What happened in tax?



Written by TaxCounsel Pty Ltd

The following points highlight important federal tax developments that occurred during May 2018.


Each month, these developments are considered in more detail in the Taxing Issues column of Taxation in Australia, the Institute's member journal.

2018-19 Budget
The 2018-19 federal Budget, which was handed down by the Treasurer on 8 May 2018, contained quite a number of taxation proposals. These included:
  • Asset write-off threshold
  • Medicare levy low-income threshold increases
  • Personal Income Tax Plan
  • Tax evasion: phoenixing
  • The corporations and tax laws reforms
  • Division 7A
  • Partnerships and CGT small business concessions access
  • Trusts: circular distributions
  • Testamentary trusts
  • Black economy initiatives, and other changes.
Members can find more information on each in June’s journal, due to land on desks shortly.

SMSF changes
The Minister for Revenue and Financial Services has announced several initiatives that will expand access to self-managed superannuation funds, and will make it easier to roll existing superannuation funds into a self-managed fund.

GST withholding: purchase of new residential premises

The Commissioner has released a draft law companion ruling which explains his views on the recent amendments that require a purchaser of certain types of real property to make a payment to the Commissioner that represents the GST payable by the vendor (as a consequence of such a payment, the purchaser then does not have a liability to the vendor for that amount) (LCR 2018/D1). 


Rental investment properties: travel expenditure
A draft law companion ruling issued by the Commissioner considers the recently enacted amendments that operate to deny a deduction for travel expenditure incurred by (broadly) an individual or trust in gaining or producing assessable income from certain uses of residential premises as residential accommodation (LCR 2018/D2).

Meaning of “directly in connection with”
The Commissioner has issued a draft determination which explains his view on the meaning of the expression “directly in connection with” the supply in s 177DA(1)(a)(ii) ITAA36 (TD 2018/D1).

Service by post
The Federal Court has set aside a windingup order made by a Registrar of the Court on the basis that evidence adduced by the company (and that was not before the Registrar) was sufficient to raise a reasonable doubt about the normal operation of the statutory provisions that govern the time of service of a document by prepaid post (DCT v Josway Hospitality Pty Ltd [2018] FCA 466).

Payment of tax debt by instalments
The Federal Court has dismissed judicial review proceedings brought by a director of a company against the Commissioner’s decision (under s 255-115 of Sch 1 to the Taxation Administration Act 1953 (Cth)) to refuse an application by the director to pay by instalments amounts due to the Commissioner under director penalty notices (Stojic v DCT [2018] FCA 483).

Tax schemes fail
The Full Federal Court has unanimously dismissed appeals by a taxpayer from a first instance decision which had held that the Commissioner had correctly assessed the taxpayer in respect of two amounts derived under rather complicated schemes; one amount was held to be assessable under what might be called the ordinary provisions of the income tax law or, alternatively, under the general anti-avoidance provisions, while the other amount was held to be assessable by the operation of the general anti-avoidance provisions (Hart v FCT [2018] FCAFC 61).

CGT relationship roll-over
The Full Federal Court has by majority allowed appeals from a decision of McKerracher J in which his Honour had held that CGT marriage or relationship breakdown roll-over relief applied to the transfer by a discretionary trust of shares in a public company (Ellison v Sandini Pty Ltd [2018] FCAFC 44). This decision is considered in more detail in the Tax Tips column of June’s issue of the journal.



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