Period Ending 9 February 2017 - cpdlive.com€¦ · OECD Transfer Pricing Guidelines –from 1 July...
Transcript of Period Ending 9 February 2017 - cpdlive.com€¦ · OECD Transfer Pricing Guidelines –from 1 July...
14022017
1
Tax UpdatePeriod Ending 9 February 2017
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Session Outline
bull Legislation
bull Income
bull Deductions
bull CGT
bull Indirect tax
bull Taxation of superannuation
bull Tax administration
bull International tax
bull Tax controversy
bull State Taxes
bull Tax reform
14022017
2
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ACNC releases Interpretation Statement on PBIs
bull ACNC Interpretation Statement on meaning of ldquopublic benevolent institutionrdquo
bull ACNC-registered PBIs can seek endorsement from ATO as
‒ tax concession charities (income tax and FBT exemptions GST concessions)
‒ deductible gift recipients
Income
CIS 201603 ndash Public Benevolent Institutions
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ASIC-ATO information sharing
bull Exposure draft released
bull Proposed amendment to Australian Securities and Investments Commission
Act 2001 to allow ASIC to more readily disclose confidential information to
ATO
Legislation
Draft TLA (2017 Measures No 1) Bill 2017 ASIC
14022017
3
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Increasing penalties for significant global entities
bull Draft legislation on 2016-17 Budget measure to increase penalties imposed
on companies with global revenue of $1bn or more who breach tax disclosure
obligations
bull Maximum penalty to be increased from $4500 to $450000
bull Proposed date of effect 1 July 2017
Taxation of Legislation
Draft legislation released
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Increase in unincorporated small business tax discount
bull Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016 (still in House of
Reps) seeks to lift unincorporated small business tax offset threshold to $5m
and incrementally increase offset rate
bull From 1 July 2016 tax offset will rise from 5 to 8
bull ATO will accept tax returns as lodged while Bill before Parliament
bull Taxpayers can then seek amendment if measure enacted amp they didnrsquot claim
offset or if measure not enacted
Taxation of Legislation
ATO admin treatment
14022017
4
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2017 Autumn Sittings
bull Treasury Laws Amendment (GST Low Value Goods) Bill 2017
ndash GST will apply to low value goods (up to $1000) supplied to Australian consumers by offshore businesses
bull Treasury Laws Amendment (Enterprise Incentives No 1) Bill 2017
ndash Gives taxpayers option to self-assess effective life of certain intangible assets
ndash Amends tax incentives for early stage investors
Bills proposed for introduction
Legislation
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Corporations Amt (Professional Standards of Financial Advisers) Bill 2016
bull Passed both Houses without amendment
ndash Awaits Royal Assent
bull Amends Corporations Act 2001 to require certain financial advisers to meet
specified education and training standards comply with ethics code
bull Amends Tax Agent Services Act 2009 to enable information sharing
Financial advisers education amp training standards ndash Bill passed
Legislation
14022017
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Treasury Laws Amendment (Combating Multinational Tax Avoidance) Bill
bull Bill introduced into Parliament
bull Expands Pt IVA to include 40 diverted profits tax for significant global
entities ndash from 1 July 2017
ndash Tax imposed by Diverted Profits Tax Bill 2017
bull Increases admin penalties for significant global entities that fail to lodge
returns certain other documents ndash from 1 July 2017
bull Updates transfer pricing rules to include 2016 OECD BEPS amendments to
OECD Transfer Pricing Guidelines ndash from 1 July 2016
DPT increased penalties transfer pricing guidelines
Legislation
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Tax and Superannuation Laws Amendment (2016 Measures No 2) Bill 2016
bull Passed both Houses without amendment
bull Measures include
ndash Remedial power for FCT to modify law by legislative instrument to ensure
intended purpose of law achieved ndash will apply from Royal Assent
ndash Primary producer income averaging replaces permanent choice to opt out of averaging with 10-year opt-out period ndash will apply from 1 July 2016
ndash LCT exemption for certain public institutions that import or acquire luxury cars for public display ndash will apply from Royal Assent
Tax Bill (No 2) 2016 awaits Royal Assent
Legislation
14022017
6
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ACNC releases Interpretation Statement on PBIs
bull ACNC Interpretation Statement on meaning of ldquopublic benevolent institutionrdquo
bull ACNC-registered PBIs can seek endorsement from ATO as
‒ tax concession charities (income tax and FBT exemptions GST concessions)
‒ deductible gift recipients
Income
CIS 201603 ndash Public Benevolent Institutions
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High Court Industry severance scheme not a unit trust for Div 6C purposes
bull FCT wins High Court case
bull Industry severance scheme not a unit trust for tax purposes
bull Workers didnrsquot have ldquounitsrdquo in scheme
Income
ElecNet (Aust) Pty Ltd v FCT [2016] HCA 51
14022017
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Taxpayer resident of Australia under AustMalaysia DTA
bull Taxpayer born in Malaysia Australian citizenship and passport
bull Self-employed as software development consultant
bull For 2014-15 in Australia 279 days in Malaysia 88 days
bull From 1 April 2015 leased room in Malaysia from mother-in-law
bull AAT found taxpayer resident of Australia ndash Malaysian source PSI and
business profits taxable in Australia
Income
Re Tan and FCT [2016] AATA 1062
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No disclaimer of interest in trust
bull Following audits
‒ Trusts denied carried forward losses
‒ Beneficiaryrsquos income increased by over $12m
