TAX ON THE COUCH TOPICS

Transcription

1 TAX ON THE COUCH TOPICS HOT TOPICS MONTH-BY-MONTH January/February 2018 FBT, exemption for eligible vehicles and PCG 2017/D14 March 2018 Managing Unpaid Present Entitlements to corporate beneficiaries April 2018 Transfer Balance Account Reporting ( TBAR ) May 2018 Marriage breakdown and CGT rollover relief June 2018 Transitional CGT relief for superannuation funds July 2018 Key changes affecting 2018 income tax returns August 2018 Trust distribution minefield (Reimbursement agreements (S.100A) and distributing to tax exempt entities) September 2018 Compliance update: Dealing with trust distributions to individual taxpayers (distributing capital gains and revenue losses) October 2018 Applying the main residence exemption to an inherited dwelling November 2018 The Trust Distribution Statement completing the Trustee Beneficiary ( TB ) statement and the annual trustee payment report information 2018 National Tax & Accountants Association Ltd 1

2 ATO TOPICS/NTAA SPECIAL UPDATES MONTH-BY-MONTH January/February 2018 Special Update (No ATO Topic/Special Update) March 2018 ATO Aggressive Tax Planning and matters about deductions April 2018 Special Update Understanding the GST margin scheme May 2018 Special Update Personal deductible superannuation contributions removal of the 10% test June 2018 Special Update 2018/19 Budget July 2018 ATO Aggressive Tax Planning and concerns about the Research & Development Tax Incentive August 2018 TPB Tax Practitioner Board Engagement letters (Ian Taylor) September 2018 ATO ATO Graham Whyte Assistant Commissioner of Taxation Superannuation update October 2018 Special Update Specific deductions for primary production depreciating assets November 2018 ATO ATO Graham Whyte Assistant Commissioner of Taxation Division 293 Tax 2018 National Tax & Accountants Association Ltd 2

3 ALL TOPICS COVERED JANUARY/FEBRUARY 2018 Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 & Foreign Acquisitions and Takeovers Fees Imposition Amendment (Vacancy Fees) Bill 2017 Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No.1) Bill 2017 and First Home Super Saver Tax Scheme Bill 2017 Treasury Laws Amendment (Enterprise Tax Plan Base Rate Entities) Bill 2017 Treasury Laws Amendment (Enterprise Tax Plan No.2) Bill 2017 Package of 11 Bills proposed to increase the Medicare Levy from 2% to 2.5% Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017 TR 2017/D10 Trust vesting TD 2017/D4 Deductibility of interest expenses incurred by a beneficiary of a discretionary trust on borrowings on-lent interest free to the trustee TD 2017/23 Residency assumption in S.95(1) of the ITAA 1936 and S of the ITAA 1997 which disregards certain capital gains of a trust which is a foreign trust for CGT purposes TD 2017/24 S.99B(1) assessment re capital gain from non-tap held be foreign trust TD 2017/25 Can a foreign resident elect to treat their interest in a limited partnership as an interest in a foreign hybrid limited partnership under S (2)(b) of the ITAA 1997? TD 2017/26 Employee share schemes - when a dividend equivalent payment is assessable to an employee as remuneration GSTR 2017/D1 Goods and services tax: supplies of goods connected with the indirect tax zone (Australia) GSTR 2017/D2 Goods and services tax: supplies of real property connected with the indirect tax zone (Australia) A taxpayer, who was able to convince the Administrative Appeals Tribunal ( AAT ) that the market value of shares subject of a CGT event was less than the proceeds actually received, thereby placing the taxpayer in a position to satisfy the $6million Maximum Net Asset Value test ( MNAV test ) and to access the CGT small business concessions, had their earlier victory against the ATO overturned by the Federal Court. - Commissioner of Taxation v Miley [2017] FCA 1396 An SMSF was found to have breached both the in-house asset rules and the sole purpose test where a daughter of a fund member was a tenant of a sub-fund, in which the SMSF and related parties owned 100% of the units. Aussiegolfa Pty Ltd v Commissioner of Taxation [2017] FCA 1525 The Administrative Appeals Tribunal upheld default assessments issued to a taxpayer, which treated regular and periodic payments arising from the sale of a domain name and website as assessable on revenue account. - VPRX v Commissioner of Taxation [2017] AATA 2156 An accounting firm providing payroll services to an arm s length client was found to be an accessory liable for its involvement in contraventions of the Fair Work Act Fair Work Ombudsman and Blue Impression Pty Ltd (No.2) [2017] FCCA 2797 ATO withdraws guidelines in relation to the allocation of profits within professional firms Mid-Year Economic and Fiscal Outlook (MYEFO) Private Binding Ruling Search Functions FBT, exemption for eligible vehicles and PCG 2017/D14 Special Update (No special update or ATO topic this month) 2018 National Tax & Accountants Association Ltd 3

