| Brought to you in association with Thomson Reuters | Your weekly tax update | 3 September, 2009 |
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Abolition of capital gains tax trust cloning exception: draft legislation released Assistant Treasurer, Senator Nick Sherry, has released for public comment draft legislation for the abolition of the CGT 'trust cloning exception'. The abolition was announced on 31 October 2008 and confirmed in the 2009 Federal Budget on 12 May. It will apply from 1 November 2008. Senator Sherry said that, while removing the trust cloning exception, the draft legislation contains a new provision that will allow for a limited CGT roll-over for the transfer of assets between fixed trusts. Submissions are due by Wednesday 30 September. Members who have comments on the draft legislation can email them to us at tax@cpaastralia.com.au by Monday 21 September for inclusion in a proposed CPA Australia submission. High Court decision on surcharge issue The High Court has ruled that the Commonwealth's attempt to impose a surcharge tax on members of state parliaments, based on their notional entitlements under defined benefit superannuation schemes, was constitutionally invalid. The relevant case is Ralph Desmond Clarke v Commissioner of Taxation & Anor (2009) HCA 33. Ralph Clarke is a former member of the South Australian Parliament and was a member of three state superannuation schemes that were subsequently rolled into the state superannuation scheme under its merger legislation. Further information can be obtained by emailing jmussett@hcourt.gov.au Submission on tax agent registration CPA Australia and the other accounting bodies recently lodged a joint submission which addresses some contentious issues arising under the exposure draft tax agent services regulations that were released by the Assistant Treasurer on 2 August. The draft regulations deal with the qualifications and relevant work experience requirements for registration as a tax agent or BAS agent under the proposed new tax agent services regime which will apply from 1 January 2010. The submission is available on the CPA Australia website. Upcoming consultations and meetings
Member enquiries or issues for these meetings can be sent to tax@cpaaustralia.com.au
ATO warns on fraudsters using tax agents The ATO has warned tax agents to be aware of fraudsters using them to unknowingly lodge fraudulent returns. The ATO said fraudsters have attended registered tax agent practices requesting to have their returns prepared or to lodge returns printed from e-tax. The ATO said they will often attend a tax agent's practice with a group of individuals, who typically claim not to speak English. The ATO said tax agents should take extra precautions to ensure that new clients are legitimate if they notice unusual behaviour. Reminder to lodge returns for family tax benefit Centrelink has advised that the Family Assistance Office has sent out letters to approximately 70,000 taxpayers who have failed to lodge all required tax returns for the years they were in receipt of family tax benefit (FTB). Centrelink said the letter also informs taxpayers that from January 2010, 'any family who has failed to lodge a tax return for any previous financial year, will no longer be able to receive family tax benefit as a fortnightly payment'. However, it said these families will not miss out on the payment altogether as they will still have the option of claiming it as a lump sum at the end of the financial year after they have lodged their tax return. One new ATO ID The ATO has released ATO ID 2009/94 (on-market share buyback). ATO website updates From the ATO website:
Resumption of debate on Bills in Federal Parliament Federal Parliament resumes next Monday 7 September. The draft programs for the House of Representatives and the Senate show resumption of debate on Bills as follows: House of Representatives
Senate
'Alcopops' Bills receive royal assent The following Bills received royal assent on 27 August:
Both Bills passed all stages without amendment and increase excise on ready-to-drink beverages or 'alcopops'.
