| Brought to you in association with Thomson Reuters | Your weekly tax update | 24 September, 2009 |
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R&D tax incentive: Treasury consultation paper The government has released a consultation paper on the government's 2009 – 10 Australian Federal Budget announcement to replace the existing research & development (R&D) tax concession with a new R&D tax incentive from 1 July 2010. The two core components of the proposed incentive are: a non-refundable 40 per cent standard R&D tax credit; and a 45 per cent refundable R&D tax credit for companies with a turnover of less than $20 million. Accompanying this will be a tighter definition of eligible R&D activity. Submissions are due by Monday 26 October 2009. Also, a number of public forums around the country will be held during September and October. CPA Australia is concerned with the proposed change to the R&D tax credit which will require the dual innovation and technical risk criteria to be met and may have the inadvertent result of emasculating the R&D tax concession. We shall be making further representations to the government on this matter and comments from interested members can be emailed to tax@cpaaustralia.com.au by Monday 19 October 2009. Tax agents services bill
information sessions & webinars A senior member of the secretariat to the Henry Tax Review Panel provided a comprehensive update on the review at a recent function held at CPA Centre which was attended by members of our Board Tax Practice Committee and other members with an interest in this area. It was emphasised that the review covers federal and state taxes as well as the transfer system and thus is even more comprehensive than the 1975 Asprey Committee Review. Like Asprey, the review is aiming to develop a long-term plan for tax / transfer reform over the next 10 to 15 years. Australian financial centre forum CPA Australia participated in a recent reference group meeting of the Australian Financial Centre Forum which is considering ways to enhance the international competitiveness of Australia's funds management industry. The forum's final report is expected to be finalised shortly and tabled in parliament in late November. Submission to senate committee A submission has been made to the current inquiry by the Senate Economic References Committee into the government's economic stimulus initiatives. The submission will be available soon from CPA Australia website. Upcoming consultations and meetings
Member enquiries or issues for these meetings
should be sent to tax@cpaaustralia.com.au
GST and incapacitated entities: Treasury consultation summary According to Treasury, most submissions generally supported the proposed amendments to restore the stated government's intention of the GST law that a representative of an incapacitated entity will be liable for GST on transactions within the scope of its appointment. Draft legislation on these amendments was released earlier this year for comment. Treasury said it noted a number of technical issues raised and took them into account in finalising the Bill. The amendments have now been included in Tax Laws Amendment (2009 Measures No 5) Bill 2009, which has been introduced into parliament. GST and credit card fees case: ATO views The ATO has released a Decision Impact Statement on the decision in AAT Case [2009] AATA 442, Re Waverley Council and FCT. That case concerned the GST treatment of a credit card administration fee imposed by a local council when a credit card is used to pay council charges. The tribunal affirmed the objection decision under review, concluding that the credit card could not be a stand-alone fee in itself, it is really part of the fee for the underlying supply. The ATO said the tribunal's decision confirms the commissioner's view that a credit card fee forms part of the consideration for the underlying supply and its GST attributes are determined by reference to the attributes of the amount for the underlying supply that the credit card is used to pay. GST input tax credits case: ATO views The ATO has released a Decision Impact Statement on the decision in AAT Case [2009] AATA 351, Re Queensland Harvesters Pty Ltd and FCT (2009) 72 ATR 301. The case essentially involved whether the discretion to treat a document as a tax invoice should be exercised, whether a tax shortfall resulted from intentional disregard or recklessness, whether a penalty for failure to withhold should be further remitted, whether the AAT was bound to accept an incorrect concession by the Commissioner of Taxation and whether residual discretions should be exercised. The ATO said that, other than in one matter, the tribunal's decision accords with the submissions made by the commissioner. Limited CGT roll-over relief for fixed trusts: ATO administrative treatment The ATO has released details of its administrative treatment regarding the government's 2009 Australian Federal Budget announcement to provide a limited CGT roll-over for fixed trusts with the same beneficiaries. The government has released draft legislation for public consultation which closes on 30 September. The ATO said taxpayers affected by the announcement that are self-assessing before the proposed change becomes law, should apply the existing law. When the law is enacted, it said taxpayers would then need to seek an amendment to their assessment. If taxpayers choose to self-assess by anticipating the announcement, the ATO said they will need to review the assessment when the law is enacted. ATO IDs: three new; one withdrawn The ATO has released the following IDs:
The ATO has withdrawn ATO ID 2004/905 (foreign tax credit: tax paid on pension and rental income earned in New Caledonia). ATO website updates From the ATO website:
Tax Bill (No 4) receives assent The Tax Laws Amendment (2009 Measures No 4) Bill 2009 passed all stages without amendment and received royal assent on 18 September as Act No 88 of 2009. The bill amends the tax law to improve the integrity of prescribed private funds which will now be known as private ancillary funds. Other amendments relate to: demutualisation of friendly societies; consolidation, application of losses with nil available fraction; and increased expenditure cap for eligibility to R&D tax offset. FBT exemption — worker entitlement funds — regs made The Fringe Benefits Tax Amendment Regulations 2009 (No 1) were registered to amend the Fringe Benefits Tax Regulations 1992 to list three funds as approved worker entitlement funds for the purposes of para 58PB(2)(a) of the FBT Assessment Act. List of prescribed private funds updated — regulations made The Income Tax Assessment Amendment Regulations 2009 (No 4) were registered to update the table under reg 995 1.02 of the Income Tax Assessment Regulations 1997 to take account of changes approved by the government since the table was last updated in January.