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5 MARCH 2018 Treasury Laws Amendment (2018 Measures No.1) Bill 2018 Exposure Draft: Treasury Laws Amendment (Measures for a later sitting) Bill 2018: improving the small business CGT concessions Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No 2) Bill 2018 Treasury Laws Amendment (Black Economy Taskforce Measures No 1) Bill 2018 Treasury Laws Amendment (Taxation and Superannuation Guarantee Integrity Measures) Bill 2018 TR 2018/2 Record keeping and access electronic records GST Industry Issues Detailed Food List smoothie packs Goods and Services Tax: Digital Currency Conversion Determination DCC 2018/D1 Tribunal confirms termination of tax agent registration primarily due to tardiness with respect to personal tax affairs - Peterson and Tax Practitioners Board [2018] AATA 93 (31 January 2018) A $2.5 million Government windfarm grant considered an assessable recoupment - Denmark Community Windfarm Ltd v Commissioner of Taxation [2018] FCAFC 11 (5 February 2018) IGT review of the PAYG instalments system released Latest serious crime investigation results released SMSF auditor registration fee ATO Managing Unpaid Present Entitlements to corporate beneficiaries Aggressive Tax Planning and matters about deductions 2018 National Tax & Accountants Association Ltd 5

6 APRIL 2018 Legislative update on: Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017 Treasury Laws Amendment (Measures No 2) Bill 2018 Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No 2) Bill 2018 Treasury Laws Amendment (Enterprise Tax Plan Base Rate Entities) Bill 2018 Treasury Laws Amendment (Measures No 1) Bill 2018 Exposure draft regulations supporting transfer of early release of superannuation function to the ATO Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No 1) Regulations 2018 Labor s tax policy remove the ability to claim refundable imputation credits Labor s tax policy introduce a new Australian Investment Guarantee ( AIG ) TR 2018/3 Income Tax: tax treatment of long term construction contracts TA 2018/1 Structured arrangements that provide imputation benefits on shares acquired on a limited risk basis around ex-dividend dates TPB(PN) 2/2018 Outsourcing and offshoring Code of Professional Conduct considerations LCR 2018/1 GST on low value imported goods LCR 2018/2 GST on supplies made through EDPs LCR 2018/3 When is a redeliverer responsible for GST on a supply of low value imported goods? Additional hours and public holidays in an annualized salary found to be OTE for super guarantee purposes - Australian Workers' Union v BlueScope Steel (AIS) Pty Ltd [2018] FCA 80 Entitlement to PAYG credits allowed - Cassaniti v Commissioner of Taxation [2018] FCA 92 ATO imposed Departure Prohibition Order ( DPO ) revoked - Walsh and Commissioner of Taxation (Taxation) [2018] AATA 235 IGT submission on potential disclosure of tax debts to credit bureaus Board of Taxation report on tax treatment of bare trusts Single touch payroll ATO website update Transfer Balance Account Reporting ( TBAR ) Special Update Understanding the GST Margin Scheme 2018 National Tax & Accountants Association Ltd 6