bull Before AAT beneficiary said she disclaimed trust interests (this wasnrsquot raised
in her objection)
bull AAT didnrsquot allow objection to be amended to rely on disclaimers ndash FCT would
be prejudiced
Income
Re TVKS and FCT [2016] AATA 1010
14022017
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Home office expenses on floor area basis ndash FCTs method preferred
bull Taxpayer ndash employee electrician
bull Applied for private ruling on home office expenses
bull AAT agreed with FCT that apportionment on ldquofloor areardquo basis appropriate
Deductions
Re HWZG and FCT [2016] AATA 1017
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MPs allowances reimbursements donations deductions etc
bull Substantial amendments made to Ruling TR 9910
bull Amendments clarity tax treatment of allowances and expenses incurred in
financing holding and maintaining accommodation that MPs purchase or
lease and stay in when travelling
Deductions
Addendum to TR 199910
14022017
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Deduction for bad debt beneficiary of a trust and UPEs
bull Beneficiary not entitled to bad debt deduction for unpaid present entitlement
bull ATO gives two reasons
‒ Trusteersquos equitable obligation to pay UPE not a debt at common law
‒ UPE not ldquoincludedrdquo in beneficiaryrsquos assessable income under Div 6 ITAA 1936 as required by s 25-35(1)(a) ITAA 1997
Deductions
Taxation Determination TD 201619
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Work-related travel expenses not deductible ndash taxpayer fails burden of proof
bull Test engineer worked for offshore division of Indian company
bull Deductions for travel to India medical insurance disallowed
bull Private expenditure
Deductions
Re Thambiannan and FCT [2016] AATA 1004
14022017
10
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Commercial website deductibility
bull Detailed ruling on expenditure on websites used for carrying on business
bull Covers deductions for acquiring developing maintaining or modifying
website
Deductions
Taxation Ruling TR 20163
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Depreciating assets - composite items
bull Draft ruling on whether composite item is single depreciating asset
bull Component parts may be separate depreciating assets if they can be
separately identified or recognised as having commercial and economic
value
Deductions
Draft Taxation Ruling TR 2017D1
14022017
11
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Effective life of assets ndash drafts released
bull Draft effective lives of assets used in electronic information storage services
(data centre) industry released
bull Draft effective lives of assets used in coal seam gas industry released
bull Proposed date of effect for both 1 July 2017
Deductions
Draft lists released
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Deduction for cost of tools rejected
bull Taxpayer claimed he bought $24750 worth of tools online paid vendor in
cash from gambling winnings had handwritten tax invoice for 87 hand tools
andor power tools
bull FCT denied deduction imposed 25 shortfall penalty
bull AAT agreed with FCT ndash no tools purchased vendor non-existent fake tax
invoice
Deductions
Re Ishaq and FCT [2017] AATA 35
14022017
12
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Overtime meal expenses disallowed
bull Deduction for overtime meal expenses disallowed ndash 25 shortfall penalty
affirmed
bull Taxpayer not paid allowance under industrial agreement (as required by s 32-
50 ITAA 1997)
bull Paid same amount each week regardless of how much overtime he worked
Deductions
Re Kael and FCT [2017] AATA 38
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No deduction or capital loss for guarantee obligation
bull Taxpayers (controllers of trusts) involved in property development
bull Income of 2 family trusts increased by $43m after capital loss of associated
unit trust disallowed
bull Taxpayers claimed they were entitled to $43m deduction or capital loss as
trusts guaranteed business loan which lender (another related entity) had
called on guarantors to meet
bull AAT found insufficient evidence to support existence of guarantee
Deductions
Re Carioti and FCT [2017] AATA 62
14022017
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Taxpayer denied deduction for work expenses of $60000
bull AAT found that mechanical engineer not entitled to deductions for
‒ Car expenses ndash not work related
‒ Self-education costs ndash no nexus with income-producing activities
‒ Other ldquoworkrdquo expenses ndash not substantiated
bull AAT also affirmed 25 shortfall penalty for lack of reasonable care
Deductions
Re Vakiloroaya and FCT [2017] AATA 95
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Intangible capital improvements made to a pre-CGT asset - a separate asset
bull Intangible capital improvement to pre-CGT asset can be separate CGT asset
bull Example provided of pre-CGT land being rezoned and subdivided ndash ATO says
improvements to land may be separate CGT assets
CGT
Taxation Determination TD 20171
14022017
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GST determining if a recipient is an Australian consumer
bull Draft ruling on Netflix tax
bull Explains when suppliers can rely on automated systems and when they need
to take extra measures to determine customerrsquos GST status
bull Netflix tax applies from 1 July 2017 transitional rules started on
1 July 2016
Indirect Taxes
Draft GST Ruling GSTR 2016D1
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GST no recovery for margin scheme increasing adjustment
bull Developer sold land to local council
bull Subject to margin scheme
bull Council required to pay GST on the supply
bull Court held council not required to pay increasing adjustment in developerrsquos
BAS
Indirect Taxes
McEwans Australia Pty Ltd v Brisbane City Council [2016] QDC 347
14022017
15
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GST cross-border law changes and currency conversion
bull Draft determination provides currency conversion options for businesses
