, were on the same page working to achieve a common purpose, which included as a main element the UK tax deductions.
“… the spread was ‘an inevitable known consequence’ of step 8, but not the end in sight.”
There was no evidence to suggest that the taxpayer was pursuing any broader investment activity or that there were any actual funds to invest. The taxpayer simply became indebted to its parent company in order to acquire preference shares in that company. Any net return received by the taxpayer was to the ultimate benefit of the parent company, and on the premature unwind of the arrangements, the taxpayer paid a dividend to its parent company equal to the net return. There was no commercial substance to step 8, apart from the expected taxation outcomes.
Without step 8, the scheme can be said to have achieved global tax efficiency by shifting taxable income from the US sub-group to the UK group where, in the short term, there were tax losses and, in the longer term, an expectation that UK tax rates would continue to be materially lower than US tax rates. Such an outcome would not have engaged s 441 CTA09. However, it was open to the tribunal to find that the taxpayer had a main tax avoidance (or unallowable) purpose under that section for step 8, and to describe the spread as “an inevitable known consequence (or effect)”25 of that step, but not the end in sight.
Various conceptions of purpose are fundamental to the tax laws in Australia. Consideration of purpose is either an explicit necessity, such as when deciding on the application of Pt IVA of the Income Tax Assessment Act 1936 (Cth) (ITAA36),26 or implicit when making some other decision about the end to which an action is directed, such as whether an amount is incurred in gaining or producing assessable income.27 Statutory provisions also raise difficult questions of gradation of purposes for a particular transaction: the purpose may have to be the dominant purpose,28 a principal purpose,29 or a main purpose,30 or simply a not incidental purpose;31 and it may be the purpose of those who participate in the transaction, or the purpose of the transaction itself, which is relevant in a particular case.
While Oxford Instruments dealt with the question of purpose in the context of an anti-avoidance rule with significant differences to those found in Australia, there are nonetheless parallels in the reasoning processes of the tribunal in Oxford Instruments and of Australian courts dealing with questions of purpose in anti-avoidance provisions which are worthy of note.
For example, many of the factors considered by the tribunal to be relevant when determining the issues of purpose in Oxford Instruments are also referred to in the recently released draft ATO guidance on the administration of general anti-abuse rules (such as the principal or main purpose tests included in Australia’s tax treaties) in PS LA 2019/D2. PS LA 2019/D2 offers a lengthy list of questions that may be relevant to allow an ATO officer to understand and consider the objective purposes of an arrangement under review in order to apply those rules, such as:
– What is the broader business context in which the arrangement has been implemented?
– What are the objective effects of the arrangement? That is, what are the results which it produces or is capable of producing?
– How does the arrangement go about achieving its results?
– What do the terms and circumstances of the arrangement indicate about the characteristics of the arrangement and the results it was intended to produce?
– Is there an alternative way that the non-tax objectives of the arrangement could be achieved?
– Is the arrangement more complex or does it contain more steps than is necessary to achieve the non-tax objectives? For example, is there a more convenient, commercial or cost-effective way of achieving the same non-tax objectives?
– What are the non-tax benefits and drivers for establishing each of the relevant entities in each relevant jurisdiction?
– Is the role of any entity in the arrangement explicable solely or principally by tax reasons or for obtaining the relevant benefit?
– Is there a discrepancy between the substance of what is being achieved under the arrangement and the legal form it takes?
– What are the functions, assets and risks of each entity in the arrangement? Does each entity possess the necessary competencies and capacity to manage its functions, assets and risks?
Each of those questions, in one way or another, was considered and answered by the tribunal in Oxford Instruments in the course of determining the purpose of the arrangements.
In Mills v FCT,32 Gageler J, with whom the rest of the High Court bench agreed, noted with respect to s 177EA ITAA36 that “[a] purpose is a consequence intended by a person to result from some action”.33 The spread on the preference share investment was an intended consequence of step 8. No doubt, even if the tribunal had recognised this purpose, it would not have regarded it as a main purpose of the taxpayer because it was merely a means to another end. While the taxpayer in Oxford Instruments sought to place emphasis on the spread and the US objectives, the tribunal was required to reach its own conclusion about the main purposes of the taxpayer, and recognition of the achievement of the spread as a purpose in its own right would not have changed its conclusion.34
The tribunal did not need to consider the relative importance which the parties argued ought to be given to the different purposes in order to determine whether the tax avoidance purpose was a main purpose, given its conclusion that step 8 had a sole tax avoidance purpose. The tax advantage in Oxford Instruments was not, for example, “subordinate to or in subsidiary conjunction”35 with the commercial purposes of the scheme, in contrast to the franking credits in the issue of the PERLS V securities in Mills. In that case, there was no other way that the Commonwealth Bank could raise tier 1 capital without franking distributions to the same extent,36 which was relevant for the assessment of purpose conducted via s 177EA of Pt IVA ITAA36.
That said, the tribunal did at one point refer to the overall scheme having a sole purpose comprising two parts,37 and at other points referred to each of those purposes being a main purpose, with the US objectives being the paramount purpose.38 That, however, is consistent with the comments of the High Court in cases such as Spotless,39 Consolidated Press Holdings40 and Hart41 in a Pt IVA context that, although there was an ultimate economic or commercial purpose of each of the schemes considered in those decisions, that does not, and did not in those cases, preclude the conclusion that there is a dominant purpose of enabling a taxpayer to obtain a tax benefit. The point is expressed pithily by Gleeson CJ in the course of argument in Hart in 2003:42
“… all these are just different ways of expressing the one basic proposition, which is, you say there is an ordinary way of going about this and there is an extraordinary way of going about it, and the difference between the ordinary way and the extraordinary way is nothing more and nothing less than the tax benefits that attach to the second alternative.”
Given the conclusion in Oxford Instruments that step 8 was an optional extra, or an “extraordinary way” of achieving the US objectives, the rationale for step 8 is to be found elsewhere, that is, the real UK tax benefits, rather than the decorative commercial spread. Similarly, in Orica Ltd v FCT, the court pointed out that:43
“It may be accepted that the motivation of the people concerned was to utilise the US tax losses by rebooking of the losses through an arrangement which provided virtual certainty of the American subsidiary being able to utilise the tax losses, but their motivation was achieved by schemes with their dominant purpose of the taxpayer getting scheme benefits. The scheme benefit was the dominant purpose because without it the schemes made no sense. The relevant entities, through Mr Muculj in particular, entered into the transactions only to generate accounting profits which impacted the group’s net profit through the tax deductions which the schemes were necessarily contemplated, and designed, to obtain.” (emphasis added)
In view of the similarities in the approaches to identification of purpose, the outcome in Oxford Instruments is not surprising, and the taxpayer did not appeal the tribunal’s decision. There is, however, a lesson to be learned from Oxford Instruments by advisers and participants in such schemes in any jurisdiction that, in an increasing number of statutory contexts, one must ask: what is it that drives this transaction? If it is truly a tax outcome, then, viewed through the lens of an anti-avoidance rule, that outcome will prevail despite the commercial icing.
Tony Pane
Consultant
Thomson Geer
Nicholas Dodds
Associate
Thomson Geer
1 [2019] UKFTT 0254 (TC). Available at http://financeandtax.decisions.tribunals.gov.uk//judgmentfiles/j11058/TC07094.pdf.
2 Oxford Instruments at [75].
3 These are set out in Oxford Instruments at [104(3)] and do not detail the consequential US tax savings or quantify the “tax efficiency” benefit.
4 See, for example, RF Edmonds, SC, in FCT v Hart [2003] HCATrans 452.
5 Judge Tony Beare, sitting as the First-tier Tribunal, Tax Chamber (the tribunal).
6 Oxford Instruments at [116].
7 Oxford Instruments at [28].
8 Oxford Instruments at [29].
9 Oxford Instruments at [61].
10 Oxford Instruments at [99].
11 Oxford Instruments at [58]-[60].
12 Oxford Instruments at [104(10)].
13 Oxford Instruments at [101] and [102].
14 Not unlike the scheme in Orica Ltd v FCT [2015] FCA 1399, described at [11].
15 Oxford Instruments at [60(8)].
16 Oxford Instruments at [60].
17 Oxford Instruments at [104].
18 Note reference to “sole” in [104(2)].
19 Note reference to “paramount” in [105(3)].
20 Oxford Instruments at [105(15)].
21 Oxford Instruments at [105(7)].
22 Oxford Instruments at [105(17)].
23 Oxford Instruments at [105(12)].
24 Oxford Instruments at [105(13)].
25 Oxford Instruments at [104(10)(c)].
26 S 177D ITAA36.
27 W Nevill & Co Ltd v FCT (1937) 56 CLR 290 at 301.
28 S 177A(5) ITAA36.
29 S 177DA ITAA36.
30 Convention between the Government of Australia and the Government of the United Kingdom of Great Britain and Northern Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital Gains [2003] ATS 22, art 12(7).
31 S 45B ITAA36.
32 [2012] HCA 51.
33 Mills at [63].
34 Oxford Instruments at [123].
35 Mills at [74].
36 Mills at [71].
37 Oxford Instruments at [104(2)].
38 Oxford Instruments at [105(3)].
39 FCT v Spotless Services Ltd (1996) 186 CLR 404 at 416.
40 FCT v Consolidated Press Holdings Ltd [2001] HCA 32.
41 FCT v Hart [2004] HCA 26.
42 FCT v Hart [2003] HCATrans 452.
43 [2015] FCA 1399 at [37].
PK IP > OEBPS/chapter11.xhtmlby Adam Crowley, ATI, Partner, RSM Australia
The Australian tax system differentiates between residents and non-residents. In the context of fairness, those who contribute to the system should also benefit from the system. As non-residents are typically unable to benefit from government spending in the same way as residents, many would consider it only fair that these individuals are not subject to the same scope of taxation as those who reside in Australia. With this in mind, parliament introduced Div 855 ITAA97. The effect of Div 855 is relatively simple. It seeks to narrow the range of assets that are subject to Australian capital gains tax for foreign residents. While the intent of the provisions is apparent, that is, foreign residents should not be subject to Australian tax on non-taxable Australian property (TAP) assets, the complexity arises where a foreign resident receives a distribution of a non-TAP capital gain via a resident discretionary trust.
The foundations of a sound tax system are built on the notions of efficiency, equity and simplicity.1 Put simply, this means that the tax system should minimise distortion, apply fairly, and be clear and concise in its application.2
While determining “fairness” may be subjective, in the context of the Australian tax system, it is generally accepted that “fairness” occurs when individuals in similar circumstances are taxed similarly.2 It seems to therefore follow that it would also be “unfair” to impose the same scope of taxation on those in different circumstances.