ASIC warns on illegal early access to superannuation ASIC has appealed to trustees of super funds and their members to help limit illegal early access to super. ASIC said it was concerned that the current market conditions are contributing to an increase in the number of people attempting to gain illegal early access and warned that such access could have significant legal and financial penalties. ASIC also asked investors to be wary of promoters promoting early access, saying early access to super is illegal except in very limited circumstances. ASIC has released a consumer brochure which it encourages trustees to distribute to super fund members. ATO website updates on superannuation From the ATO website:
The following rulings were released by the ATO on 2 September:
Reduction in penalties for capital gains In AAT Case [2009] AATA 654, Re Mezrani & Anor and FCT, the Administrative Appeals Tribunal found that a husband and wife were not 'reckless' in failing to disclose taxable income derived from the sale of four home units. The tribunal was satisfied that the husband was 'deeply affected' by the deaths of their accountants 'to the extent of being unable to act logically for a very substantial period of time during the period when the tax returns were compiled by [the new tax agents]'. The tribunal held their conduct amounted to negligence rather than recklessness. Interest deduction allowed for sham victim In AAT Case [2009] AATA 649, Re Willersdorf-Greene and FCT, the tribunal held that a taxpayer who was the victim of a sham fuel scheme was entitled to deduct interest and bank charges associated with loans obtained to meet his obligations under a guarantee under the scheme. In the tribunal's view, a nexus existed between the taxpayer giving the guarantee and the investor entering into the scheme. Commissioner of Taxation to refund payments made by insolvent company In Cooper v FCT, the NSW Supreme Court held that payments made by a company to the ATO were voidable transactions pursuant to s 588FE of the Corporations Act 2001. Accordingly, the court ordered the Commissioner of Taxation to repay the company an amount of $126,153 in accordance with s 588FF of the Corporations Act. Departure prohibition order: taxpayer loses appeal In Lui v FCT, the Federal Court dismissed a taxpayer's appeal against a decision of the Administrative Appeals Tribunal to refuse his application for a departure authorisation certificate. The taxpayer, together with his associates, had an outstanding tax liability of over $18 million and was subject to a departure prohibition order. This was despite the taxpayer's claim that he needed to leave the country for a limited time on 'humanitarian grounds' in order to visit his former wife who was dying in a Hong Kong hospital, and despite his offer of security over a property in Australia and a floating charge over his worldwide assets. Duty evasion: prison sentences over Commonwealth fraud charges The Australian Federal Police (AFP) have announced that four people who pleaded guilty to charges relating to defrauding the Commonwealth were sentenced to imprisonment in the Brisbane Supreme Court on 28 August. The AFP said the four people sentenced on 28 August were the last of a group of 11 people to be prosecuted in relation to a duty evasion scam that had been investigated over nearly six years by the Australian Customs and Border Protection Service, the ATO and the AFP. The AFP said the scheme, which operated between 2001 and 2004, involved the diversion of large quantities of duty free tobacco products through two Brisbane duty free shops onto the home market.
NSW land tax: family unit trust not a fixed trust In Sahab Holdings Pty Ltd ATF The Kanjian Family Trust v Chief Comr of State Revenue, the NSW Administrative Decisions Tribunal held that a family held unit trust was not a fixed trust for the purposes of s 3A of the Land Tax Management Act 1956 (NSW) as at 31 December 2007. In doing so, it affirmed the Commissioner of Taxation's 2008 land tax assessment. Victoria stamp duty: transfer of land to new trustee exempt In Lend Lease Funds Management Ltd v Comr of State Revenue, the Victorian Supreme Court allowed the appeal of a taxpayer in relation to a stamp duty assessment on a transfer of land from a custodian to a responsible entity of a unit trust. The court held the transfer was exempt under s 33(3) Duties Act 2000 (Vic) as 'the transfer was made solely because of a change in trustees and in order to vest the land in the trustees for the time being entitled to hold it'. Queensland: payroll tax regulation made The Payroll Tax Regulation 2009 (Queensland) was gazetted on 28 August. The regulation was made under the Payroll Tax Act 1971 (Queensland) and sets out various items as required under the Act (i.e. value of taxable wages, value of Queensland fringe benefits, calculation of fringe benefits, etc.). The regulation commenced on 2 September.
