What happened in tax in July

Written by TaxCounsel Pty Ltd

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

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

R&D tax incentive

Draft legislation (and explanatory material) to give effect to the 2018-19 Budget proposal in relation to the research and development tax incentive has been released.

Stapled structures

The government has released a paper for public consultation in relation to the reform of the tax treatment of stapled structures and similar arrangements.

Company residence

The Commissioner has issued a final ruling which sets out his view on how the central management and control test of company residency in s 6(1) ITAA36 operates following the decision of the High Court in the Bywater Investments Ltd case (TR  2018/5).

Part IVA

A draft practical compliance guideline sets out the ATO’s compliance approach with respect to the general anti-avoidance provisions and certain restructures that have the effect of preserving Australian tax benefits that would otherwise be disallowed under the proposed hybrid mismatch rules.

CGT improvement threshold

For the 2018-19 income year, the indexed CGT improvement threshold is $150,386
(TD 2018/8).

Interest deductibility

A recent final taxation determination considers the question of whether a beneficiary of a discretionary trust who borrows money, and on-lends all or part of that money to the trustee of the discretionary trust interest-free, can be entitled to a general deduction for any interest incurred (TD 2018/9).

GST withholding rules

The Commissioner has issued a law companion ruling that deals with the recently enacted GST notification and withholding requirements for vendors and purchasers of residential premises and potential residential land (LCR 2018/4).

Small business CGT reliefs

The AAT has affirmed the Commissioner’s decision that the taxpayer did not satisfy the maximum net asset value test and, therefore, was not eligible for the CGT small business reliefs (Hookey and FCT [2018] AATA 1509).

Cross-border arrangements

A recently issued final practical compliance guideline outlines the ATO’s compliance approach to the taxation outcomes associated with a “financing arrangement”, or a related transaction or contract, entered into with a cross-border related party (PCG 2017/4).

Tax agent deregistration

The AAT has affirmed a decision of the Tax Practitioners Board to terminate the registration of an individual as a tax agent on the ground that she was not a “fit and proper” person (Beckett and Tax Practitioners Board [2018] AATA 1860).

Onus not discharged

The Federal Court has dismissed appeals by a taxpayer against objection decisions made by the Commissioner involving amended assessments (and penalties) for eight income years (Bosanac v FCT [2018] FCA 946). 

Residence: individual

The Federal Court has held that, on the facts, a taxpayer who had an Australian domicile but worked overseas did not have a place of abode outside Australia (Harding v FCT [2018] FCA 837).

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