The Tax Specialist

Articles from the current issue:

• Issues related to powers of attorney and SMSFs

  shopping_cart Add to cart 01 Oct 2018

  The ageing of SMSF trustees gives rise to numerous issues for the management of SMSFs over the next 10 years. The increasing longevity of the general population, coupled with the prospect that many trustees will suffer from legal incapacity in their later years, are going to challenge many family groups. This article considers the different aspects of how power of attorney documents can be used for SMSFs to address the risks and processes involved in dealing with loss of capacity. In particular, this article focuses on having a substituted decision-maker appointed by virtue of an enduring power of attorney document or an advance personal plan document in the Northern Territory. A person validly appointed in this manner is recognised under the Superannuation Industry (Supervision) Act 1993 (Cth) as a legal personal representative for a member.

• Basics of transfer pricing documentation

  shopping_cart Add to cart 01 Oct 2018

  Transfer pricing is an important issue for multinational companies that operate in Australia. Not only has the Australian Government been a vocal advocate for change and increased transparency, it has also sought to lead by introducing significant new and aggressive changes in local tax rules, both from a corporate tax and transfer pricing/avoidance perspective and from a goods and services tax perspective. This article examines the objective of transfer pricing documentation (TPD), the history of TPD in Australia (in particular, Div 13 and Divs 815-B and 815-C), and the steps in preparing TPD. This article also looks at the analysis of global group and local entity, and related-party dealings, including market and industry overview, functional and risk analysis, transfer pricing methodology, comparative benchmarking study and the implications of holding TPD, including disclosure in tax returns and risks to ATO review/penalties.

• White roses red: The false dichotomy of GAAR determinations

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  In the murky and confused interpretations of tax minimisation, tax avoidance and tax evasion, there abounds numerous opportunities to “paint white roses as red” — a well-known metaphor not only for spin doctors and politicians who seek to put a positive interpretation on a negative outcome, but also an alliteration for concealing the true nature of something from inquiry or investigation. In terms of the operation of the Australian general anti-avoidance rules (GAARs) as well as the ancillary legislative and administrative provisions designed to protect the revenue, a degree of uncertainty and discretionary power in the Commissioner’s ability to deal with such attempts has been deemed to be inherently necessary. The purpose of this article is to demonstrate the fundamentally flawed “false dichotomy” that the Commissioner holds discretion under the GAAR in the Income Tax Assessment Act 1936 (Cth) when dealing with the myriad of schemes, promotions and mechanisms by which tax avoidance or evasion are promulgated.

• Form and substance in Australia’s transfer pricing rules

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  In the absence of a specific legislative direction or guidance from the courts, there is much uncertainty with respect to the meaning of the words “form” and “substance” in Australia’s transfer pricing rules, as well as how the first and second exceptions in s 815-130 of the Income Tax Assessment Act 1997 (Cth) apply. As such, care and careful consideration are needed with respect to supporting transfer pricing positions. This article examines the meaning of the words “form” and “substance”, what is an inconsistency between “form” and “substance”, and the effect of disregarding some or all of the “form” of the commercial or financial relations. This article also examines if the inclusion of the word “substance” in s 815-130(3)(c) affects the meaning of the word “substance” in s 815-130(1)(b) and (2) and vice versa, and analyses “form” and “substance” against the OECD transfer pricing guidelines.