7 MAY 2018 Royal Assent: Treasury Laws Amendment (2018 Measures No. 1) Bill 2018 Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill 2018 Treasury Laws Amendment (Junior Minerals Exploration Incentive) Bill 2017 Legislative update on: Treasury Laws Amendment (Enterprise Tax Plan No 2) Bill 2017 Treasury Laws Amendment (2018 Measures No. 4) Bill 2018 Treasury Laws Amendment (Tax Integrity and Other Measures) Bill 2018 SMSFRB 2018/1 The use of reserves by self-managed superannuation funds TD 2018/1 Indexation factors for non-remote housing for the 2019 FBT year TD 2018/2 Benchmark interest rate for the 2019 FBT year: 5.20% TD 2018/3 Reasonable food amounts for the 2019 FBT year TD 2018/4 Cents per kilometre rates for valuing vehicles other than cars for the 2019 FBT year TD 2018/5 Record-keeping exemption threshold for the 2019 FBT year: $8,552 Full Federal Court overturns decision of Federal Court and confirms that Subdivision 126-A rollover relief is unavailable where an asset is transferred to a trust rather than an individual (former spouse) Ellison v Sandini Pty Ltd [2018] FCAFC 44 Tribunal confirms that the cost base of an asset sold under vendor finance did not include as an incidental cost a fee/commission of $124,000 purportedly paid by the taxpayer to the vendor, for which the taxpayer could not adequately explain what the fee was for Bosanac v Commissioner of Taxation [2018] AATA 472 Tribunal confirms an individual taxpayer working for an Independent Contractor providing services to the Australian Defence Force in the Middle East, was not engaged by a disciplined force for the purposes of S.23AG(1AA)(d), so his income was not exempt under S.23AG(1) PZTL v Commissioner of Taxation [2018] AATA 461 KPMG Report into the Black Economy ATO advice for SMSF trustees wanting to invest in Cryptocurrencies (e.g., BitCoin) Commissioner of Taxation appears before House of Representatives Tax and Revenue Committee ABC 4 Corners and Fairfax report on how ATO deals with small businesses Marriage breakdown and CGT rollover relief Special Update Personal deductible superannuation contributions removal of the 10% test Transitional CGT relief for superannuation funds 2018 National Tax & Accountants Association Ltd 7

8 JUNE 2018 Bills the Government will not be proceeding with Measures that have been legislated to commence from 1 July 2018 Addenda to GST rulings and determinations LCR 2018/D1 Purchaser's obligation to pay an amount for GST on taxable supplies of certain real property LCR 2018/D2 Residential premises deductions: travel expenditure relating to rental investment properties Part IVA applied to treat trust distributions from law firm as assessable income in the hands of the taxpayer Hart v Commissioner of Taxation [2018] FCAFC 61 AAT could not proceed with review of objection decisions because the taxpayer was bankrupt and had no standing to progress the applications Nugawela, Bankrupt and Commissioner of Taxation [2018] AATA 979 ATO allowed to continue recovery action for approximately $11 million of outstanding tax debts because Court did not accept the taxpayer s valuations of properties offered as security to the ATO Caratti v Commissioner of Taxation (No. 2) [2018] FCA 568 No obligation on Commissioner to permit taxpayer to pay a tax-related liability by instalments Stojic v Deputy Commissioner of Taxation [2018] FCA 483 Most of an interpreter s claims for almost $78,000 of work-related expenses denied due to lack of substantiation Hussain and Commissioner of Taxation [2018] AATA 1111 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry ASIC reviews accountant compliance with changes to SMSF advice licensing ASIC releases guidance on AFS licensing exemption for tax and BAS agents Assessing the risk: allocation of profits within professional firms Update Transitional CGT relief for superannuation funds Special Update 2018/19 Budget 2018 National Tax & Accountants Association Ltd 8

