The Tax Specialist

Articles from the current issue:

• Malaysia: The prospects and drawbacks of navigating from GST to SST

  shopping_cart Add to cart 01 Aug 2018

  Malaysia introduced the goods and services tax (GST) in April 2015 to raise revenue for the government and lower its budget deficit. However, in the recent elections held on 9 May 2018, the newly formed government (Alliance of Hope) decided to replace the GST with the sales and services tax (SST), which will come into effect on 1 September 2018. The move to abolish the GST and reintroduce the SST is expected to lower the cost of living — particularly for middle and lower income groups — but there is little indication as to the form the SST framework is expected to take. This article reviews the GST and SST regimes, the prospects and drawbacks of the SST and makes some suggestions for the smooth implementation of the SST.

• Not my money to give away

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  The Commissioner has broad powers and duties — described as the general power of administration. These derive from statute, but they involve many things, consistent with efficiently gathering the revenue. What is the scope of the revenue authority’s ability to make practical decisions when managing the revenue? This article discusses the question in the context of tax legislation, which is expressed in words; and this is against the twin backdrops of uncertainty and of limited resources. The article also explores the scope of the Commissioner’s powers, including claims about the so-called power of general administration, attempts to force particular action by an official, attempts to restrain particular action by an official, settlement negotiations before and after assessment, place of the revenue in our modified Westminster systems of governments, and the true scope of this power.

• Effect of share premium account on continuity of ownership test analysis

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  Par value shares and share premium accounts still exist in some jurisdictions, such as the United Kingdom. If a company incorporated in such a jurisdiction is relevant to an Australian tax issue, its par value shares and share premium account might intrude on Australian tax concerns. Division 165 of the Income Tax Assessment Act 1997 contains rules restricting the ability of a company to claim a deduction for past period losses (the so-called “loss carry forward rules”), which in some circumstances will require an analysis of ownership and control of various rights attaching to shares in non-Australian companies — some of which may still have par value shares and share premium accounts. Division 165 and s 80A of the Income Tax Assessment Act 1936 both apply various tests to determine whether a company passes the so-called “continuity of ownership test” in respect of a tax loss. This article discusses how rights to share premium should be treated for the purpose of the loss carry forward rules.

• Alienation of income and “taxable wages”

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  Payroll tax is a state or territory tax. However, notwithstanding harmonisation, each jurisdiction does not operate from a common Act. States and territories typically tax wages, as defined in each jurisdiction. The definition of “wages” is defined broadly, including wages, remuneration, salary, commission, bonuses or allowances paid to an employee. This article examines common arrangements that are used for income tax purposes and questions if they are effective for payroll tax purposes. The article also looks at the ordinary meaning of “wages” for payroll tax purposes; what deeming provisions may apply to tax wages that may not otherwise be captured under the ordinary meaning of wages; and the treatment that may be afforded to payments in relation to directors, payments for image rights and distributions of profits in trusts, partnerships and incorporated entities.

• The curious reform of foreign source income

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  Proposals currently before parliament which change the tax treatment of foreign source income seem to have been largely overlooked. They deserve greater attention because they produce curious and potentially illogical outcomes for many classes of Australian taxpayers. They are the unpublicised consequences of choices made in the design of Australia’s anti-hybrid rules, rules which were intended to curb the aggressive tax avoidance practices of multinational enterprises. Instead, they extend to many types of resident taxpayers earning some classes of foreign source income. This article demonstrates how entirely innocuous situations can be affected and how the impacts can be quite unexpected.