For this reason (in part), the Australian tax system differentiates between residents and non-residents. In the context of fairness, those who contribute to the system should also benefit from the system. As non-residents are typically unable to benefit from government spending in the same way as residents,3 it is only fair that these individuals are not subject to the same scope of taxation as those who reside in Australia.
With this in mind, and a desire to encourage investment in Australia and better align with OECD standards,4 the parliament repealed former Div 136 of the Income Tax Assessment Act 1997 (Cth) (ITAA97) and introduced Div 855 ITAA97. The effect of Div 855 is relatively simple. It seeks to narrow the range of assets that are subject to Australian capital gains tax for foreign residents.4
While the Division seemingly achieves its desired effect for CGT assets held directly, or indirectly via fixed trusts, it falls apart where discretionary trusts are concerned.
The discussion that follows considers the notion of fairness when applying Div 855 in the context of discretionary trusts. To this end, first, it outlines the form of the relevant provisions and their interaction. Second, it considers the applicable case law, recent ATO determinations, and critiques from the profession. Finally, it seeks to demonstrate that what otherwise appears unfair is, in effect, necessary to protect the integrity of the Australian tax system.
Division 855 provides that a foreign resident’s liability for CGT is determined by whether the relevant asset is “taxable Australian property” (TAP) (s 855-15 ITAA97). Broadly, TAP assets are defined to include direct interests,5 or indirect6 non-portfolio interests,7 in real property situated in Australia,8 assets used in carrying on business through a permanent establishment in Australia,9 options or rights in the abovementioned,10 or assets elected to be TAP11 to defer a capital gain under CGT event I1.12
The substantive provisions that mitigate CGT for foreign residents are ss 855-10 and 855-40 ITAA97. Section 855-10 states that foreign residents can disregard a capital gain or loss from a CGT event that happens in relation to a CGT asset that is not TAP (non-TAP). Similarly, s 855-40 provides that a foreign resident can disregard a non-TAP gain made through a “fixed trust”.13 In effect, s 855-40(1) seeks to provide comparable taxation treatment to foreign residents as between direct and indirect ownership of non-TAP assets.
While the intent of the provisions is apparent, that is, foreign residents should not be subject to Australian tax on non-TAP assets, the complexity arises where a foreign resident receives a distribution of a non-TAP capital gain via a resident discretionary trust.14
Under s 95 of the Income Tax Assessment Act 1936 (Cth) (ITAA36), the net income15 of a trust estate is calculated as if the trustee were an Australian resident taxpayer. This requires the trust to include income from sources both inside and outside of Australia (s 6-5(2) ITAA97). Where a foreign resident beneficiary has been made “presently entitled”16 to a share of the trust’s net income, the taxation of the beneficiaries’ share (or the trustee on the beneficiaries’ behalf) is typically administered by ss 97 and 98 ITAA36.
Under these provisions, the assessable income is limited to so much of the share of the trust net income as is attributable to a period when:
– the beneficiary was a resident;17 and
– the beneficiary was not a resident and is also attributed to sources in Australia.18
One anomaly that arises is that, while foreign residents owning assets directly are only subject to tax if the asset is “TAP” (s 855-15), those same foreign residents, if made presently entitled to net income (including a net capital gain) via a discretionary trust, would otherwise be taxed by reference to the “source” of the gain if it were not for Div 6E ITAA36 (discussed below). Unfortunately, the CGT rules do not contain any provisions that expressly determine the source, and the TAP tests in Div 855 are said to not be relevant for this purpose.19 Thus, case law principles of source being a “practical hard matter of fact”20 will apply.
To evidence the perceived unfairness of this anomaly, should a foreign resident individual directly hold a portfolio interest of ASX listed shares, as the shares are non-TAP, the foreign resident will not be subject to tax under Div 855.21 Conversely, as the “source” of a gain in relation to shares is typically where the shares are held and the contract for sale entered,22 if not for the application of Subdiv 115-C and Div 6E (discussed below), should a foreign resident be made presently entitled to the same gain via a discretionary trust, the gain would be subject to tax as being Australian-sourced.
Overlaying the above interaction between capital gains and trust income are “interim measures” introduced in 2010-11 within Subdiv 115-C ITAA97. The practical effect of the Subdivision is to gross-up net capital gains that have been discounted in the hands of the trustee,23 and to attribute to the grossed-up gain to the beneficiary.24 Attribution is done first by reference to a beneficiaries’ “specific entitlement” to the gain (streaming),25 and second by reference to the beneficiaries’ “present entitlement” to any gain remaining after that.26
To avoid double taxation for the beneficiary,27 Div 6E ITAA36 will apply to adjust the amount assessable to the beneficiary under Div 6 by the amount of the attributable gain under Subdiv 115-C.28
Given the removal of the capital gain under Div 6 and its attribution under Subdiv 115-C, when determining whether a capital gain is taxable, either in the hands of a foreign beneficiary or the trustee on their behalf, confusion arises as to whether “non-TAP status” and/or “source” become relevant. If nothing else, complexity ensues.
The Commissioner’s views on the interaction of the abovementioned provisions first gained notoriety in Radhika Pankaj Oswal v FCT (the Oswal case).29 As far as is relevant, the Oswal case concerned a resident discretionary trust that made a capital gain in relation to non-TAP shares held in an Australian company.29 The trustee made Mrs Oswal presently entitled to the net income of the trust estate (which included the gain) and, as at the relevant time Mrs Oswal was a temporary resident, she was arguably afforded foreign resident treatment under the exemption in s 768-915(1)) ITAA97.
As a foreign resident30 presently entitled to a non-TAP capital gain, Mrs Oswal argued, consistent with policy intentions, that s 855-10(1) ITAA97 applied to disregard the capital gain.
Despite accepting that the gain would have been disregarded if the shares were held by Mrs Oswal directly,31 the Commissioner advanced two arguments against the taxpayer:
1. that Mrs Oswal did not “make a capital gain … from a CGT event”, but rather the trustee had the CGT event, and Mrs Oswal’s capital gain arose from the attribution under the gross-up rules within s 115-215 ITAA97; and
2. that Div 855 provides absolutely no relief to a beneficiary of a resident discretionary trust.32 That is, s 855-10 does not apply to beneficiaries,33 and relief for beneficiaries under s 855-40 only applies to fixed trusts.
Beyond the obvious “why should it matter if the gain was made directly or indirectly”, the most compelling critiques of the Commissioner’s arguments are as follows:
– there is nothing in s 855-10 that states a gain must arise from a CGT event that happens to the taxpayer.32 That is, the Commissioner is reading words into the legislation that do not exist;
– s 102-20 ITAA97 explicitly provides that “you may make a capital gain … as a result of a CGT event happening to another entity”;
– capital gains can only arise from CGT events. To the extent that s 115-215 attributed a gain, it merely deemed the beneficiary to have had the relevant CGT event;32 and
– there is nothing in the language in s 855-10 that excludes beneficiaries from its application.32
Unfortunately, as the Oswal case was settled before judgment, the above interpretations are left unresolved. Fortunately, we did not have to wait too long for guidance.
In a recent decision from the Federal Court in Peter Greensill Family Co Pty Ltd (trustee) v FCT (the Greensill case),34 similar issues to Oswal were contested.
In the Greensill case, the Commissioner assessed the trustee of a discretionary trust under s 98 in relation to $58m of capital gains that it made over a three-year period on the disposal of shares which were not “taxable Australian property”. In each year, the trustee resolved to distribute 100% of the capital gains from the sale of those shares to Mr Alexander Greensill, a foreign resident.
Following an ATO review, the Commissioner issued assessments to the trustee under s 98 on the basis that the capital gains distributed to Mr Greensill, being deemed or attributable capital gains under Subdiv 115-C, were assessable to the trustee and not disregarded under Div 855.
The taxpayer contended that the capital gains distributed to Mr Greensill were capital gains “from a CGT event” which were to be disregarded by operation of s 855-10(1). It was submitted that Mr Greensill’s capital gains were from the happening of CGT events to exempt assets, and that there was no amount, in respect of Mr Greensill within s 115-220, on which the trustee was liable to be assessed under s 98.
In response, the Commissioner contended that Mr Greensill was deemed to have made capital gains as a result of s 115-215(3), and that those deemed capital gains were not disregarded under s 855-10. As such, Mr Greensill was assessable on his net capital gain for each income year. The Commissioner also contended that the trustee was liable for the tax that had been assessed to it as trustee, regardless of whether s 855-10 applied to disregard the capital gains deemed to have been made by Mr Greensill.
In finding in favour of the Commissioner, Thawley J held that:
– s 855-10(1) did not apply to disregard any of the trust’s capital gains as the trust was neither a foreign resident nor a trustee of a foreign trust; and
– the amount which s 115-220 required the trustee to be taxed on under s 98 is an “attributable gain”, being simply an amount which the statute requires to be calculated, and is not a capital gain capable of being the subject of s 855-10(1).
In relation to Mr Greensill:
– Mr Greensill, as a presently entitled beneficiary, was assessed under s 115-215; and
– an attributable gain calculated under s 115-215 is not a capital gain from a CGT event within the meaning of s 855-10(1). It is an amount which is calculated by reference to CGT events which occurred in respect of CGT assets of a trust.
While much of the taxpayers arguments proceeded upon an assumption that the policy objective of Div 855 was the non-taxation of foreign beneficiaries in respect of non-TAP capital gains, Thawley J was quick to point out that the purpose of the legislation is to be derived from what the legislation says, not from an a priori assumption about the desired or desirable operation of the provisions.
While the court has sided with the Commissioner, only time will tell if the decision was the correct one. Given the tax liability involved, one can only assume that an appeal to the Full Federal Court is likely.
Unsurprisingly, the Commissioner’s view in TD 2019/D6 is that foreign beneficiaries of a resident discretionary trust that are presently (or specifically) entitled to non-TAP gains are assessable in Australia on those gains.35
The arguments advanced in support are principally the same as those in Oswal and Greensill, ie that, primarily, a capital gain that a foreign resident beneficiary makes because of the operation of s 115-215(3) ITAA97 is not a capital gain from a CGT event that happens to the beneficiary; instead, such an event happens to the trustee.36 The ATO reasons that, while s 855-10(1) does not expressly provide that the relevant CGT event must happen “to” the foreign resident, this is an inference which may be drawn from the statutory context.36 This statutory context seems to be the mere existence of s 855-40. In other words, if s 855-10 is sufficient to exclude foreign beneficiaries from tax, why did the drafters feel it necessary to include s 855-40?