impacted by GST cross-border changes
bull Includes method to convert foreign consideration into Australian currency
Indirect Taxes
Draft FOREX 2016D1 GST Foreign Currency Conversion Determination
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GST on home care and residential care
bull ATO draft guidance documents to help home amp residential care suppliers work
out if their services are GST-free
bull Also explains how GST applies to sub-contracted services
Indirect Taxes
ATO seeks views on guidance material
14022017
16
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ATO guidance on concessional contributions and constitutionally protected super funds
bull Draft guidance on calculating concessional contributions for defined benefit
interests and constitutionally protected funds
bull Under super reforms extra amount included in concessional contributions
from 1 July 2017 to reflect full amount of accrued benefits for defined benefit
interests
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D11
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ATO releases 2014-15 SMSF statistical overview
bull 996 of super funds are SMSFs
bull 29 of super assets (totalling $622 billion) in SMSFs
bull 6 of SMSFs held assets under LRBAs with gt 90 of LRBA investments in
real estate
bull 31 growth in number of SMSFs over five years
Taxation of Superannuation
14022017
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SMSFs LRBAs and non-arms length income
bull ATO says two-step process to determine if non-armrsquos length income rules
apply to SMSF limited recourse borrowing arrangement
‒ Are terms of LRBA consistent with safe harbours in PCG 20165
‒ Can SMSF trustee otherwise show that LRBA on armrsquos length terms
bull If yes donrsquot consider TD 201616 (non-armrsquos length LRBAs)
Taxation of Superannuation
ATO info re interaction and application of PCG 20165 and TD 201616
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Superannuation objective - draft reg released
bull Draft reg sets out subsidiary objectives of super system eg
‒ Managing risks in retirement
‒ Being invested in best interests of fund members
‒ Alleviating fiscal pressures on government
Taxation of Superannuation
Draft Superannuation (Objective) Regulation
14022017
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Superannuation reform total superannuation balance
bull Explains how individuals total superannuation balance is calculated from 30
June 2017
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D12
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Super reforms $16m pension cap commutations actuarial certificates
bull Draft regs to complement super reforms amp $16m transfer balance cap
released
bull Allow commutation of certain super income streams to reduce excess transfer
balance
bull Actuarial certificate exemption re income stream benefits in retirement phase
bull Broader range of death benefits to be treated as roll-over benefits
Taxation of Superannuation
Draft Treasury Laws Amendment (Fair and Sustainable Super) Regulation
14022017
19
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Super trustee rollover obligations amid ATO website outage
bull APRA advised RSE licensees in December 2016
‒ It wonrsquot take action for breaches directly related to ATO website outage
‒ RSE licensees not required to give APRA formal notice of such breaches
Taxation of Superannuation
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Super reforms Defined benefit income streams life expectancy and market-linked pensions
bull Draft Guideline on defined benefit income cap rules and income stream
pensionsannuities paid from non-commutable life expectancy and market-
linked products
bull From 1 July 2017 capped defined benefit income streams
‒ Will count towards $16 million transfer balance cap
‒ Wonrsquot of themselves lead to excess transfer balance
Taxation of Superannuation
Draft Law Companion Guideline LCG 2017D1
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20
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ATO SuperSeeker
bull SuperSeeker online service for individuals now decommissioned
bull Individuals can findmanage super via myGov
Taxation of Superannuation
Service decommissioned
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ATO corporate tax transparency report for 2014-15
bull Second annual report on corporate tax transparency released
bull Data from 2015 tax returns of large corporates operating in Australia
bull Once third of listed taxpayers reported no tax payable ndash FCT said donrsquot
assume tax avoidance
bull Of top 100 public or foreign companies six in highest risk quadrant
Tax Administration
2014-15 Report of Entity Tax Information
14022017
21
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Backpackers tax registration deadline extended for employers
bull From 1 Jan 2017 working holiday maker WHT rate of 15
bull Employers can withhold 15 even if unregistered
bull Unregistered employers wonrsquot be penalised if they register by 31 Jan 2017
Tax Administration
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SMSF trustees (and LRBA trustees) garnishee notices invalid for group payroll tax
bull Custodian company amp SMSFLRBA trustees had payroll tax liability under
grouping rules
bull Custodian sold property held on trust for SMSF trustees
bull Garnishee notices issued to purchasers invalid
bull Garnishee notice canrsquot be used to recover tax from trust property to satisfy
trusteersquos tax debt if debt incurred in another capacity
Tax Administration
Comr of State Revenue v Can Barz Pty Ltd amp Anor [2016] QCA 323
14022017
22
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Court gives judgment for full tax debt of $11m
bull Taxpayer with $11m tax debt
bull During recovery proceedings taxpayer produced $600000 bank cheque
reducing tax debt to $500000
bull Court gave judgment against taxpayer for $11m ndash said cheque is conditional
payment could be dishonoured
Tax Administration
DCT v Dukes [2016] NSWSC 1759