9 JULY 2018 Treasury Laws Amendment (2018 Superannuation Measures No 1) Bill 2018 Treasury Laws Amendment (Release of Superannuation on Compassionate Grounds) Regulations 2018 Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 2) Regulations 2018 Taxation Administration - Single Touch Payroll - Exemption for Employers Having a Seasonal Workforce GST: Foreign Currency (Customs Value of Low Value Goods) Determination 2018 Discussion of various Consultation Papers TD 2018/6 What is the car limit under S of the Income Tax Assessment Act 1997 for the financial year? TD 2018/7 Car parking threshold for the 2019 FBT year LCTD 2018/1 Luxury car tax threshold and the fuel-efficient car limit for the financial year LCR 2018/D4 Housing affordability measures: contributing the proceeds of downsizing to superannuation LCR 2018/D5 First Home Super Saver Scheme Withdrawal of SMSFD 2013/2, SMSFD 2014/1 and TD 94/8 The Federal Court has upheld a taxpayer s appeal against an AAT decision that a professional valuation of land the taxpayer held as at 1 July 2000 was not an approved valuation for margin scheme purposes Decleah Investments Pty Ltd v Commissioner of Taxation [2018] FCA 717 The Administrative Appeals Tribunal has agreed with the ATO that an individual should be disqualified from being an SMSF trustee as a result of numerous serious breaches of the SIS Act Hart and Commissioner of Taxation [2018] AATA 1267 The Full Federal Court has upheld a decision of the Federal Court that a letter from the ATO was not a decision relating to a taxpayer s request for full remission of GIC owing. As a result, the subsequent partial remission of the GIC was valid, leaving the taxpayer with an unexpected tax debt Pintarich v Deputy Commissioner of Taxation [2018] FCAFC 79 Board of Taxation to review small business tax concessions Commissioner of Taxation defends ATO against claims made by ABC Amazon to geoblock Australians from accessing its international sites Key changes affecting the 2018 income tax returns ATO Update Aggressive Tax Planning and concerns about the Research & Development Tax Incentive 2018 National Tax & Accountants Association Ltd 9

10 August 2018 Treasury Laws Amendment (2017 Enterprise Incentives No.1) Bill 2017 Treasury Laws Amendment (2018 Measures No.2) Bill 2018 Treasury Laws Amendment (2018 Measures No.4) Bill 2018 Treasury Laws Amendment (Black Economy Taskforce Measures No.1) Bill 2018 Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No.2) Bill 2017 Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No.2) Bill 2018 Treasury Laws Amendment (Tax Integrity and Other Measures) Bill 2018 Treasury Laws Amendment (2018 Superannuation Measures No 1) Bill 2018 Treasury Laws Amendment (Accelerated Depreciation for Small Business Entities) Bill 2018 Treasury Laws Amendment (Enterprise Tax Plan No.2) Bill 2017 Treasury Laws Amendment (Enterprise Tax Plan Base Rate Entities) Bill 2018 MVE 2018/1 Cents per kilometre rate updated for 2019 TD 2018/11 Reasonable travel and overtime meal allowance amounts TR 2018/4 Effective lives of depreciating assets (applicable from 1 July 2018) TD 2018/10 Goods taken from stock for private use for the 2017/18 income year PCG 2018/3 - Exempt car benefits and exempt residual benefits: compliance approach to determining private use of vehicles Draft Taxation Determination TD 2018/D3 Trust split arrangements and CGT Event E1 The Federal Court has found that interest on overpaid GST, accrued from 14 days after the date on which the GST surplus arose rather than from 14 days after the day on which notification for the refund is given to the Commissioner. Travelex Limited v Commissioner of Taxation [2018] FCA The AAT upheld a ruling by the Commissioner of Taxation that land, which was mainly vacant was not an active asset. Rus and Commissioner of Taxation (Taxation) [2018] AATA The Federal Court held that a taxpayer who left his family home in Australia to work in Saudi Arabia as an aircraft engineer on a permanent basis, was a resident of Australia for tax purposes for the 2011 income year. Harding v Commissioner of Taxation [2018] FCA 837. ATO Tax Gap announcement ATO penalty relief changes Changes to taxation of defined benefit income streams Trust distribution minefield (Reimbursement agreements (S.100A) and distributing to tax exempt entities) TPB Update Tax Practitioners Board Engagement letters (Ian Taylor) 2018 National Tax & Accountants Association Ltd 10