The ATO then doubled down on its position in TD 2019/D7,36 claiming that a foreign beneficiary of a discretionary trust is assessable on non-TAP capital gains, irrespective of whether the gain has an Australian source or not.37
The combined result of TD 2019/D6 and TD 2019/D7 is the ATO disregarding both “non-TAP status” and “source” to impose tax on foreign beneficiaries of discretionary trusts. At this point, it seems that “fairness” as we understand it vanishes.
The ATO’s position has been heavily criticised by practitioners, academics and professional associations. Grouped into areas of “policy” and “technical application”, the criticism is summarised below.
Professional associations have labelled the ATO’s interpretation as “unsustainable,”38 “inconsistent with basic international taxation principles”,39 not “aligned with the overarching policy of the trust tax provisions”,39 and “not a suitable outcome from a policy perspective”.39
Academics have described TD 2019/D6 as “[t]he ATO simply read[ing] the ambiguous language of a small number of provisions to produce a revenue maximising result without regard to underlying policy”, and TD 2019/D7 as “just highlight[ing] how confusing the legislation is without advancing any particular reason for the ATO’s preferred analysis”.40
Despite numerous changes to legislation surrounding the taxation of trusts over the years, the policy intent has remained consistent, that is, the “conduit treatment” of trust income. This treatment effectively requires that a beneficiary should be taxed the same as if they had held the asset or derived the income directly.39
While the intended policy behind Div 855 was to “narrow the range of assets on which foreign residents will be liable to Australian CGT”,41 the ATO’s interpretation does the opposite.42
The ATO has misinterpreted the policy intention of s 115-215. That policy intention is to allow streaming, and not to create a dichotomy between gains from CGT events and gains from attribution.39
The ATO has effectively read words into s 855-10(1) that do not exist (being that nothing expressly excludes beneficiaries).43
Although the ATO considers that non-TAP and foreign-sourced capital gains should be caught by Subdiv 115-C and subject to tax, if the same foreign gain were on revenue account, it appears that the gain would not be subject to tax under s 98 ITAA36.40
As a matter of proper statutory interpretation, s 6-10 ITAA97 applies to modify Subdiv 115-C when determining how capital gains will be taxed. Although s 6-10(5)(b) provides that a foreign resident’s assessable income includes statutory income “on some basis other than having an Australian source”, it is argued that Subdiv 115-C does not provide a relevant “basis” for including the gain, and, as such, the source limitation in s 6-10(5)(a) applies to restrict the gain from being included in the foreign resident’s assessable income.44
Finally, Professor Richard Vann has stated that “[i]t is a mystery why the ATO continues to be unwilling to use the various means at its disposal to reach the sensible interpretive and policy outcomes, but instead creates more and more unintended consequences in relation to trusts and CGT”.41
“… it is time for the long-awaited reform of trust taxation …”
To unravel the mystery, in the author’s opinion, the ATO’s position is not grounded in policy nor proper statutory interpretation. Instead, it is an attempt to protect the integrity of the tax system from avoidance due to the inadequacy of existing provisions within the tax legislation.
When an individual, a company or a trust ceases to be a resident,45 CGT events I1 or I2 will occur. Broadly, the consequence is that the taxpayer is deemed to have disposed of all of its post-CGT assets at the time it ceases to be a resident, with the exception of assets that are TAP, ie assets that remain taxable in Australia irrespective of residency.46 The capital gain or loss that occurs is determined by reference to the cost base (or reduced cost base) of the asset and its market value at the time of the CGT event.47
The effect of these provisions is to capture capital gains that have accrued to taxpayers while they are Australian tax residents. Without CGT events I1 and I2, taxpayers may simply avoid tax in Australia by changing residence and subsequently realising gains on the disposal of non-TAP assets, relying on Div 855 to exclude the assets from taxation.
One issue with CGT events I1 and I2 is that they only apply in relation to CGT assets held by the taxpayer just before the time of cessation.47 Where a taxpayer owns a non-TAP asset directly, CGT events I1 and I2 apply without issue. Where a taxpayer owns a non-TAP asset indirectly via an interest in a fixed trust, it is the interest in the fixed trust itself that is the relevant CGT asset (s 108-5 ITAA97), and similarly, the provisions apply without issue. However, where a taxpayer is a mere object of a discretionary trust, until the beneficiary is made entitled,48 the taxpayer has no CGT asset that may be recognised for CGT events I1 and I2.49 This is because mere objects of discretionary trusts do not ordinarily have the necessary interest in the trust (or its assets) prior to the exercise of discretion in their favour.49
Accordingly, if Div 855 applied to non-TAP gains distributed from discretionary trusts, it seems that tax may be avoided by trustees holding off on realising capital gains on the disposal of non-TAP assets until beneficiaries (that would have otherwise been assessable on the distributed gain) become non-residents.
Acknowledging that s 115-220 ITAA97 may still assess the trustee on the gain under s 98 ITAA36, the question then arises as to whether, as the Commissioner contends, s 115-220 does not test whether the beneficiary’s attributable gain satisfies the conditions in s 98, but rather it increases the amount assessable to the trustee under s 98 without regard to those conditions,50 or alternatively, whether s 115-220 only applies to amounts which satisfy the requirements of s 98.39
The difference here is significant, as the former does away with source and residency (the trustee being taxed on the full gain), and the latter makes taxation contingent on the gain being “attributable to a period when the beneficiary was a resident” or “attributable to sources in Australia” (s 98(2A)(c) and (d) ITAA36).
Under the latter interpretation, the following questions are posed:
– When is a capital gain included in net income, and when is it attributable to a period when the beneficiary was a resident? Does this capture unrealised gains that have accrued while the beneficiary was a resident, or does it only capture gains that are realised while the beneficiary is a resident (thus excluding gains realised after the beneficiary ceases to be a resident)?
– If the source of the capital gain is the relevant factor, do we arrive at the taxation of gains that were otherwise exempt as non-TAP assets (eg ASX listed shares), and is the 100+ year old case law determining source even relevant in a global society where intangible assets and instruments are so disconnected from geography?
Notwithstanding the above, a conclusion that Div 855 applies to discretionary trusts would seemingly also result in increased s 100A ITAA36 or Pt IVA ITAA36 activity, such as distributions (on paper) of non-TAP gains to foreign resident beneficiaries, only for the proceeds to be gifted or loaned back to Australian residents.
If Australia’s tax system can be so easily undermined, those with means will seek to exploit it, resulting in outcomes that most Australians would hardly consider “fair”.
Despite the foundations of a sound tax system being built on efficiency, equity and simplicity, when it comes to the interaction between CGT, residency and trusts, it is arguable that our current system falls short of all three objectives. In the author’s opinion, the solution is not for the ATO to deviate from policy objectives, read words into the legislation, or stretch the scope of provisions to address gaps that they were not intended to cover. Instead, it is time for the long-awaited reform of trust taxation51 and a re-write into the ITAA97. Only then can we hope to achieve a tax system that is moving towards efficiency, equity and simplicity.
Adam Crowley, ATI
Partner
RSM Australia
1 H Hodgson, “Theories of distributive justice: frameworks for equity”, (2010) 5(1) Journal of Australasian Tax Teachers Association 86-116.
2 M Dirkis, Terms of engagement : a qualitative examination of the basic building blocks of Australia’s international tax regime (residency and source) against the tax policy objectives of equity, efficiency, simplicity and the prevention of tax avoidance and an exploration of the avenues for reform, thesis, 2004.
3 Either through their lesser use of public facilities and infrastructure (as they live and reside elsewhere), or their exclusion from the social security system (typically being ineligible for Medicare, Centrelink etc).
4 Page 32 of the explanatory memorandum to the Tax Laws Amendment (2006 Measures No. 4) Bill 2006.
5 Item 1, s 855-15 ITAA97.
6 Item 2, s 855-15 ITAA97.
7 S 855-25 ITAA97.
8 S 855-20 ITAA97.
9 Item 3, s 855-15 ITAA97.
10 Item 4, s 855-15 ITAA97.
11 Item 5, s 855-15 ITAA97.
12 S 104-165(3) ITAA97.
13 S 995-1 ITAA97 (a “fixed trust” is a trust in which persons have fixed entitlements to all of the income and corpus of the trust).
14 S 995-1 ITAA97 (“resident trust for CGT purposes”).
15 S 95(1) ITAA36 (broadly, total assessable income less allowable deductions).
16 FCT v Whiting [1943] HCA 45; Union Fidelity Trustee Co of Australia Ltd v FCT [1969] HCA 36; Taylor v DCT [1969] HCA 25; and FCT v Harmer (1990) 21 ATR 623.
17 Ss 97(1)(a)(i) and 98(2A)(c) ITAA36.
18 Ss 97(1)(a)(ii) and 98(2A)(d) ITAA36.
19 ID 2010/54.
20 Nathan v FCT [1918] HCA 45.
21 S 855-10 ITAA97.
22 Australian Machinery and Investments Co Ltd v DCT [1946] HCA 65; ID 2010/54; ID 2010/55.
23 S 115-215(3) ITAA97.
24 S 115-215(4A) ITAA97.
25 Ss 115-227(a) and 115-228 ITAA97.
26 S 115-227(b) ITAA97.
27 That is, under both Div 6 ITAA36 and Subdiv 115-C ITAA97.
28 S 102UX ITAA36.
29 Radhika Pankaj Oswal v FCT, 10 June 2016; T Russell, “Trust beneficiaries and exemptions from CGT: reflections on the Oswal litigation”, (2016) 51(6) Taxation in Australia 296 (a settlement was reached between the parties prior to judgment, and the Pt IVC proceedings were discontinued).
30 Mrs Oswal was a temporary resident, albeit treated as a foreign resident for CGT purposes under Div 855 pursuant to s 768-915(1).
31 Radhika Pankaj Oswal v FCT, 10 June 2016 (assuming the CGT asset was not TAP).
32 T Russell, “Trust beneficiaries and exemptions from CGT: reflections on the Oswal litigation”, (2016) 51(6) Taxation in Australia 296.
33 The ATO arguing that such a finding is evidenced by the mere existence of s 855-40.
34 [2020] FCA 559.
35 TD 2019/D6, n 68.
36 TD 2019/D7, n 69.
37 S Campbell, “TD 2019/D6 and TD 2019/D7: (further) unintended consequences?”, (2020) 54(6) Taxation in Australia 323; T Russell, “Trust beneficiaries and exemptions from CGT: reflections on the Oswal litigation”, (2016) 51(6) Taxation in Australia 296.