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'Rudd puts budget to business test' (Report that the Government will set up a panel of independent tax experts to advise it on any proposed tax or super changes before they are publicly announced) AFR [p 1], Wed 2.9.2009 'Changes stir opinion maelstrom' (Comment on Government's move to set up a panel of independent tax experts) AFR [p 6], Wed 2.9.2009 'New model starts to turn heads' (Comment on separately managed accounts, their transparency and ability to manage the tax position) AFR [p 29], Wed 2.9.2009 'Ways to make your money more tax effective' (Investing more tax efficiently) AFR [p 29], Wed 2.9.2009 'Transaction levy on the agenda' (Comment on the prospects of a general financial transaction tax - a Tobin tax - being proposed at the next G20 meeting) AFR [p 32], Wed 2.9.2009 'Tax deductions for active trading are a tough ask' (Comment on ATO ID 2009/92 re a DIY super fund's claim to treat a loss on a share investment as a tax deduction) AFR [p 33], Wed 2.9.2009 'Call for new Federal-State reform pact' (Former NSW Premier says exclusion of GST from Henry review was 'madness') AFR [p 1], Tue 1.9.2009 'Proposed rules tax accountants' (Claim that international accounting rule change would force companies to quantify and disclose uncertain tax positions in their accounts) AFR [p 13], Tue 1.9.2009 'Troubled ATO begins overhaul' (Report that the Tax Office is to overhaul its central operations to cut costs and redeploy staff into frontline services) AFR [p 3], Mon 31.8.2009 'Share-scheme tax slug for expatriates' (Claim that new tax rules on employee share schemes will impose higher taxes on expats returning to work in Australia) AFR [p 7], Mon 31.8.2009 'Tax or ETS: liberals must act' (Comment on the ongoing debate about an emissions trading scheme) AFR [p 55], Mon 31.8.2009 'Call for tax break on advice' (IFSA says financial advice should be tax deductible) AFR [p 3], 29-30 August 2009 'Fees are eating your super' (Comment on the fees that eat into superannuation savings) AFR [p 19], 29-30 August 2009 'The great super grab' (Comment on a claimed conflict of interest for super fund trustees) AFR [p 21], 29-30 August 2009 'Recession-hit London loses allure for expats' (Report that tax increases and changes are driving expats out of the UK) AFR [p 32], 29-30 August 2009 'Retirement adequacy a tricky issue' (The question of determining how much superannuation is adequate) AFR [p 41], 29-30 August 2009 'Tax shadow on your inheritance' (There are ways of reducing tax on death benefits) AFR [p 43], 29-30 August 2009 'There are fairer ways to advance Australia' (Opinion that tax cuts for foreign investors will distort the system without delivering the benefits) AFR [p 63], 29-30 August 2009 'Tax banks, help poor: FSA chief' (Chairman of Britain's Financial Services Authority has proposed a global tax on banks, a so-called Tobin tax) AFR [p 16], Fri 28.8.2009 'Tax Office stand 'too general'' (Comment by Law Council of Aust and Law Institute of Vic on Tax Office's views on partnerships trying to incorporate) AFR [p 19], Fri 28.8.2009 'Accountants feel left out of tax review' (Report that a large number of accountants claim not have been adequately consulted on the Henry tax review) AFR [p 49], Fri 28.8.2009 'Paper mindset a barrier to digital office' (Comment on moves towards the paperless accounting office) AFR [p 49], Fri 28.8.2009 'Court stops Tax Office jumping creditors queue' (High Court finds Tax Office can't claim tax debt after company had been put into liquidation) AFR [p 4], Thur 27.8.2009 'Gibraltar tax haven closed' (Australia signs tax info exchange agreement with Gibraltar) AFR [p 4], Thur 27.8.2009 'Software to cut red tape for business' (Government releases new Standard Business Reporting (SBR) taxonomy and tools for software developers) AFR [p 8], Thur 27.8.2009 'Taking chair on tax reform' (Interview with Michael Dirkis, tax lawyer, and his move to the University of Sydney) AUSTRALIAN [p 35], Wed 2.9.2009 'Downturn leads to rise in super scams' (Warning against illegal early access to super) AUSTRALIAN [Wealth, p 5], Wed 2.9.2009 'Expats challenge UK pension rule' (Report on upcoming court proceedings in the European Court of Human Rights re 'frozen pension' policy affecting expats' UK pensions) AUSTRALIAN [Wealth, p 8], Wed 2.9.2009 'Self-managed funds flush with cash turn to shares' (Comment that SMSFs are beginning to move back into the share market) AUSTRALIAN [Wealth, p 8], Wed 2.9.2009 'A developing situation' (Article on super funds and dealing with GST) AUSTRALIAN [Wealth, p 9], Wed 2.9.2009 '$23m tax debtor must stay' (Report that a taxpayer has been denied permission to leave Australia to visit his dying ex-wife overseas because of a tax debt) AUSTRALIAN [p 8], Tue 1.9.2009 'UK regulator under fire over global tax plan to rein in risk' (Comments by the chairman of Britain's Financial Services Authority for a global tax on financial transactions to curb speculative activities have drawn sharp reaction from bankers) AUSTRALIAN [p 30], 29-30 August 2009 'Amnesty on tax a blessing for Brits' (Report that wealthy UK taxpayers may be able to use a tax amnesty to move undeclared money to Liechtenstein and pay lower taxes) AUSTRALIAN [p 21, Fri 28.8.2009 'Capital gains liability fazes firms' (Article on the Law Council of Australia's response re Tax Office's views on law firm partnerships, recognition of goodwill and CGT, if firms incorporate) AUSTRALIAN [p 27], Fri 28.8.2009 'Strength in tax defies downturn' (Report that some tax practices are growing despite economic downturn) AUSTRALIAN [p 29], Fri 28.8.2009 'High Court puts taxman in his place' (The High Court has ruled against the Tax Office re case relating to the recovery of debts from collapsed companies) AUSTRALIAN [p 20], Thur 27.8.2009 'Soak-the-rich tax won't solve housing problems' (Opinion that imposing CGT on family homes valued at more than $2 million will drive price inflation as vendors will try to recoup the impost) AUSTRALIAN [p 28], Thur 27.8.2009
CPA Australia seeks your input on issues it should take up on the members' behalf. If you would like to contact us please email us at tax@cpaaustralia.com.au.
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