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Taxpayersrsquo rights and obligations
bull IGT recommends ATO implement measures to ensure
‒ Taxpayersrsquo Charter at forefront of ATOrsquos interactions with community
‒ ATOrsquos performance against Charter principles measured and publicly reported
bull If stakeholder concerns persist IGT may undertake follow-up review and
make recommendations to government
Tax Administration
IGT Review into the Taxpayers Charter and Taxpayer Protections released
14022017
23
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Default assessments upheld - burden of proof not satisfied
bull Unexplained deposits to bank accounts controlled by taxpayer
bull Significant gambling at casinos
bull AAT affirmed default assessments
bull Taxpayerrsquos claims that money came from family gifts loans from friends
gambling wins rejected
Tax Administration
Re Nguyen and FCT [2016] AATA 1041
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No summary judgment for DPN liability - unresolved facts re whether director took reasonable steps
bull Summary judgment in respect of $167000 director penalty notice not granted
bull Unresolved question of fact ndash whether director took reasonable steps to
ensure company complied with ATO payment arrangement
Tax Administration
DCT v Pedley [2016] WADC 166
14022017
24
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Reminder of easier GST reporting for new small businesses from 19 Jan 2017
bull Newly registered SMEs can lodge simpler BAS from 19 January 2017
‒ Quarterly reporters select Option 2 Calculate GST quarterly and report annually
‒ Monthly reports insert 0 at labels G2 G3 G10 and G11
‒ Annual reporters leave labels G2 G3 G10 and G11 blank
Tax Administration
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Review of tax and corporate whistleblower provisions in Australia
bull 2016-17 Federal Budget plan to better protect tax whistleblowers
bull Government now seeks public comments on proposed tax whistleblower
protection
Tax Administration
Consultation paper released
14022017
25
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Ride sourcing providers
bull ATO to identify ride sourcing drivers who donrsquot meet tax obligations
(registration reporting lodgment payment)
bull Data from financial institutions for 2016-17 and 2017-18
bull ATO wants details of payments from ride sourcing facilitator to ride sourcing
provider
bull Records relating to up to 60000 individuals to be collected
Tax Administration
ATO data matching
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Simplifying income recognition for NFPs
bull New standards to apply from 1 January 2019
‒ AASB 1058 Income of Not-for-Profit Entities
‒ AASB 2016-7 Amendments to Australian Accounting Standards ndash Deferral of
AASB 15 for Not-for-Profit Entities
‒ AASB 2016-8 Amendments to Australian Accounting Standards ndash Australian Implementation Guidance for Not-for-Profit Entities
Tax Administration
New standards coming
14022017
26
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Summary judgment against taxpayers for $305m upheld ndashtaxpayers lose appeal re ATO use of Cayman Islands info
bull $305m summary judgment against Vanda Gould and company he controlled
bull Assessments based on info from Cayman Islands tax authority
bull Taxpayers alleged ATO obtained info unlawfully
bull Held assessments valid
Tax Administration
Gould amp Anor v DCT [2017] FCAFC 1
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TPB Information sheet on payroll service providers
bull Information Sheet gives examples to help payroll service providers determine
if they must register with TPB
Tax Administration
TPB(I) 312016 - Payroll service providers
14022017
27
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Current ATO data-matching activities
bull ATO collecting data from banks on
‒ Credit and debit card payments received by businesses
‒ Payments to ride-sourcing drivers
bull Also collecting data from on-selling sites about sellers who sold at least
$12000 worth of goods or services
Tax Administration
Credit and debit card online selling ride-sourcing data-matching
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Incorrect PAYG instalment variations and GIC
bull ATO says some taxpayers incorrectly varying PAYG instalment rate or
amount
bull Liable to penalty GIC if variation significantly incorrect
bull ATO may contact tax agents to discuss clientsrsquo variations
Tax Administration
14022017
28
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ATO explains what caused system outage
bull Cause of ATOrsquos Dec 2016 system outage major malfunction of data storage
infrastructure in central computing system
bull ATO insists taxpayer data not lost or compromised
bull PwC to independently review system outage (has expertise with ICT storage
at heart of incident)
bull ATO also conducting internal review focus on key stakeholders
Tax Administration
Announces independent review
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No grounds to set aside DPO
bull Dubai resident served with amended assessments departure prohibition
order (DPO) while going through customs
bull Federal Court dismissed application to set aside DPO
ndash DPO not issued for improper purpose given taxpayerrsquos significant tax liability ($45m) amp poor compliance record
ndash Australian tax debt not enforceable in UAE
Tax Administration
Bakri v DCT [2017] FCA 20
14022017
29
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Exemptions from registering with ATO re foreign ownership of water or agricultural land
bull Draft rules to support Register of Foreign Ownership of Water or Agricultural
Land Act 2015 released
bull Water Register from 1 July 2017
bull Draft rules provide reporting exemptions for
ndash Harvestable rights
ndash Irrigation infrastructure operators
ndash Foreign persons re security held under money lending agreement
Tax Administration
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ATO releases Guide to Reportable Tax Positions 2017
bull ATO guide to help companies complete