38 Letter from M Croker (CA ANZ) to the Australian Taxation Office, 4 October 2019.
39 Letter from T Neilson (The Tax Institute) to the Australian Taxation Office, 30 September 2019.
40 R Vann, C Blackwood, A White and C Colley (Greenwoods & Herbert Smith Freehills), International tax trust morass – again!, 4 October 2019.
41 Para 4.1 of the explanatory memorandum to the Tax Laws Amendment (2006 Measures No. 4) Bill 2006 (Cth).
42 Letter from DJ Honey (Pitcher Partners) to the Australian Taxation Office, 4 October 2019.
43 Letter from M Croker (CA ANZ) to the Australian Taxation Office, 4 October 2019; letter from DJ Honey (Pitcher Partners) to the Australian Taxation Office, 4 October 2019.
44 Letter from T Neilson (The Tax Institute) to the Australian Taxation Office, 30 September 2019; letter from DJ Honey (Pitcher Partners) to the Australian Taxation Office, 4 October 2019.
45 Ss 104-160 and 104-170 ITAA97.
46 Ss 104-160(3) and 104-170(3) ITAA97.
47 Ss 104-160(4) and 104-170(4) ITAA97.
48 A Kayis-Kumar and CJ Taylor, The application of capital gains tax to trusts: conceptual, technical and practical issues, and a proposal for reform, School of Taxation and Business law, Business School, University of New South Wales, 2019.
49 TD 2003/28.
50 TD 2019/D7; TD 2019/D6.
51 Australia’s Future Tax System Review Panel, Australia’s future tax system, report to the Treasurer, part two, detailed analysis (recommendation 36), 23 December 2009.
PK P3 3 OEBPS/chapter12.xhtmlby Philippa Briglia, Sladen Legal
Self-managed superannuation funds and bare trusts — investment in the underlying asset or in-house asset issue?
Self-managed superannuation funds (SMSFs) are known for their use of bare trusts in the context of limited recourse borrowing arrangements (LRBAs), but there are other ways in which SMSFs could use bare trusts as part of their asset structure. This article looks at the use of non-LRBA bare trusts by SMSFs, and whether that could cause issues from an in-house asset perspective.
“Bare trusts” or “holding trusts” are commonly used as part of LRBAs, with s 67A of the Superannuation Industry (Supervision) Act 1993 (Cth) (SISA) providing an exception to the general prohibition against borrowing by SMSF trustees. Under s 67A, an SMSF trustee may borrow money where that money is applied for the acquisition of a single acquirable asset, and where the acquirable asset is held on trust so that the SMSF trustee acquires a beneficial interest in the asset.
While not defined in the SISA, a bare trust is generally understood to exhibit the following characteristics:1
– the trustee holds property without any interest therein, other than that existing by reason of the office and the legal title as trustee; and
– the trustee has no discretion and no active duties, other than to convey the trust property on demand to the beneficiary or beneficiaries or as directed by them.
Section 67A does not strictly require a bare trust relationship. It could, for example, include a fixed trust that is not a bare trust. However, many LRBA trusts are established as bare trusts.
In addition, there are other ways in which an SMSF might invest via a bare trust, which are outside of an LRBA context. This could be, for example, to protect the SMSF from claims (asset protection), for commercial efficiency reasons, or for privacy reasons.
An SMSF is typically restricted to investing no more than 5% of the market value of the SMSF’s assets in “in-house assets”. “In-house asset” is defined in s 71(1) SISA as:
“… an asset of the fund that is a loan to, or an investment in, a related party of the fund, an investment in a related trust of the fund, or an asset of the fund subject to a lease or lease arrangement between a trustee of the fund and a related party of the fund …” (emphasis added)
For the purposes of the in-house asset provisions, a related trust includes a trust where the SMSF has an entitlement to the majority of the income from the trust.
A trust under an LRBA is typically a related trust of the SMSF because the SMSF trustee has an entitlement to all of the income from the trust. The interest of the SMSF in the LRBA trust therefore represents an investment in that trust for the purposes of the in-house asset rules. An express legislative carve-out is contained in s 71(8) and (9) SISA which provide that an SMSF’s investment in the LRBA trust is not an in-house asset, provided that certain conditions are satisfied (including that the LRBA meets all of the requirements set out under s 67A SISA).
However, the operation of s 71(8) and (9) is limited to trusts used as part of LRBAs which meet the requirements set out under s 67A SISA. These provisions do not apply more broadly to trusts (including bare trusts).
A similar carve-out for instalment trusts is provided in s 10(1) SISA which defines “related trust” as:
“… a trust that a member or a standard employer-sponsor of the fund controls (within the meaning of section 70E), other than an excluded instalment trust of the fund.” (emphasis added)
“Excluded instalment trust” is defined in s 10(1) SISA as a trust which arises when the fund trustee makes an investment under which a listed security, being the only trust property, is held in trust until the purchase price of the underlying security is fully paid, and where the investment in the underlying security held in trust would not be an in-house asset of the fund.
These two examples appear to be the only exceptions expressly provided for by the SISA. The SISA does not contemplate a scenario where an SMSF has an interest in a bare trust, where that bare trust is not part of an LRBA.
In that instance, would the SMSF’s interest in the bare trust count as an investment in a related trust for the purposes of the in-house asset provisions? Or, given the “bare” nature of the trust, should the SMSF’s interest in the bare trust be more properly characterised as an interest in the underlying asset? That is, should the bare trust be “looked through” for the purposes of the in-house asset provisions?
SMSFR 2009/4 discusses the Commissioner’s view on the meaning of “investment in” for the purposes of the in-house asset provisions but does not specifically discuss investment in a non-LRBA bare trust.
There is a widespread taxpayer practice where bare trusts are not recognised for income tax purposes, ie the bare trust is generally looked through or disregarded. Beneficiaries are taken to derive income and incur losses directly as though no trust exists. However, this practice is not expressly supported by Div 6 of Pt III of the Income Tax Assessment Act 1936 (Cth) for most types of bare trusts, in that Div 6 does not express a distinction between bare trusts and other trusts. The practice is arguably only maintained by an ongoing administrative approach from the Commissioner.2
In its June 2017 report to the Minister for Revenue and Financial Services,3 the Board of Taxation expressed concern that this general taxpayer practice appears not to be supported at law, which inevitably gives rise to uncertain outcomes. The Board made a number of recommendations, arguing that the current administrative approach be given express legislative support. However, these recommendations have not yet translated to legislative reform.
The Income Tax Assessment Act 1997 (Cth) (ITAA97) provides express legislative support for the look-through approach in certain circumstances, including:
– s 106-50 ITAA97: a beneficiary will be treated for CGT purposes as if it owns a CGT asset to which it is absolutely entitled as against the trustee (the concept of “absolute entitlement” in this context was examined in TR 2004/D25);
– s 235-820 ITAA97: if an entity (the investor) has a beneficial interest in an instalment trust asset under an instalment trust, the asset is treated as being the investor’s asset (instead of being an asset of the trust); and
– s 235-840 ITAA97: the look-through treatment in s 235-820 applies to bare trusts used as part of SMSF LRBAs.
The “look-through” approach to bare trusts is also reflected in the ATO’s administration of the tax system, for example:
– GSTR 2008/3 permits registration at the beneficiary level rather than the bare trustee level, therefore allowing for the beneficiary to account for the GST; and
– PS LA 2000/2 exempts bare trusts that are “transparent trusts” from lodging tax returns, permitting the income and expenses of the bare trust to be accounted for at the beneficiary level.
In TR 2004/D25, the look-through treatment of bare trusts in the context of the CGT provisions turned largely on the concept of “absolute entitlement”.
The Commissioner’s view in TR 2004/D25 is that absolute entitlement to an asset as against a trustee is the ability of a beneficiary to call for a trust asset to be transferred to them at their discretion where the beneficiary has a vested and indefeasible interest in the entire asset.
The Commissioner further confirmed that the most straightforward application of the core principle of “absolutely entitled” is one where a single beneficiary has all of the interests in the trust asset.
Arguably then, if the SMSF trustee is the sole beneficiary under a bare trust and has all of the interests in the trust asset, the SMSF trustee is absolutely entitled to the asset in the same way that a beneficiary is as described under s 106-50 ITAA97. It follows that the “look-through” treatment described in TR 2005/D25 should also apply to this scenario.
This argument is bolstered by the fact that s 235-840 ITAA97 recognises look-through treatment specifically in the context of bare trusts in LRBAs. By analogy, this treatment should also apply to SMSFs and non-LRBA bare trusts, where the SMSF trustee is the sole beneficiary and has all of the interests in the trust asset.
To take it one step further, if the “look-through” treatment applies for tax purposes, could it also apply for in-house asset purposes? That is, the bare trust is looked through or disregarded, and the interest of the SMSF trustee is in the underlying trust asset, rather than an interest in the trust. Accordingly, there would be no “investment in a related trust of the fund” for the purposes of the in-house asset provisions and, so long as the underlying asset does not fall within the definition of in-house asset for other reasons, no issues from an in-house perspective.
While the above reasoning makes practical sense, it is untested and relies on an analogy with non-SMSF provisions and ATO materials. The application of TR 2004/D25 is limited to the CGT provisions, and comments made by the Commissioner in the ruling cannot be applied with certainty in an SMSF context. It is also important to note that the ATO has a broad discretion to deem an SMSF trustee’s investment to be an in-house asset, even if it does not constitute an in-house asset under the usual rules.
More specific commentary from the ATO as to how it will interpret and apply the in-house asset provisions in the context of bare trusts under the in-house asset rules will be needed before SMSF trustees can proceed with certainty. In the meantime, SMSF trustees with bare trust arrangements (other than those relating to LRBAs) may have to infer a look-through approach under the SISA by way of the ATO’s general administrative practices relating to bare trusts.
Philippa Briglia
Senior Associate
Sladen Legal
1 See Herdegen v FCT [1988] FCA 419.
2 See GSTR 2008/3, PS LA 2000/2, and the Commissioner’s comments in his Colonial First State Investments Ltd v FCT ([2011] FCA 16) and Howard v FCT ([2012] FCAFC 149) decision impact statements.
3 Board of Taxation, Review of the tax treatment of bare trusts and similar arrangements, 2017.
PK ĉPvg g OEBPS/chapter13.xhtmlby Daniel Butler, CTA, and Bryce Figot, CTA, DBA Lawyers
Self-managed superannuation funds that own business real property are facing the prospect of tenants falling behind in their rent payments due to the economic stress arising from COVID-19.
This article examines the position of self-managed superannuation funds (SMSFs) that lease business real property to an arm’s length tenant and to a related party tenant, and provides recommendations to ensure that they minimise downside risk and position themselves with sound legal backing.