ATO Website updates on superannuation From the ATO Website:
The following rulings were released by the ATO on 23 September:
Resetting tax cost of partnership assets ineffective In Commonwealth Bank of Australia v DCT, the Federal Court upheld a decision that partnerships between the Commonwealth Bank and one of its bank subsidiaries (the Savings Bank) were dissolved when the banks were integrated in 1993. Accordingly, the tax cost of the assets of the partnerships could not be reset to market value when the group consolidated on 1 July 2002. Reduced penalties affirmed In FCT v Burness (As Trustee for the Property of Bottazzi, A Bankrupt), the Federal Court dismissed the Commissioner of Taxation's appeal from the decision in AAT Case [2008] AATA 890, Re Bottazzi and FCT in which the AAT reduced shortfall penalties for evasion to 25 per cent in relation to the taxpayer's failure to include a capital gain of over $178,000 from the sale of a rental property. Claims for interest payments denied In Charara v FCT, the NSW Supreme Court dismissed a taxpayer's claim seeking interest payments from the Commissioner of Taxation. Pursuant to an agreement, a company assigned to the taxpayer all of its rights and entitlements in respect of any claims it had against the commissioner. The first claim related to amounts credited to the company's running balance account (RBA). The refunds resulted from a deed of settlement entered into between the taxpayer and the commissioner following a GST audit. The second claim concerned a late payment of a GST refund. Assessments held correct In AAT Case [2009] AATA 622, Re Ho and FCT, the AAT rejected a taxpayer's submission that the Commissioner of Taxation had failed to take into account all legitimately claimable tax deductions in calculating her tax payable. The application arose from an earlier decision of the tribunal. The tribunal was satisfied the commissioner had properly calculated the allowable deductions in each of the relevant years. SMSF non-compliance notice upheld for failing residency test In AAT Case [2009] AATA 709, Re CBNP Superannuation Fund and FCT, the AAT affirmed the Commissioner of Taxation's decision to issue a non-compliance notice to a self-managed superannuation fund (SMSF) because the fund did not satisfy the definition of a 'complying superannuation fund' under s 42A(1) of the SIS Act. Appeals update The taxpayer has sought special leave to appeal to the High Court from the decision of the Federal Court in M W McIntosh Pty Ltd v FCT [2009] FCAFC 88. The full court had unanimously held that the Commissioner of Taxation did not have the power under s 388-55 of the TAA to extend the time in which a taxpayer can lodge a choice to form a consolidated group under s 703-50(3) of the ITAA 1997.
Vic stamp duty: leasing provisions The Victorian State Revenue Office (SRO) has published information on its website explaining the recent amendments to the Duties Act 2000 (Vic) to ensure that certain leasing arrangements are not used as a mechanism to avoid duty. The information explains the application of the provisions and includes examples.
Superannuation SMSF compliance audit (claim up to 4 CPD hours per workshop) Make sure your SMSF audits comply with the SIS Act and regulations requirements. Find out the key SIS reporting requirements and documentation necessary to support your compliance audits and avoid common breaches by working through case study examples. Program information — Adelaide, Melbourne,
Sydney SMSF financial statement audit (claim up to 4 CPD hours per workshop) Confidently complete your SMSF financial statement audits and ensure they comply with the ATO's mandatory requirements. Program information — Adelaide, Melbourne,
Sydney General management Harvard: Leading through uncertain times (claim up to 20 CPD hours upon completion) Lead through change and reorient your strategies for ongoing resilience. This Harvard resource will provide you with task-based guidance on adapting strategies, focusing on fundamentals, and communicating for strength. Program information — Online More training and events For information on other CPA CPD activities being
held throughout Australia please visit the training and
events section on our website and use the search facility. To register
click onto the activity you wish to attend and follow the
prompts.
The taxation of super death benefits DVD This DVD discusses the high degree of complexity in tax rules applying to superannuation death benefits. Reserve from CPA Library.