bull Reportable tax position schedule 2017 (NAT 74066)
bull Reportable tax position early disclosure form 2017 (NAT 74067)
bull RTP Category C (reportable transactions or events) expanded to cover issues
of concern to ATO (eg those in recent taxpayer alerts)
bull Category C questions must be answered if companyrsquos income year ends on
or after 30 June 2017
Tax Administration
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
2
copy Chartered Accountants Australia + New Zealand 2017
ACNC releases Interpretation Statement on PBIs
bull ACNC Interpretation Statement on meaning of ldquopublic benevolent institutionrdquo
bull ACNC-registered PBIs can seek endorsement from ATO as
‒ tax concession charities (income tax and FBT exemptions GST concessions)
‒ deductible gift recipients
Income
CIS 201603 ndash Public Benevolent Institutions
copy Chartered Accountants Australia + New Zealand 2017
ASIC-ATO information sharing
bull Exposure draft released
bull Proposed amendment to Australian Securities and Investments Commission
Act 2001 to allow ASIC to more readily disclose confidential information to
ATO
Legislation
Draft TLA (2017 Measures No 1) Bill 2017 ASIC
14022017
3
copy Chartered Accountants Australia + New Zealand 2017
Increasing penalties for significant global entities
bull Draft legislation on 2016-17 Budget measure to increase penalties imposed
on companies with global revenue of $1bn or more who breach tax disclosure
obligations
bull Maximum penalty to be increased from $4500 to $450000
bull Proposed date of effect 1 July 2017
Taxation of Legislation
Draft legislation released
copy Chartered Accountants Australia + New Zealand 2017
Increase in unincorporated small business tax discount
bull Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016 (still in House of
Reps) seeks to lift unincorporated small business tax offset threshold to $5m
and incrementally increase offset rate
bull From 1 July 2016 tax offset will rise from 5 to 8
bull ATO will accept tax returns as lodged while Bill before Parliament
bull Taxpayers can then seek amendment if measure enacted amp they didnrsquot claim
offset or if measure not enacted
Taxation of Legislation
ATO admin treatment
14022017
4
copy Chartered Accountants Australia + New Zealand 2017
2017 Autumn Sittings
bull Treasury Laws Amendment (GST Low Value Goods) Bill 2017
ndash GST will apply to low value goods (up to $1000) supplied to Australian consumers by offshore businesses
bull Treasury Laws Amendment (Enterprise Incentives No 1) Bill 2017
ndash Gives taxpayers option to self-assess effective life of certain intangible assets
ndash Amends tax incentives for early stage investors
Bills proposed for introduction
Legislation
copy Chartered Accountants Australia + New Zealand 2017
Corporations Amt (Professional Standards of Financial Advisers) Bill 2016
bull Passed both Houses without amendment
ndash Awaits Royal Assent
bull Amends Corporations Act 2001 to require certain financial advisers to meet
specified education and training standards comply with ethics code
bull Amends Tax Agent Services Act 2009 to enable information sharing
Financial advisers education amp training standards ndash Bill passed
Legislation
14022017
5
copy Chartered Accountants Australia + New Zealand 2017
Treasury Laws Amendment (Combating Multinational Tax Avoidance) Bill
bull Bill introduced into Parliament
bull Expands Pt IVA to include 40 diverted profits tax for significant global
entities ndash from 1 July 2017
ndash Tax imposed by Diverted Profits Tax Bill 2017
bull Increases admin penalties for significant global entities that fail to lodge
returns certain other documents ndash from 1 July 2017
bull Updates transfer pricing rules to include 2016 OECD BEPS amendments to
OECD Transfer Pricing Guidelines ndash from 1 July 2016
DPT increased penalties transfer pricing guidelines
Legislation
copy Chartered Accountants Australia + New Zealand 2017
Tax and Superannuation Laws Amendment (2016 Measures No 2) Bill 2016
bull Passed both Houses without amendment
bull Measures include
ndash Remedial power for FCT to modify law by legislative instrument to ensure
intended purpose of law achieved ndash will apply from Royal Assent
ndash Primary producer income averaging replaces permanent choice to opt out of averaging with 10-year opt-out period ndash will apply from 1 July 2016
ndash LCT exemption for certain public institutions that import or acquire luxury cars for public display ndash will apply from Royal Assent
Tax Bill (No 2) 2016 awaits Royal Assent
Legislation
14022017
6
copy Chartered Accountants Australia + New Zealand 2017
ACNC releases Interpretation Statement on PBIs
bull ACNC Interpretation Statement on meaning of ldquopublic benevolent institutionrdquo
bull ACNC-registered PBIs can seek endorsement from ATO as
‒ tax concession charities (income tax and FBT exemptions GST concessions)
‒ deductible gift recipients
Income
CIS 201603 ndash Public Benevolent Institutions
copy Chartered Accountants Australia + New Zealand 2017
High Court Industry severance scheme not a unit trust for Div 6C purposes
bull FCT wins High Court case
bull Industry severance scheme not a unit trust for tax purposes
bull Workers didnrsquot have ldquounitsrdquo in scheme
Income
ElecNet (Aust) Pty Ltd v FCT [2016] HCA 51
14022017
7
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer resident of Australia under AustMalaysia DTA
bull Taxpayer born in Malaysia Australian citizenship and passport
bull Self-employed as software development consultant
bull For 2014-15 in Australia 279 days in Malaysia 88 days
bull From 1 April 2015 leased room in Malaysia from mother-in-law
bull AAT found taxpayer resident of Australia ndash Malaysian source PSI and
business profits taxable in Australia
Income
Re Tan and FCT [2016] AATA 1062
copy Chartered Accountants Australia + New Zealand 2017
No disclaimer of interest in trust
bull Following audits
‒ Trusts denied carried forward losses
‒ Beneficiaryrsquos income increased by over $12m
bull Before AAT beneficiary said she disclaimed trust interests (this wasnrsquot raised