Self-managed superannuation funds that own business real property are facing the prospect of tenants falling behind in their rent payments and with regard to other obligations under the lease due to the economic stress arising from COVID-19.
Australian states and territories have put a six-month moratorium on evictions for both residential and commercial tenants during the coronavirus pandemic, Prime Minister Scott Morrison announced on 29 March 2020:
“Now there is a lot more work to be done here and my message to tenants, particularly commercial tenants and commercial landlords is a very straight forward one: we need you to sit down, talk to each other and work this out.”
The National Cabinet Mandatory Code of Conduct — SME Commercial Leasing Principles During COVID-19 (National Code) was released on 3 April 2020. The Code’s purpose is to impose a set of good faith leasing principles for application to commercial tenancies (including retail, office and industrial) between owners/operators/other landlords and tenants, where the tenant is an eligible business for the purpose of the Commonwealth Government’s JobKeeper program. The National Code is given effect through relevant state and territory legislation or regulations, as appropriate.
Under the National Code, landlords are encouraged to offer tenants proportionate reductions in rent payable in the form of waivers and deferrals of up to 100% of the amount ordinarily payable, on a case-by-case basis, based on the reduction in the tenant’s trade during the COVID-19 pandemic period and a subsequent reasonable recovery period. Rental waivers must generally constitute no less than 50% of the total reduction in rent payable, with the balance being deferred and repaid over a prescribed period.
Most states and territories have since enacted legislation and/or regulations following some of the leasing principles in the National Code. Some key points are now discussed in relation to the position in New South Wales and Victoria.
In NSW, the Retail and Other Commercial Leases (COVID-19) Regulation 2020 (NSW) (Regulation) made under the Retail Leases Act 1994 (NSW) gives effect to certain aspects of the National Code. For example, the parties must have regard to the economic impacts of the COVID-19 pandemic and the leasing principles in the National Code. However, not all of the principles in the National Code are reflected in the Regulation, such as the proportionate reduction and the rent deferral/waiver principles. Instead, the Regulation relies on the parties negotiating in good faith having regard to the principles in the National Code.
In Victoria, the COVID-19 Omnibus (Emergency Measures) Act 2020 (Vic) (Victorian Act) applies to “eligible leases”. Interestingly, an SMSF that leases commercial property to a related party tenant that is a company is not likely to be covered by the Victorian Act. This is because s 13(3)(c) of the Victorian Act asserts that a retail lease or a non-retail commercial lease or licence will not be an eligible lease where:
“(c) an entity has a prescribed method of control or influence, through the holding of a prescribed interest, right or power, in relation to acts or decisions relating to the ownership, management or affairs of a tenant under the retail lease or a non-retail commercial lease or licence that is a body corporate.”
On 1 May 2020, the Victorian Government passed the COVID-19 Omnibus (Emergency Measures) (Commercial Leases and Licences) Regulations 2020 (Vic) which give effect to the National Code (with some notable differences).
The ATO has provided a practical approach of, broadly, not applying its resources to determine whether an SMSF is obtaining rent from a related party tenant for FY2020 and FY2021. While this ATO approach is welcome, a properly considered strategy is recommended rather than relying on the ATO’s practical compliance approach, given the significant downside risks. In particular, if these matters are not carefully managed and documented, SMSFs and their trustees/directors could potentially face the risk of significant penalties under the Superannuation Industry (Supervision) Act 1993 (Cth) (SISA) and the Superannuation Industry (Supervision) Regulations 1994 (Cth) (SISR).
If the tenant has no direct or indirect relationship with the SMSF trustee (that is, the landlord), the SMSF trustee may be in a position to grant rent relief without contravening the SISA. Under this scenario, the parties probably would be dealing at arm’s length and, as outlined below, there may be various factors supporting a rent reduction in whole or in part as being in the best interests of fund members. For example, the following reasons could support rent relief:
– the tenant may have a better chance of successfully trading out of its current predicament; especially as many other landlords are being requested to grant relief due to the economic stress arising from COVID-19;
– the tenant may also be in a position to continue to cover holding costs such as council rates, land tax, regular maintenance of equipment and insurance subject to any applicable law (eg the Retail Leases Act 2003 (Vic) may preclude a landlord from recovering land tax). Note that a property that has been vacant for some time may not be covered by insurance and having a tenant occupy premises, by itself, can be a significant advantage to a landlord who’s otherwise at risk without insurance;
– there may be further risks of having a vacant property such as break-ins and fires and other damage arising while a property remains vacant and not maintained; and
– there may also be little prospect of obtaining another tenant in the near future until the economy recovers after COVID-19 which some predict may take years.
The states and territories arrangements may provide some detail on what changes, if any, are required to be made to a lease agreement as the states and territories have the power to override any lease agreement with a direction or order when a state of emergency is declared. Subject to further developments, a lawyer should be consulted in relation to the terms and conditions in each lease agreement as some may include a “force majeure” clause that allows a party to suspend or terminate the performance of its obligations if certain events occur such as an act of god. Note that since a lease confers a form proprietary interest in relation to the land, the usual contractual law rules such as ‘frustration’ of a contract may not necessarily apply. This area of law is being well researched and commented on by many property law experts.
If the tenant is a related party of the SMSF trustee, it is very easy to contravene the SISA provisions and extreme care is required when handling these situations.
Where an SMSF wants to grant any concession under a lease to a related party tenant, they should, after taking appropriate accounting and legal advice, be careful to follow the appropriate steps and gather relevant evidence.
Some of the key issues that an SMSF dealing with a related party tenant will need to manage include:
– the sole purpose test (s 62 SISA): is the SMSF trustee’s purpose to assist a related party, which is to generate retirement benefits in accordance with what an arm’s length landlord would do? As noted above, an arm’s length landlord may decide to grant a concession to an unrelated tenant where that is in the landlord’s best interests;
– the in-house asset test (Pt 8 SISA): non-payment of rent is likely to give rise to a loan by the SMSF to the related party, and if that loan exceeds 5%, an in-house asset contravention may arise. Note also that the terms of the lease may apply a penalty interest rate to the amount owed;
– the prohibition against lending or providing financial assistance to a member or relative (s 65 SISA): if the SMSF is leasing to a member or relative of an SMSF, there is a potential contravention of s 65 if the arrangement is not on arm’s length commercial terms; and
– the arm’s length test (s 109 SISA): broadly, all investments and transactions involving an SMSF must be made and maintained, on an ongoing basis, on arm’s length terms.
As you can appreciate from the above, an SMSF trustee will need to demonstrate that granting any concession is consistent with what arm’s length parties would agree to do and in the best interests of the fund and its members. They should also examine all available options and obtain advice from an experienced real estate agent with regard to the prevailing market conditions for that particular lease in that location, and determine if and when another tenant can be found and make appropriate notes.
Additionally, the SMSF trustee should gather any evidence that supports the course of action proposed to be taken and consider other alternatives (assuming the tenant was an arm’s length tenant, rather than a related party tenant) in those particular circumstances.
A detailed review of the lease documentation should be undertaken as soon as practicable, and advice taken on what variations may need to be made to the lease to reflect any concession that may be granted. Naturally, any variation to the lease agreement should be prepared by an experienced and qualified lawyer.
Note that, even though the SMSF trustee may gather evidence that the outcome of the concession granted to a related party tenant under the lease reflects arm’s length terms, that may not necessarily protect them from contraventions of the SISA occurring if, for instance, there is a loan or financial assistance that invokes s 65 or 109 SISA.
The ATO’s website states:1
“Question: My SMSF owns real property and wants to give my tenant — who is a related party — a reduction in rent because of the financial effects of COVID-19. Charging a related party a price that is less than market value is usually a contravention. Given the effects of COVID-19, will the ATO take action if I do this?
Answer: Some landlords are giving their tenants rent relief as a rent reduction, waiver or deferral because of the financial effects of COVID-19 and we understand that you may wish to do so as well. Our compliance approach for the 2019-20 and 2020-21 financial years is that we will not take action if an SMSF gives a tenant — even one who is also a related party — a temporary rent reduction, waiver or deferral because of the financial effects of COVID-19 during this period.”
Broadly, the ATO will not actively seek out cases where an SMSF gives a related party tenant a temporary rent reduction during the remainder of FY2020 or FY2021. However, the usual position for such practical approaches previously issued by the ATO is that, if the ATO does come across contraventions from other sources, eg via its usual data detections, reviews or auditor contravention reports, the ATO will usually apply the legislation in the normal manner. While the ATO should be congratulated on the practical approach reflected above, SMSF trustees should not rely on this non-binding guidance given the substantial downside consequences, especially in light of the alternatives outlined below.
The authors understand that some SMSF trustees and/or businesses may not have the time or resources to obtain proper advice with regard to related party tenants and may choose to simply rely on the ATO practical approach. However, given the consequences, landlords should seek to place themselves in the best position possible to minimise future risk.
It should also be noted that, in relation to an SMSF that owns property via an interposed non-geared company or unit trust, the ATO website states:1
“If your SMSF holds an interest in an interposed entity such as a non-geared company or unit trust and that interposed entity leases property to a tenant, we will not treat the investment in the interposed entity as an in-house asset for the current and future financial years as a result of a deferral of rent being provided to the tenant due to the financial effects of COVID-19.”
Once a contravention of one of the criteria relating to a non-geared company or a non-geared unit trust is triggered under reg 13.22D SISR, the trust is “forever” tainted and the SMSF must dispose of its units in that unit trust to comply with the SISR. In particular, if the lease is not legally enforceable or if rent owing by a related party tenant is deferred and constitutes a loan under the lease, the company or unit trust will cease to comply with the criteria in Div 13.3A SISR. However, the ATO states in this regard:1
“… we will not treat the investment in the interposed entity as an in-house asset for the current and future financial years as a result of a deferral of rent being provided to the tenant due to the financial effects of COVID-19.”
Thus, the ATO has confirmed that a COVID-19-related deferral of rent in a non-geared company or a non-geared unit trust will not cause an SMSF investment in that company or unit trust to be an in-house asset in the current or any future financial year. This is important because a deferral of rent typically constitutes a loan (see SMSFR 2009/3), and typically, if a non-geared company or a non-geared unit trust has a loan asset, any investment in that company or unit trust becomes an in-house asset.
