The Tax Specialist

Articles from the current issue:

• “Fuzzy law” in the tax world

  shopping_cart Add to cart 01 Jun 2020

  This article looks to recent developments with corporate law and the Banking Royal Commission and asks if there are any lessons to be learned for the formulation of tax law. In particular, should tax law be prescriptive or principles-based (ie “fuzzy’)? Four example areas of tax law are considered, being: the capital v revenue account dividing line (together with some recent cases and developments); the tax consolidation provisions; the taxation of financial arrangements provisions; and the transfer pricing provisions. Differing conclusions emerge from these areas. The answer itself is fuzzy and the article concludes that there is a role to play for both principles-based drafting and prescriptive drafting of tax law. Tax law is at its best when both the principles and goalposts are clear — achieving that holy grail is not easy.

• Kimberley capers: An outback “whodunnit”?

  shopping_cart Add to cart 01 Jun 2020

  In November 2019, a sequel to the mass-marketed tax avoidance schemes of the 1990s appeared in the West Kimberley region of Western Australia. The Australian Broadcasting Corporation ran a series of articles revealing how hundreds of disaffected and isolated taxpayers engaged in a tax scam potentially involving tens of millions of dollars. In itself the scam was short, sharp and almost trivial, compared to the billion dollar mass-marketed tax avoidance schemes which involved over 40,000 taxpayers nationwide and took years to evolve and settle. The “sideshow” was over almost before it started, and nearly went unnoticed from a national perspective. However, the “when, what, where and how” are not the key elements of this article — it is the “who and why” that are investigated. This article is an overview of what can go wrong when taxpayers feel disaffected and isolated from their government.

• Navigating the running balance account rules

  shopping_cart Add to cart 01 Jun 2020

  The running balance account (RBA) rules in Pt IIB of the Taxation Administration Act 1953 (Cth) provide for a system of recognising and recording tax debts, credits and payments between taxpayers and the Australian Taxation Office. The law is currently in the unusual state of awaiting the outcome of two appeals by the Commissioner of Taxation against decisions concerning the RBA rules. The first relates to overpayments of GST from a taxpayer to the Commissioner (FCT v Travelex Ltd). The second relates to what the Commissioner says are administrative overpayments from the Commissioner to a tax agent (DCT v MWB Accountants Pty Ltd). Although these cases are unrelated, they involve common themes, and a number of important conclusions may be drawn from them about the current state of the RBA rules. They also provide guidance and practical considerations for tax practitioners who are advising on these issues.

• The potential for the unintentional loss of tax losses in the COVID-19 environment

  shopping_cart Add to cart 01 Jun 2020

  In the wake of the unprecedented environment arising from the COVID-19 crisis, it is likely that we will begin to see an increase in companies seeking to utilise the newly enacted similar business test (SiBT). The authors specifically consider the community-minded business response through production lines “hacks”. A number of business pivots publicised in the COVID-19 environment are examined to consider whether they stretch the SiBT beyond its scope, resulting in the potential loss of tax losses. In doing so, the authors reflect on how COVID-19 leads to established businesses facing similar limitations as start-up businesses, the likelihood of numerous pivots being required to get back on economic track and the anti-avoidance considerations that the appearance of such pivots create. It is concluded that COVID-19 creates a particular need to capture — in sufficient detail — these unusual activities to support any claim of tax losses.