in her objection)
bull AAT didnrsquot allow objection to be amended to rely on disclaimers ndash FCT would
be prejudiced
Income
Re TVKS and FCT [2016] AATA 1010
14022017
8
copy Chartered Accountants Australia + New Zealand 2017
Home office expenses on floor area basis ndash FCTs method preferred
bull Taxpayer ndash employee electrician
bull Applied for private ruling on home office expenses
bull AAT agreed with FCT that apportionment on ldquofloor areardquo basis appropriate
Deductions
Re HWZG and FCT [2016] AATA 1017
copy Chartered Accountants Australia + New Zealand 2017
MPs allowances reimbursements donations deductions etc
bull Substantial amendments made to Ruling TR 9910
bull Amendments clarity tax treatment of allowances and expenses incurred in
financing holding and maintaining accommodation that MPs purchase or
lease and stay in when travelling
Deductions
Addendum to TR 199910
14022017
9
copy Chartered Accountants Australia + New Zealand 2017
Deduction for bad debt beneficiary of a trust and UPEs
bull Beneficiary not entitled to bad debt deduction for unpaid present entitlement
bull ATO gives two reasons
‒ Trusteersquos equitable obligation to pay UPE not a debt at common law
‒ UPE not ldquoincludedrdquo in beneficiaryrsquos assessable income under Div 6 ITAA 1936 as required by s 25-35(1)(a) ITAA 1997
Deductions
Taxation Determination TD 201619
copy Chartered Accountants Australia + New Zealand 2017
Work-related travel expenses not deductible ndash taxpayer fails burden of proof
bull Test engineer worked for offshore division of Indian company
bull Deductions for travel to India medical insurance disallowed
bull Private expenditure
Deductions
Re Thambiannan and FCT [2016] AATA 1004
14022017
10
copy Chartered Accountants Australia + New Zealand 2017
Commercial website deductibility
bull Detailed ruling on expenditure on websites used for carrying on business
bull Covers deductions for acquiring developing maintaining or modifying
website
Deductions
Taxation Ruling TR 20163
copy Chartered Accountants Australia + New Zealand 2017
Depreciating assets - composite items
bull Draft ruling on whether composite item is single depreciating asset
bull Component parts may be separate depreciating assets if they can be
separately identified or recognised as having commercial and economic
value
Deductions
Draft Taxation Ruling TR 2017D1
14022017
11
copy Chartered Accountants Australia + New Zealand 2017
Effective life of assets ndash drafts released
bull Draft effective lives of assets used in electronic information storage services
(data centre) industry released
bull Draft effective lives of assets used in coal seam gas industry released
bull Proposed date of effect for both 1 July 2017
Deductions
Draft lists released
copy Chartered Accountants Australia + New Zealand 2017
Deduction for cost of tools rejected
bull Taxpayer claimed he bought $24750 worth of tools online paid vendor in
cash from gambling winnings had handwritten tax invoice for 87 hand tools
andor power tools
bull FCT denied deduction imposed 25 shortfall penalty
bull AAT agreed with FCT ndash no tools purchased vendor non-existent fake tax
invoice
Deductions
Re Ishaq and FCT [2017] AATA 35
14022017
12
copy Chartered Accountants Australia + New Zealand 2017
Overtime meal expenses disallowed
bull Deduction for overtime meal expenses disallowed ndash 25 shortfall penalty
affirmed
bull Taxpayer not paid allowance under industrial agreement (as required by s 32-
50 ITAA 1997)
bull Paid same amount each week regardless of how much overtime he worked
Deductions
Re Kael and FCT [2017] AATA 38
copy Chartered Accountants Australia + New Zealand 2017
No deduction or capital loss for guarantee obligation
bull Taxpayers (controllers of trusts) involved in property development
bull Income of 2 family trusts increased by $43m after capital loss of associated
unit trust disallowed
bull Taxpayers claimed they were entitled to $43m deduction or capital loss as
trusts guaranteed business loan which lender (another related entity) had
called on guarantors to meet
bull AAT found insufficient evidence to support existence of guarantee
Deductions
Re Carioti and FCT [2017] AATA 62
14022017
13
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer denied deduction for work expenses of $60000
bull AAT found that mechanical engineer not entitled to deductions for
‒ Car expenses ndash not work related
‒ Self-education costs ndash no nexus with income-producing activities
‒ Other ldquoworkrdquo expenses ndash not substantiated
bull AAT also affirmed 25 shortfall penalty for lack of reasonable care
Deductions
Re Vakiloroaya and FCT [2017] AATA 95
copy Chartered Accountants Australia + New Zealand 2017
Intangible capital improvements made to a pre-CGT asset - a separate asset
bull Intangible capital improvement to pre-CGT asset can be separate CGT asset
bull Example provided of pre-CGT land being rezoned and subdivided ndash ATO says
improvements to land may be separate CGT assets
CGT
Taxation Determination TD 20171
14022017
14
copy Chartered Accountants Australia + New Zealand 2017
GST determining if a recipient is an Australian consumer
bull Draft ruling on Netflix tax
bull Explains when suppliers can rely on automated systems and when they need
to take extra measures to determine customerrsquos GST status
bull Netflix tax applies from 1 July 2017 transitional rules started on
1 July 2016
Indirect Taxes
Draft GST Ruling GSTR 2016D1
copy Chartered Accountants Australia + New Zealand 2017
GST no recovery for margin scheme increasing adjustment
bull Developer sold land to local council
bull Subject to margin scheme
bull Council required to pay GST on the supply
bull Court held council not required to pay increasing adjustment in developerrsquos
BAS
Indirect Taxes
McEwans Australia Pty Ltd v Brisbane City Council [2016] QDC 347
14022017
15
copy Chartered Accountants Australia + New Zealand 2017
GST cross-border law changes and currency conversion
bull Draft determination provides currency conversion options for businesses
impacted by GST cross-border changes