If an SMSF has borrowed money under a limited recourse borrowing arrangement (LRBA) to finance the acquisition of a property (whether residential or business real property), a range of other implications may arise, including:
– similar issues to the potential SISA contraventions raised above also may apply if a related party lender does not act at arm’s length in relation to collecting all moneys owing under the LRBA. However, a related party lender would typically not consider taking any such action against the SMSF trustee (borrower), given they are related. Again, appropriate arm’s length evidence must be gathered, and accounting and legal advice obtained, to position against the significant penalties that may otherwise be applied; and
– if there is a related party lender, unless the “safe harbour” terms and conditions of the borrowing are consistent with the ATO’s criteria in PCG 2016/5 and are continuously complied with (eg regular monthly principal and interest repayments), the ATO has advised that it will typically consider applying non-arm’s length income (NALI). The following is a helpful extract from this practical compliance guideline:
“The trustees will need to be able to otherwise demonstrate that the arrangement was entered into and maintained on terms consistent with an arm’s length dealing. One example of how a trustee may demonstrate this is by maintaining evidence that shows their particular arrangement is established and maintained on terms that replicate the terms of a commercial loan that is available in the same circumstances.”
Indeed, if the tenant reduces or stops paying rent, the SMSF’s ability to make repayments under the LRBA can easily fall into arrears and into default (with the default interest rate, which is typically at least 2% higher than normal) under the loan agreement, giving rise to a range of further ramifications. If the related party lender provides any relief to the SMSF trustee that is not benchmarked to arm’s length terms (that can be justified in these difficult times), based on recent ATO materials (including LCR 2019/D3), the ATO position is that NALI may then apply to any net income and net capital gain, if any, derived from that property for the entire future period of ownership.
However, due to COVID-19, the ATO has also offered this practical approach:1
“Question: My SMSF has a compliant limited recourse borrowing arrangement (LRBA) in place with a related party. Would the non-arm’s length income (NALI) provisions apply if the related party offers repayment relief to the SMSF trustees because of COVID-19?
Answer: We understand that temporary repayment relief may be offered in relation to an existing LRBA between an SMSF and a related party due to the financial effects of COVID-19.
If the repayment relief reflects similar terms to what commercial banks are currently offering for real estate investment loans as a result of COVID-19, we will accept the parties are dealing at arm’s length and the NALI provisions do not apply. For example, these terms currently include temporary repayment deferrals for most businesses of up to 6 months, with unpaid interest being capitalised on the loan.
The parties to the arrangement must also document the change in terms to the loan agreement and the reasons why those terms have changed. It is also expected that there is evidence that interest continues to accrue on the loan and that the SMSF trustee will catch up any outstanding principal and interest repayments as soon as possible.
Any further repayment relief needed due to the continued effects of COVID-19 should be reviewed at the end of the agreed deferral period and remain in line with what the commercial banks are offering at that time.”
Despite the ATO’s practical approach outlined above, a range of other contraventions may also occur (or may occur in the near future) in these difficult and stressful economic times if, for example, money is withdrawn without a valid condition of release, or if existing SMSF assets are used as security for a borrowing by a related party. When added to non-compliance by an SMSF trustee or a “connected” unit trust renting property to a related party tenant (eg a non-geared unit trust), SMSF trustees may be widely exposed to a range of penalties and become embroiled in costly and lengthy disputes.
There are a range of potential penalties that the ATO may apply unless these matters are appropriately and properly managed, including:
– in extreme cases, the fund could be rendered non-complying, with 45% tax imposed on the value of its opening account balance in the year it is rendered non-complying;
– contravention of a civil penalty, such as s 62, s 65, Pt 8 and s 109 SISA, can result in a monetary penalty of a maximum amount of $504,000 (ie 2,400 penalty units × $210); and
– an administrative penalty, typically of $12,600 per contravention for s 65 and Pt 8, and the ATO’s stated policy is to “automatically” impose an administrative penalty for each and every occasion. An SMSF trustee can seek remission of any penalty, the success of which depends on whether the ATO considers whether remission is appropriate in the circumstances.
This type of situation highlights the need for making sure that SMSF trustees act in compliance with the law and do not make rash or hasty decisions that they may later regret, especially if the actions were designed to assist a related party without any evidence documenting that the actions were consistent with an arm’s length dealing and/or without taking the appropriate steps to implement a lease variation.
This is where a written opinion from an SMSF lawyer, which is subject to legal professional privilege, outlining the law in view of the particular facts is a prudent first step to take. A written opinion that is supported with the right evidence and that is implemented correctly can save on costs that may otherwise arise from needing to respond to the likely auditor or ATO queries, and any auditor contravention report that may be lodged which may give rise to unnecessary inquiries by the ATO.
If an SMSF trustee grants a concession to a related party tenant, the administrative penalties on their own can, in these types of circumstances, give rise to hundreds of thousands of dollars as the ATO might argue that each monthly payment of rent not made is subject to an additional penalty.
If the SMSF has, say, two individual trustees, the administrative penalties will be double the amount that would be imposed on two directors of an SMSF corporate trustee, as each individual trustee is subject to the same amount of administrative penalty. For example, if the SMSF has two members who are individual trustees, the typical $12,600 for a single administrative penalty is doubled, ie $25,200. If the SMSF has a corporate trustee, with two members as directors of the corporate trustee, the administrative penalty is $12,600.
Naturally, it is strongly recommended that each SMSF has a sole purpose SMSF corporate trustee to minimise legal risk, given the current economic conditions. Many SMSFs still have individual trustees who remain personally liable for a fund’s liabilities, and the administrative penalty system is a big incentive to move to a corporate trustee in these testing times.
It is also recommended that an SMSF should have a sole purpose corporate trustee in these difficult economic times. This is because many “trading” companies that also double up as an SMSF trustee may be facing insolvency. If an administrator, a liquidator, a receiver or some other form of external management “takes over” control of that company, that could make the management of the SMSF assets difficult until that company’s external controller is convinced that the SMSF assets are not capable of being applied towards the creditors. This “fight” alone may prove difficult and costly.
Self-managed superannuation fund trustees should obtain expert accounting, financial, valuation, legal and other advice to ensure that any rent relief is properly implemented and legally effective.
Self-managed superannuation fund trustees should also obtain professional advice regarding their options, including how the SMSF trustee can minimise risk to the SMSF from contravening any applicable SISA and/or Income Tax Assessment Act 1997 (Cth) provision.
Daniel Butler, CTA
Director
DBA Lawyers
Bryce Figot, CTA
Special Counsel
DBA Lawyers
1 Australian Taxation Office, Self-managed super funds frequently asked questions. Available at www.ato.gov.au/General/COVID-19/COVID-19-frequently-asked-questions/Self-managed-super-funds-frequently-asked-questions.
PK DPPGK K OEBPS/chapter14.xhtmlby Nick Rogaris and Seán Hanrahan, PwC
COVID-19 has acutely impacted the real estate and infrastructure sectors, giving rise to a number of tax implications.
The federal and state governments have responded swiftly to the economic crisis resulting from measures to limit the spread of the coronavirus (COVID-19). A raft of measures aimed at preserving cashflow, business relationships and jobs has been announced, while the ATO and state revenue offices (SROs) have announced a number of administrative concessions.
It is important to note that some of the announced measures have not yet been enacted, and guidance from the ATO and SROs is being continually updated. Given the speed of developments, impacted businesses and their tax advisers will need to monitor closely (almost on a daily basis) new legislation/regulations and associated guidance published by the ATO and SROs.
While Australian tax issues are highlighted in this article, multinational groups will also need to deal with similar issues in other impacted countries.
This article first considers the key tax issues for fund vehicles (including investment and trading entities). It then goes on to discuss the key tax issues for property management and other operating entities that are employers.
National Code of Conduct. While landlords may already have started negotiating rental waivers or deferrals with their tenants, the National Cabinet Mandatory Code of Conduct – SME Commercial Leasing Principles During COVID-19 (National Code) imposes a framework on landlords and eligible tenants to negotiate in good faith amendments to existing leasing arrangements. To apply the National Code, tenants must be eligible for the JobKeeper program and have an annual turnover of up to $50m (referred to as “SME tenants”).
Under the National Code (on a case by case basis), landlords must offer tenants a proportionate reduction in rent payable in the form of waivers and deferrals. Where a rent reduction is agreed, 50% of this must be in the form of a waiver and the 50% balance must be in the form of a deferral. Payment of rental deferrals by the tenant must be amortised over the balance of the lease term and for a period of no less than 24 months, whichever is the greater, unless otherwise agreed by the parties. This means that, if a lease has six months to run, the tenant will have 24 months to pay the deferred rent, a period of 18 months beyond the expiry of the lease.
Landlords should consider the tax implications of any agreed rent waiver/deferral and, in particular, the taxing point of the portion of rent that is agreed to be deferred (eg is the deferral structured as merely a deferral of cash but still assessable as it has accrued, or is the taxing point also deferred to a later time?).
The agreed rent reduction may also give rise to “trading trust” issues under Div 6C of the Income Tax Assessment Act 1936 (Cth) (ITAA36), which will be of particular concern to the eligibility of trusts structured as withholding managed investment trusts (MITs)/attribution MITs (AMITs). For example, the safe harbour rule in s 102MB ITAA36 requires that at least 75% of the gross revenue from investments in land for the income year consists of rent (except excluded rent). The 75% threshold may not be met where reductions in rent are negotiated across a landlord’s portfolio.
Where a rent reduction is agreed based on the tenant’s fall in turnover or profits, this may give rise to concerns over whether the rent that is then payable is “excluded rent” under the definition in s 102M ITAA36. A fall in the landlord’s rental income may also mean that the 2% threshold in s 102MC ITAA36 is breached.
Where the above safe harbours cannot be relied on, landlords will need to rely on the basic definition of “eligible investment business” in s 102M that they are investing in land for the purpose, or primarily for the purpose, of deriving rent.
A number of states have announced land tax relief as part of a package of measures to support businesses affected by COVID-19. In some cases, this relief is only available to landlords who provide rent relief to affected tenants and apply the leasing principles under the National Code.
Cross-staple leases. Transitional rules apply to MIT cross-staple arrangement income that is attributable to a facility that existed, or was sufficiently committed to, prior to 27 March 2018, meaning that the existing concessional MIT withholding rate of 15% will apply broadly from the facility’s relevant start date for a period of seven years (generally for non-infrastructure assets), or 15 years (if the facility is an economic infrastructure facility).
Any changes to the rental payments made under a cross-staple lease which are not affected under its existing provisions (such as under a rent review or force majeure clause) potentially risks creating a new cross-staple arrangement. Additionally, care should be taken to ensure that any changes to the cross-staple lease arrangement do not cause a failure of the integrity rules that must be continually satisfied by stapled entities to have the concessional 15% MIT withholding rate applied over the transitional period.