'Tax sting in capital raisings' (Report that Tax Office and major companies are in dispute over the tax treatment of renounceable rights issues) AFR [p 1], Wed 23.9.2009 'Charity urges tax on $1.1m homes' (Report that a leading charity has suggested to the Henry tax review that family homes worth more than $1.1 million should be subject to CGT) AFR [p 5], Wed 23.9.2009 'Tax-loss rule changes will aid business' (Claim that draft legislation released on loss recoupment rules will help companies) AFR [p 12], Wed 23.9.2009 'Salary sacrificers to get warning letter' (Tax Office will write to about 300,000 people it suspects might breach the salary sacrifice super limits) AFR [p 13], Wed 23.9.2009 'Row brews on Henry review' (Report that the alcohol industry is concerned how beer, wine and spirits should be taxed, as part of the Henry tax review) AFR [p 13], Wed 23.9.2009 'Deductions needn't tax ingenuity' (Article looking at tax deductions available to self-managed super funds) AFR [p 33], Wed 23.9.2009 'Forget super guarantee, maximise your savings' (NAB's submission to Henry review suggests raising compulsory super to between 12 per cent and 15 per cent) AFR [p 33], Wed 23.9.2009 'ATO trusts blitz stymies rules' (Letter to the Editor critical of the Tax Office's latest apparent change of policy on trusts) AFR [p 59], Wed 23.9.2009 'Super funds recovery best in a decade' (Report that super funds have recorded their biggest six-monthly return in at least a decade) AFR [p 1], Tue 22.9.2009 GST red tape to be cut for developers' (Claim that Treasury discussion paper on the margin scheme will simplify GST laws for property developers) AFR [p 9], Tue 22.9.2009 'Citigroup in tax fight' (Report of tax dispute over claims for foreign tax credits) AFR [p 11], Tue 22.9.2009 'Secret Swiss account holders get there weeks' grace' (US IRS extends to 15 Oct the deadline for Americans with undeclared offshore holdings to disclose them) AFR [p 13], Tue 22.9.2009 'ATO revamp scrutinised' (ANAO to audit the Tax Office's core technology overhaul) AFR [p 31], Tue 22.9.2009 'NAB joins call for higher super savings' (Report that NAB calls for increasing compulsory super savings) AFR [p 47], Tue 22.9.2009 'R&D changes will hurt some, help others' (Treasury consultation paper released on new R&D laws) AFR [p 5], Mon 21.9.2009 'Carbon tax confusion' (Report that companies are in limbo over the accounting and tax treatment of the emissions trading scheme) AFR [p 9], Mon 21.9.2009 'New ageing focus hits super' (Claim that default super funds are likely to come in for close attention) AFR [p 45], Mon 21.9.2009 'Single pensioners will get more' (Pensions set to rise, but income tests also change) AFR [p 43], 19-20 September 2009 'New tests on way for R&D claims' (Government to reveal tougher eligibility rules for claiming the R&D tax offset) AFR [p 3], Fri 18.9.2009 'Miners in treasury's tax sights' (Report of senior Treasury official's purported comment that a cut in the company tax rate could be funded through higher taxes on the resources sector) AFR [p 7], Fri 18.9.2009 'ATO taxes patience in trusts crackdown' (Tax Office to hold a meeting re its crackdown on discretionary trusts) AFR [p 15], Fri 18.9.2009 'Swiss suggest foreigner tax' (Swiss banks propose a withholding tax on foreign clients) AFR [p 17], Fri 18.9.2009 'CBA loses tax appeal' (Commonwealth Bank loses $20 million depreciation dispute with the Tax Office) AFR [p 52], Fri 18.9.2009 'ATO tries to solve problems it created' (Letter to the Editor re the Tax Office's stance on the use of corporate beneficiaries in family trusts) AFR [p 55], Fri 18.9.2009 'ATO targets wealthy in trusts blitz' (Report that the Tax Office is cracking down on discretionary trusts with corporate beneficiaries) AFR [p 1], Thur 17.9.2009 'Henry seeks extra input for tax review' (Report that meeting called to determine final tax system reform options before recommendations go to the Government in December) AFR [p 3], Thur 17.9.2009 'Deafening silence on key topic' (Will the Henry review and the Government crack down on trusts?) AFR [p 6], Thur 17.9.2009 'Push to put CGT on $1.1m homes' (Calls to remove CGT exemption on homes worth more than $1.1 million) AUSTRALIAN [p 5], Wed 23.9.2009 'The long haul: making retirement incomes last' (Claim that improved annuities could help address longevity risk) AUSTRALIAN [Wealth, p 1], Wed 23.9.2009 'Old-style investment a good option again' (Article on insurance bonds as an alternative to superannuation) AUSTRALIAN [Wealth, p 4], Wed 23.9.2009 'Reserves are complex and costly structures' (Comment that SMSFs will not receive sufficient benefit from reserves to justify their use) AUSTRALIAN [Wealth, p 8], Wed 23.9.2009 'Biggies beat the boutique funds' (According to figures, industry super funds have taken out top positions as best value funds - however, some boutique funds are reducing fees) AUSTRALIAN [Wealth, p 8], Wed 23.9.2009 'DIYers rejoin mainstream' (Claim that some investors have rejoined large funds after financial crisis made SMSF funds no longer cost effective) AUSTRALIAN [Wealth, p 9], Wed 23.9.2009 'Target super tax breaks, funds urge' (Calls to scrap tax concessions for super in exchange for all super to be made from after-tax earnings, and government co-contributions or tax offset) AUSTRALIAN [p 5], Tue 22.9.2009 'Saving grace: superwomen to the rescue' (Interviews of leaders of super funds industry) AUSTRALIAN [p 24], Mon 21.9.2009 'Push to raise pension age above 67' (According to a study, Australia needs to lift pension age beyond age 67) AUSTRALIAN [p 8], 19-20 September 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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