bull Includes method to convert foreign consideration into Australian currency
Indirect Taxes
Draft FOREX 2016D1 GST Foreign Currency Conversion Determination
copy Chartered Accountants Australia + New Zealand 2017
GST on home care and residential care
bull ATO draft guidance documents to help home amp residential care suppliers work
out if their services are GST-free
bull Also explains how GST applies to sub-contracted services
Indirect Taxes
ATO seeks views on guidance material
14022017
16
copy Chartered Accountants Australia + New Zealand 2017
ATO guidance on concessional contributions and constitutionally protected super funds
bull Draft guidance on calculating concessional contributions for defined benefit
interests and constitutionally protected funds
bull Under super reforms extra amount included in concessional contributions
from 1 July 2017 to reflect full amount of accrued benefits for defined benefit
interests
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D11
copy Chartered Accountants Australia + New Zealand 2017
ATO releases 2014-15 SMSF statistical overview
bull 996 of super funds are SMSFs
bull 29 of super assets (totalling $622 billion) in SMSFs
bull 6 of SMSFs held assets under LRBAs with gt 90 of LRBA investments in
real estate
bull 31 growth in number of SMSFs over five years
Taxation of Superannuation
14022017
17
copy Chartered Accountants Australia + New Zealand 2017
SMSFs LRBAs and non-arms length income
bull ATO says two-step process to determine if non-armrsquos length income rules
apply to SMSF limited recourse borrowing arrangement
‒ Are terms of LRBA consistent with safe harbours in PCG 20165
‒ Can SMSF trustee otherwise show that LRBA on armrsquos length terms
bull If yes donrsquot consider TD 201616 (non-armrsquos length LRBAs)
Taxation of Superannuation
ATO info re interaction and application of PCG 20165 and TD 201616
copy Chartered Accountants Australia + New Zealand 2017
Superannuation objective - draft reg released
bull Draft reg sets out subsidiary objectives of super system eg
‒ Managing risks in retirement
‒ Being invested in best interests of fund members
‒ Alleviating fiscal pressures on government
Taxation of Superannuation
Draft Superannuation (Objective) Regulation
14022017
18
copy Chartered Accountants Australia + New Zealand 2017
Superannuation reform total superannuation balance
bull Explains how individuals total superannuation balance is calculated from 30
June 2017
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D12
copy Chartered Accountants Australia + New Zealand 2017
Super reforms $16m pension cap commutations actuarial certificates
bull Draft regs to complement super reforms amp $16m transfer balance cap
released
bull Allow commutation of certain super income streams to reduce excess transfer
balance
bull Actuarial certificate exemption re income stream benefits in retirement phase
bull Broader range of death benefits to be treated as roll-over benefits
Taxation of Superannuation
Draft Treasury Laws Amendment (Fair and Sustainable Super) Regulation
14022017
19
copy Chartered Accountants Australia + New Zealand 2017
Super trustee rollover obligations amid ATO website outage
bull APRA advised RSE licensees in December 2016
‒ It wonrsquot take action for breaches directly related to ATO website outage
‒ RSE licensees not required to give APRA formal notice of such breaches
Taxation of Superannuation
copy Chartered Accountants Australia + New Zealand 2017
Super reforms Defined benefit income streams life expectancy and market-linked pensions
bull Draft Guideline on defined benefit income cap rules and income stream
pensionsannuities paid from non-commutable life expectancy and market-
linked products
bull From 1 July 2017 capped defined benefit income streams
‒ Will count towards $16 million transfer balance cap
‒ Wonrsquot of themselves lead to excess transfer balance
Taxation of Superannuation
Draft Law Companion Guideline LCG 2017D1
14022017
20
copy Chartered Accountants Australia + New Zealand 2017
ATO SuperSeeker
bull SuperSeeker online service for individuals now decommissioned
bull Individuals can findmanage super via myGov
Taxation of Superannuation
Service decommissioned
copy Chartered Accountants Australia + New Zealand 2017
ATO corporate tax transparency report for 2014-15
bull Second annual report on corporate tax transparency released
bull Data from 2015 tax returns of large corporates operating in Australia
bull Once third of listed taxpayers reported no tax payable ndash FCT said donrsquot
assume tax avoidance
bull Of top 100 public or foreign companies six in highest risk quadrant
Tax Administration
2014-15 Report of Entity Tax Information
14022017
21
copy Chartered Accountants Australia + New Zealand 2017
Backpackers tax registration deadline extended for employers
bull From 1 Jan 2017 working holiday maker WHT rate of 15
bull Employers can withhold 15 even if unregistered
bull Unregistered employers wonrsquot be penalised if they register by 31 Jan 2017
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
SMSF trustees (and LRBA trustees) garnishee notices invalid for group payroll tax
bull Custodian company amp SMSFLRBA trustees had payroll tax liability under
grouping rules
bull Custodian sold property held on trust for SMSF trustees
bull Garnishee notices issued to purchasers invalid
bull Garnishee notice canrsquot be used to recover tax from trust property to satisfy
trusteersquos tax debt if debt incurred in another capacity
Tax Administration
Comr of State Revenue v Can Barz Pty Ltd amp Anor [2016] QCA 323
14022017
22
copy Chartered Accountants Australia + New Zealand 2017
Court gives judgment for full tax debt of $11m
bull Taxpayer with $11m tax debt
bull During recovery proceedings taxpayer produced $600000 bank cheque
reducing tax debt to $500000
bull Court gave judgment against taxpayer for $11m ndash said cheque is conditional
payment could be dishonoured
Tax Administration
DCT v Dukes [2016] NSWSC 1759
copy Chartered Accountants Australia + New Zealand 2017
Taxpayersrsquo rights and obligations