11 September 2018 Draft legislation released: Budget Black Economy Measure Removing tax deductibility of certain payments Draft legislation released: Budget Black Economy Measure Further expansion of the taxable payment reporting system PCG 2018/D5 ATO compliance approach from 2016 to 2018 for corporate tax and franking rates TD 2018/14 Division 7A benchmark interest rate for 2019 TD 2018/13 Division 7A and ordinary commercial payments or loans to interposed entities LCR 2018/D6 Proposed new reporting obligations of entities in cleaning and courier industries The Federal Court has denied deductions should by a taxpayer for share losses and associated legal fees: Greig v FCT [2018] FCA 1084 The AAT has denied deductions with respect to a taxpayer s overtime meal expenses in excess of the overtime meal expense allowance received: Mitchell and Commissioner of Taxation (Taxation) [2018] AATA 2507 Taxpayer not able to separately stream the benefit of franking credits from the associated franked distributions: Federal Commissioner of Taxation v Thomas; Federal Commissioner of Taxation v Martin Andrew Pty Ltd; Federal Commissioner of Taxation v Thomas Nominees Pty Ltd; Federal Commissioner of Taxation v Thomas [2018] HCA 31 ATO Data-matching: Paid parental leave and Medicare, online accommodation and rental bonds TPB to check CPE records of over 1000 tax practitioners Changes to PAYG Payment Summary for defined benefit income streams for 2018 returns Compliance update: Dealing with trust distributions to individual taxpayers (distributing capital gains and revenue losses) Special Update (ATO) Graham Whyte Assistant Commissioner of Taxation Superannuation update 2018 National Tax & Accountants Association Ltd 11

12 October 2018 Key outstanding tax and superannuation related measures Draft legislation released Reforms to combat illegal phoenix activity Drought assistance measures announced TR 2018/6 Consequences of a trust vesting LCR 2018/D7 Base rate entities and base rate entity passive income PCG 2018/D6 The Commissioner's discretion to extend the two year period to dispose of dwellings acquired from a deceased estate PCG 2017/13 Unpaid present entitlements under sub-trust arrangements maturing in the 2017, 2018 or 2019 income years The Queensland Supreme Court considers the effectiveness of a binding death benefit nomination extended and then amended by enduring attorneys: Re Narumon Pty Ltd [2018] QSC 185 The Full Federal Court overturns finds that an SMSF property leased to the member s daughter did not breach the sole purpose test: Aussiegolfa Pty Ltd (Trustee) v FCT [2018] FCAFC 122 The taxpayer is denied a claim for input tax credits of $2.8 million for invoices it purportedly paid by way of a set-off arrangement: Sunlea Enterprises Pty Ltd v FCT [2018] AATA 2792 What to do when an SMSF member receives an ETB determination Peer-to-peer car sharing and caravan and recreational vehicle sharing Applying the main residence exemption to an inherited dwelling Special Update Specific deductions for primary production depreciating assets 2018 National Tax & Accountants Association Ltd 12

13 November 2018 Treasury Laws Amendment (Black Economy Taskforce Measures No 1) Bill 2018 Treasury Laws Amendment (Supporting Australian Farmers) Bill 2018 Treasury Laws Amendment (Working Holiday Maker Employer Registration) Bill 2017 Treasury Laws Amendment (Accelerated Depreciation for Small Business Entities) Bill 2018 Private Health Insurance Legislation Amendment Bill 2018 Treasury Laws Amendment (Tax Integrity and Other Measures) Bill 2018 Draft legislation and regulations released for 12-month exemption to the superannuation contribution acceptance work test Treasury Laws Amendment (Black Economy Taskforce Measures No.2) Bill 2018 Treasury Laws Amendment (Lower Taxes for Small and Medium Businesses) Bill 2018 (i.e., fast tracking of small business corporate tax cuts and unincorporated tax offset) PS LA 2006/7 SMSF Trustee Disqualification LCR 2018/7 Residential premises deductions: travel expenditure relating to rental investment properties The ATO has released a DIS on the decision of the Full Federal Court relating to when the ATO should issue a private binding ruling in FCT v Hacon Pty Ltd [2017] FCAFC 181 Income deduction allowed for gaming machine licence management fees: Commissioner of Taxation v Sharpcan Pty Ltd [2018] FCAFC 163 Application for special leave to the High Court rejected in relation for marriage and relationship breakdown CGT rollover relief: Ellison v Sandini Pty Ltd [2018] FCAFC 44 Parliamentary committee to consider implications of removing refundable franking credits Parliamentary committee to House of Reps recommends standard deduction and push return tax system STP tax agent authorisation process streamlined The Trust Distribution Statement completing the Trustee Beneficiary ( TB ) statement and the annual trustee payment report information ATO Update ATO Graham Whyte Assistant Commissioner of Taxation Division 293 Tax 2018 National Tax & Accountants Association Ltd 13