Governance arrangements in place between the asset and operating entities should also be considered prior to any variations in rental payments being made.
Guidance from the ATO on these issues can be found in LCR 2019/D2.
Development projects. Where development projects are either put on hold or delayed, and the “estimated profits basis” is used for determining taxable profits under a construction contract, consider adjusting the “notional taxable income” to be allocated to the current financial year (according to expectations existing at the end of the year).
Guidance from the ATO on this issue can be found in TR 2018/3.
Loan agreements: reduction of interest. Where a lender agrees to defer interest under a loan agreement, the following income tax issues should be considered by lenders and borrowers (as applicable):
– whether the accruals basis can continue to be used as the basis for deriving or deducting interest;
– where the terms of the loan agreement are changed, whether the loan agreement should be retested under the debt/equity classification rules (for example, a new loan arrangement may come into existence);
– whether the commercial debt forgiveness rules apply to any interest that has accrued and is waived; and
– whether the capital gains tax rules apply.
Where the lender is a non-resident, the following additional income tax issues should be considered by the parties:
– the withholding tax implications of interest waivers or deferrals; and
– transfer pricing implications.
Where reducing interest under a related party or cross-staple loan is contemplated, the following issues should also be considered by the parties:
– the value shifting provisions; and
– governance arrangements in place between the asset and operating entities.
The accounting treatment of any deferral or waiver of interest should also be considered by the parties in case this may have a bearing on the income tax treatment.
Thin capitalisation. A reduction in the accounting value of assets or an increase in debt levels may impact reliance on the thin capitalisation safe harbour test. In such cases, affected entities should consider alternative options, such as applying the frequent measurement method for averaging, the arm’s length debt test (ALDT) or the worldwide gearing test.
If a trade creditor’s terms are extended beyond 100 days, these liabilities may be included as debt in thin capitalisation calculations.
The ATO’s website considers the impact of COVID-19 on thin capitalisation, and outlines a pragmatic approach to thin capitalisation requirements for tax years encompassing the February/March 2020 period.1 In particular, where reliance is placed on the ALDT because the safe harbour test cannot be satisfied, the ATO has indicated that it will not dedicate compliance resources when reviewing the application of the ALDT, provided the requirements listed by the ATO under its “simplified ALDT approach” are met. One requirement in respect of inward-investing entities is that any additional related party funding is provided by way of equity, other than short-term (less than 12 months) debt facilities.
Trusts: taxable income greater than cash. Where the trust qualifies as an MIT, the issue of whether it might elect into the AMIT regime for the current income year should be considered. Where the AMIT election is made, the net income of an AMIT is allocated to unitholders on an attribution rather than a present entitlement basis, meaning that the cash distribution can be less than taxable income (with upward adjustments in cost base for investors to ensure that there are no adverse tax outcomes for investors).
Where a trust does not qualify as an AMIT (or does not elect into the AMIT regime), some trusts might consider implementing a distribution reinvestment plan (at the election of unitholders) where this is permitted under the trust deed.
Cross-staple capital reallocations. Consider whether capital reallocations can be made from a passive asset trust to an operating entity via the following methods:
– return of capital from the passive trust to investors which is then mandatorily invested as equity in the operating company; or
– a short-term loan (may be interest or non-interest bearing) to the operating company.
Instant asset write-off. An immediate tax deduction for the cost of a depreciating asset (new or second-hand) that is less than $150,000 is available for small and medium businesses with an aggregated turnover of less than $500m. The asset must first be used (or installed ready for use) from 12 March 2020 to 30 June 2020.
The aggregated turnover test includes the turnover of Australian and non-resident connected and affiliated entities (whether or not the income is assessable in Australia).
Accelerated depreciation deduction. A tax deduction is available for 50% of the cost of an eligible depreciating asset on installation, with existing depreciation rules applying to the balance of the asset’s cost. It applies to new assets acquired in the period 12 March to 30 June 2021, and is available for those businesses with an aggregated turnover of less than A$500m. There is no limit on the cost of an asset.
Consider applying the accelerated depreciation deduction where the instant asset write-off is not available.
All foreign investment bids and the establishment of certain types of entities (eg unit trusts) by foreign persons are now subject to Foreign Investment Review Board approval, as thresholds have been lowered to zero for the next six months.
This is likely to increase the time taken to complete transactions and can impact transaction structuring. To the extent that existing entities are utilised in the interim, care should be taken when planning the subsequent conveying of assets/interests to the intended holding structure when Foreign Investment Review Board-approved and established.
The JobKeeper program has been implemented to enable businesses impacted by coronavirus to access a subsidy from the government to continue paying their employees.
There are a number of tests to determine eligibility, including a turnover test. Under the basic test, businesses with an aggregated turnover of $1b or less will be eligible if their turnover is expected to reduce by 30% or more relative to a comparable period a year ago (of at least a month). Businesses with an aggregated turnover of more than $1b will be eligible if their turnover is expected to reduce by 50% or more relative to a comparable period a year ago (of at least a month). The decline in turnover calculation is broadly based on GST turnover, with some modifications.
Alternative turnover tests are set out in the Coronavirus Economic Response Package (Payments and Benefits) Alternative Decline in Turnover Test Rules 2020.
Under the Coronavirus Economic Response Package (Payments and Benefits) Amendment Rules (No. 2) 2020, the turnover test has been modified to address the circumstances where group structures use a special purpose entity to employ staff, rather than staff being directly employed by an operating entity. The alternative test can be met by reference to the combined GST turnovers of the group entities using the services of the employer entity.
Small and medium-sized (SME) employers will receive a temporary cash flow boost (via an automatic credit to be applied on forthcoming activity statements) of at least $20,000 and up to $100,000, based on the extent of PAYG withholding amounts for relevant months. The cash flow boost is available for those businesses which have an aggregated turnover of less than $50m and have employees.
This tax-free cash flow boost is to be delivered automatically through the tax system as a credit applied to eligible businesses
There are no blanket concessions or deferrals announced by the ATO in respect of all federal tax obligations, but any business that is having difficulty in meeting its tax obligations is encouraged to reach out to the ATO to seek applicable extensions of time for lodging relevant returns or when paying outstanding tax obligations. A wide range of payment arrangements are available to those struggling to pay their tax liabilities.
Different states and territories are providing refunds, waivers, deferrals, increases in thresholds and one-off grants in relation to payroll tax.
Restrictions on the movement of directors and employees may create tax residency and permanent establishment issues.
The ATO has released guidance that states that, if the only reason for holding board meetings in Australia, or for directors attending board meetings from Australia, is because of impacts of COVID-19, the Commissioner will not apply compliance resources to determine whether the entity’s central management and control is in Australia.
Similarly, the ATO has stated that, if a foreign company did not otherwise have a permanent establishment in Australia before the impacts of COVID-19, and the presence of the employees in Australia is because they are temporarily relocated or restricted in their travel as a consequence of COVID-19, the Commissioner will not apply compliance resources to determine whether the foreign company has a permanent establishment in Australia
Property and infrastructure groups will need to consider how they will be impacted by the tax issues highlighted above before the upcoming 30 June year end. In particular, funds will need to consider how they can manage their cashflow in meeting investor expectations as to year-end distributions. Without detailed planning, unexpected adverse tax outcomes may arise in respect of the recognition of income, withholding tax outcomes and the deduction of expenses. Early engagement with the ATO and SROs is recommended where unintended tax consequences arise for particular groups.
Tax advisers can play an important role in navigating clients through the complexity of these new measures and in liaising with the tax authorities.
Nick Rogaris
Partner
PwC
Seán Hanrahan
Senior Manager
PwC
1 Australian Taxation Office, International business frequently asked questions. Available at www.ato.gov.au/general/covid-19/covid-19-frequently-asked-questions/international-business-frequently-asked-questions.
PK |PaU U OEBPS/chapter15.xhtmlby Tim Donlan, ATI, Donlan Lawyers, and Katerina Peiros, ATI, Hartwell Legal
Where a power of attorney consists of basic proforma provisions without proper tailoring of the scope of the attorney’s powers, the potential for disputes increases.
A power of attorney is an important estate planning tool that will be well known to readers.
Basically, a power of attorney is a form of agency relationship where a principal or donor appoints an agent or attorney to manage the affairs of the donor.
The ability to appoint a trusted person to manage one’s affairs has existed for centuries at common law. Historically, a general power of attorney would cease to operate in the event of the loss of capacity of the donor. The concept of an “enduring” power of attorney, whereby the authority of the attorney to act on behalf of the donor would survive the donor’s loss of mental capacity, is a more recent creation founded in statute in all states and territories of Australia.1
Notably, a power of attorney can be said to have three significant features:
1. it is formed via a formal instrument (typically a deed);
2. it is designed to give effect to a relationship whereby one person vests authority in another; and
3. it can be limited in the scope and terms of the power granted.2
A power of attorney in a family or private client sense is usually given for no consideration and can be voluntarily revoked by the donor at any time, provided the donor retains the requisite mental capacity to know and understand the effect of doing so. Generally, an attorney, as an agent, is a fiduciary and is fastened with the obligations that attach to fiduciary powers.
In a commercial sense, powers of attorney can be granted for consideration and are more often irrevocable and established for the purpose of giving effect to an obligation of the donor to the attorney, or for securing a benefit for the attorney. These types of powers of attorney are often found in leases or other contractual arrangements and generally survive the death or incapacity of the donor. Such powers of attorney are outside of the scope of this article.
With increasing life expectancies, the potential for loss of mental capacity during one’s lifetime has also increased. While there is a growing emphasis on “supported” decision-making for those with impaired capacity rather than the type of “substituted” decision-making associated with the granting of a power of attorney,3 where substituted decision-making is required, the importance of having a properly drafted power of attorney as part of one’s estate or succession planning (as opposed to having an off-the-shelf proforma type document) has been increasingly recognised.
A power of attorney can be tailored to the specific circumstances of the donor and the breadth of the powers to be given to the attorney need to be properly considered. In a modern society, with complex asset structures, increased levels of superannuation and blended families, the previously typical “one-size-fits-all” deeds that can be purchased off-the-shelf will rarely be suitable.
It is incumbent on advisers to explore the intentions of the donor in the event of a loss of capacity and to ensure that, where possible, the powers to be given do, insofar as possible, reflect those intentions.
Equally important is the choice of attorney. In a blended family situation, for example, while it may seem to be a good idea to appoint a spouse together with one or more children from a prior marriage jointly as attorneys (with the intention of promoting harmony and transparency), disputes between the attorneys as to the scope and exercise of powers and actions to be taken (or not taken) by them can frustrate the operation of the power of attorney and the donor’s estate plans entirely, and thus needs careful consideration.
Section 7 of the South Australian Powers of Attorney and Agency Act 1984 provides that:
“The donee of an enduring power of attorney must, during any period of legal incapacity of the donor, exercise his powers as attorney with reasonable diligence to protect the interests of the donor and, if he fails to do so, shall be liable to compensate the donor for loss occasioned by the failure.”
The provisions of the SA Act are not prescriptive as to the scope and limitation of the attorney’s powers. However, other states are more prescriptive.
In SA, New South Wales, Tasmania and Western Australia, the scope of an enduring or general power of attorney is limited to property and “financial” matters. In Queensland, Victoria, the Australian Capital Territory and the Northern Territory, the donor may authorise an attorney to make health, lifestyle and other personal decisions.4
It is unfortunate that the power of attorney legislation differs in each state and territory. While recognition of each jurisdiction’s power of attorney is afforded, difficulties can arise where the donor has interests in multiple jurisdictions and the scope of the powers (including scope as to the nature of permitted transactions) differs within each jurisdiction. The general principal is that a power of attorney from another jurisdiction will be read down in the local jurisdiction to the extent that the powers conferred by it are beyond the permissible powers in the local jurisdiction.
Some jurisdiction’s relevant legislation prescribes specific things that an attorney is not authorised to do. In NSW, Tasmania and the ACT, for example, legislation provides that an attorney cannot do anything whereby a benefit is conferred on the attorney unless specifically authorised to do so in the instrument creating the attorney.5
The position in Queensland and Victoria is different. For example, the Queensland legislation provides that, for a financial matter, an attorney may enter into a conflict transaction only if the principle authorises the transaction, conflict transactions of that type, or conflict transactions generally.6
In Queensland and other jurisdictions, advice and directions can be sought from the Supreme Court or from the Queensland Civil and Administrative Tribunal or other state Administrative Tribunals, and transactions may be pre- or retrospectively authorised.
The Queensland and Victorian legislation provides that an attorney not only has a duty to avoid entering into a transaction in which there is a conflict or potential conflict between the donor and the attorney’s interests, but also to avoid any conflict with the interests of the attorney’s relatives, business associates or close friends.7
In some jurisdictions, gifts are permitted to be made by an attorney but only to a relative or close friend (including the attorney), and only of a “seasonal type” (for example, Christmas) or for a special event, that is the type of donation that the donor made or might reasonably be expected to make if they had capacity to consider such a gift.8
The legislation in NSW and other jurisdictions allows an attorney to make gifts and pay expenses for the welfare of the attorney “or any other specified person”.9 Furthermore, a conflict transaction may be authorised (or not be considered to be a prohibited conflict transaction) in circumstances where an attorney deals with an existing interest in property that is jointly owned with a donor, or otherwise obtains a loan or gives a guarantee on behalf of the donor in relation to such interest.10
The legislation in jurisdictions that specifically restrict conflict transactions provides for those restrictions to be subject to the terms of the instrument creating the power. The instrument might then be properly crafted to address future transactions.
Given the broad range of powers that an attorney might generally be able to undertake in the absence of specific restrictions arising from “conflict transaction” legislation, it is necessary for a donor to carefully tailor the powers to be given (or not given) to the attorney and to consider how to expand or otherwise restrict the powers granted.
From an estate planning perspective, it is relevant that an attorney’s powers have been held to include powers to directly or indirectly:
– execute a binding death benefit nomination on behalf of a donor11 subject to the limitations on the scope of the power and the terms of the trust deed, as well as the specifics of the case, including any history of prior death benefit nominations made by the member;
– act on behalf of a donor in the capacity as trustee where specifically authorised by the trust deed and the delegation is not prohibited by statute;12
– be appointed as a case guardian in Family Court proceedings;13
– act on behalf of a donor in the capacity as trustee of a self-managed superannuation fund;14 and
– act in the donor’s personal capacity as appointor of a family trust.15
While it is appropriate for donors and their advisers to consider the relevant provisions of the instrument creating the power of attorney from the perspective of limiting the scope for attorney abuse, equally, it is important to ensure that a donor provides and “arms” the attorney with all of the necessary powers intended to be exercised by the attorney free, as far as possible, from legislative restrictions.
Typically, a donor (for example, a husband or a wife) may simply seek to appoint a spouse to be their attorney in the event of their loss of capacity, with the intention that the spouse carries on “business as usual” and is at liberty to financially support the donor, the attorney, and possibly dependent children, free from any legal impediment.
That expectation may be founded in well-intentioned ignorance as it is not as easy as it may seem, given the conflict transaction restrictions and the types of restrictions placed on an attorney to avoid such conflict transactions. Even in circumstances where the applicable legislation provides for support for dependants, such provisions are subject to requirements of reasonableness in the circumstances16
The power of attorney document should expressly provide for conflict transactions.
If one considers a common second marriage, blended family scenario, it is typically intended by a donor spouse to appoint a spouse and adult child jointly as their attorneys. The potential for disputes is well known and can result in the child seeking to restrict the scope of the spouse’s transactions, including financial support from the donor, based on suggestions of unlawful conflict transactions which are often founded in the child’s own self-interest and motivation to preserve the size of the donor’s estate to be distributed on death.
A not uncommon scenario may involve a complaint by a step-child that an attorney spouse has used the donor’s funds to meet their joint expenses (possibly well in line with the donor’s “business as usual” intention) without any express authority in the instrument creating the power. Ultimately, matters such as these can be determined by the courts in their protective jurisdictions. However, such action is typically expensive and emotionally damaging for all concerned. The consideration for the courts will essentially involve a balancing of the interests of the donor in all of the specific circumstances of the case.
In the NSW case of C v W (No. 2),17 a sister pursued her brothers for alleged breaches of their duties to their mother as her attorneys under a power of attorney. While they were ultimately found to have engaged in some irregularities with respect to their delegation of certain powers and the separation of the donor’s funds from their own, their actions were ultimately excused by the court.
In that case, Lindsay J observed that the sister’s “adversarial pursuit of her brothers, using her mother as a proxy, went beyond the reasonable”.18 While the court did not make any sanctions against the attorneys, the outcome may be different depending on the court’s assessment of the facts and nuances of a particular case.
The most appropriate way to avoid disputes over conflicts involving a power of attorney is to tailor the powers to include those that are considered desirable and appropriate by the donor at the time of creation. A simple standard proforma document will rarely be satisfactory and will not evidence any consideration of a maker’s intentions with respect to particular transactions or types of transactions.
Relevant considerations when tailoring powers for an attorney include:
– the timing of commencement of the powers;
– the appointment of one or multiple attorneys and whether they may act jointly or severally;
– include substitute attorneys in the event that the first attorney is unable to act;
– whether the attorney can enter into specified transactions such as borrowing or providing guarantees, and if so, those transactions should be specifically permitted;
– whether or not the attorney can withdraw the donor’s superannuation funds or make, renew or revoke a superannuation death benefit nomination;
– whether an attorney can exercise power as trustee or appointor of a trust;19 and
– whether an attorney can enter into conflict transactions generally, notwithstanding their particular interest.
Obviously, the choice of attorney, and the relationship between the attorneys where more than one is to be appointed, also need proper consideration.
Only when a donor is able to give properly informed instructions as to the potential scope of the power of attorney, how the laws operate in relation to powers, and what can go wrong if the power is not properly prepared and implemented can the donor be confident that a power of attorney will assist, rather than hinder, their personal and estate planning objectives.
Tim Donlan, ATI
Principal
Donlan Lawyers
Katerina Peiros, ATI
Incapacity, Wills and Estates Lawyer
Accredited Specialist – Wills & Estates (Vic)
Hartwell Legal
1 Powers of Attorney and Agency Act 1984 (SA); Powers of Attorney Act 2003 (NSW); Powers of Attorney Act 2014 (Vic); Powers of Attorney Act 1998 (Qld); Guardianship and Administration Act 1990 (WA); Powers of Attorney Act 2000 (Tas); Powers of Attorney Act 2006 (ACT); Powers of Attorney Act 1980 (NT).
2 GE Dal Pont, Powers of attorney, Lexis Nexis, 2019, p 5.
3 See United Nations, Convention on the Rights of Persons with Disabilities, available at www.un.org/development/desa/disabilities/convention-on-the-rights-of-persons-with-disabilities.html; and Australian Law Reform Commission, National decision-making principles, 2014.
4 Powers of Attorney Act 2014 (Vic); Powers of Attorney Act 1998 (Qld); Powers of Attorney Act 2006 (ACT); Powers of Attorney Act 1980 (NT).
5 S 12 of the Powers of Attorney Act 2003 (NSW); s 107 of the Guardianship and Administration Act 1990 (WA); s 32AB of the Powers of Attorney Act 2000 (Tas); s 34 of the Powers of Attorney Act 2006 (ACT); s 22(8) of the Powers of Attorney Act 1980 (NT).
6 S 73 of the Powers of Attorney Act 1998 (Qld); s 64 of the Powers of Attorney Act 2014 (Vic).
7 S 64 of the Powers of Attorney Act 2014 (Vic).
8 S 67 of the Powers of Attorney Act 2014 (Vic).
9 Ss 11 to 13 of the Powers of Attorney Act 2003 (NSW).
10 S 64(2) of the Powers of Attorney Act 2014 (Vic).
11 Re Narumon Pty Ltd [2018] QSC 185.
12 S 10 of the Powers of Attorney Act 2003 (NSW).
13 Stanford v Stanford [2012] HCA 52; Price v Underwood (No. 2) [2008] FamCA 267.
14 SMSFR 2010/2. Notably, Tasmania is the only jurisdiction in Australia which specifically provides for an attorney to exercise any power of the donor in respect to any superannuation interest of the donor (s 31(2A)(i) of the Powers of Attorney Act 2000 (Tas)).
15 Belfield v Belfield [2012] NSWCA 415.
16 S 89 of the Powers of Attorney Act 1998 (Qld).
17 C v W (No. 2) [2016] NSWSC 945.
18 C v W (No. 2) [2016] NSWSC at 945 at [52] per Lindsay J.
19 Interestingly in this case, the NSW Court of Appeal held that a power of appointment over trust property was a power that could be exercised by the attorney of the appointor and the failure to exercise a discretion to appoint property to a claimant under a family provision claim was a “relevant property transaction” for the purposes of notional estate provisions in Pt 3.3 of the Succession Act 1981 (NSW). Where the notional estate legislation applies, ironically, by restricting an attorney’s power to exercise the donor’s personal power of appointment, the donor may avoid a claw-back order.
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