bull IGT recommends ATO implement measures to ensure
‒ Taxpayersrsquo Charter at forefront of ATOrsquos interactions with community
‒ ATOrsquos performance against Charter principles measured and publicly reported
bull If stakeholder concerns persist IGT may undertake follow-up review and
make recommendations to government
Tax Administration
IGT Review into the Taxpayers Charter and Taxpayer Protections released
14022017
23
copy Chartered Accountants Australia + New Zealand 2017
Default assessments upheld - burden of proof not satisfied
bull Unexplained deposits to bank accounts controlled by taxpayer
bull Significant gambling at casinos
bull AAT affirmed default assessments
bull Taxpayerrsquos claims that money came from family gifts loans from friends
gambling wins rejected
Tax Administration
Re Nguyen and FCT [2016] AATA 1041
copy Chartered Accountants Australia + New Zealand 2017
No summary judgment for DPN liability - unresolved facts re whether director took reasonable steps
bull Summary judgment in respect of $167000 director penalty notice not granted
bull Unresolved question of fact ndash whether director took reasonable steps to
ensure company complied with ATO payment arrangement
Tax Administration
DCT v Pedley [2016] WADC 166
14022017
24
copy Chartered Accountants Australia + New Zealand 2017
Reminder of easier GST reporting for new small businesses from 19 Jan 2017
bull Newly registered SMEs can lodge simpler BAS from 19 January 2017
‒ Quarterly reporters select Option 2 Calculate GST quarterly and report annually
‒ Monthly reports insert 0 at labels G2 G3 G10 and G11
‒ Annual reporters leave labels G2 G3 G10 and G11 blank
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Review of tax and corporate whistleblower provisions in Australia
bull 2016-17 Federal Budget plan to better protect tax whistleblowers
bull Government now seeks public comments on proposed tax whistleblower
protection
Tax Administration
Consultation paper released
14022017
25
copy Chartered Accountants Australia + New Zealand 2017
Ride sourcing providers
bull ATO to identify ride sourcing drivers who donrsquot meet tax obligations
(registration reporting lodgment payment)
bull Data from financial institutions for 2016-17 and 2017-18
bull ATO wants details of payments from ride sourcing facilitator to ride sourcing
provider
bull Records relating to up to 60000 individuals to be collected
Tax Administration
ATO data matching
copy Chartered Accountants Australia + New Zealand 2017
Simplifying income recognition for NFPs
bull New standards to apply from 1 January 2019
‒ AASB 1058 Income of Not-for-Profit Entities
‒ AASB 2016-7 Amendments to Australian Accounting Standards ndash Deferral of
AASB 15 for Not-for-Profit Entities
‒ AASB 2016-8 Amendments to Australian Accounting Standards ndash Australian Implementation Guidance for Not-for-Profit Entities
Tax Administration
New standards coming
14022017
26
copy Chartered Accountants Australia + New Zealand 2017
Summary judgment against taxpayers for $305m upheld ndashtaxpayers lose appeal re ATO use of Cayman Islands info
bull $305m summary judgment against Vanda Gould and company he controlled
bull Assessments based on info from Cayman Islands tax authority
bull Taxpayers alleged ATO obtained info unlawfully
bull Held assessments valid
Tax Administration
Gould amp Anor v DCT [2017] FCAFC 1
copy Chartered Accountants Australia + New Zealand 2017
TPB Information sheet on payroll service providers
bull Information Sheet gives examples to help payroll service providers determine
if they must register with TPB
Tax Administration
TPB(I) 312016 - Payroll service providers
14022017
27
copy Chartered Accountants Australia + New Zealand 2017
Current ATO data-matching activities
bull ATO collecting data from banks on
‒ Credit and debit card payments received by businesses
‒ Payments to ride-sourcing drivers
bull Also collecting data from on-selling sites about sellers who sold at least
$12000 worth of goods or services
Tax Administration
Credit and debit card online selling ride-sourcing data-matching
copy Chartered Accountants Australia + New Zealand 2017
Incorrect PAYG instalment variations and GIC
bull ATO says some taxpayers incorrectly varying PAYG instalment rate or
amount
bull Liable to penalty GIC if variation significantly incorrect
bull ATO may contact tax agents to discuss clientsrsquo variations
Tax Administration
14022017
28
copy Chartered Accountants Australia + New Zealand 2017
ATO explains what caused system outage
bull Cause of ATOrsquos Dec 2016 system outage major malfunction of data storage
infrastructure in central computing system
bull ATO insists taxpayer data not lost or compromised
bull PwC to independently review system outage (has expertise with ICT storage
at heart of incident)
bull ATO also conducting internal review focus on key stakeholders
Tax Administration
Announces independent review
copy Chartered Accountants Australia + New Zealand 2017
No grounds to set aside DPO
bull Dubai resident served with amended assessments departure prohibition
order (DPO) while going through customs
bull Federal Court dismissed application to set aside DPO
ndash DPO not issued for improper purpose given taxpayerrsquos significant tax liability ($45m) amp poor compliance record
ndash Australian tax debt not enforceable in UAE
Tax Administration
Bakri v DCT [2017] FCA 20
14022017
29
copy Chartered Accountants Australia + New Zealand 2017
Exemptions from registering with ATO re foreign ownership of water or agricultural land
bull Draft rules to support Register of Foreign Ownership of Water or Agricultural
Land Act 2015 released
bull Water Register from 1 July 2017
bull Draft rules provide reporting exemptions for
ndash Harvestable rights
ndash Irrigation infrastructure operators
ndash Foreign persons re security held under money lending agreement
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Guide to Reportable Tax Positions 2017
bull ATO guide to help companies complete
bull Reportable tax position schedule 2017 (NAT 74066)
bull Reportable tax position early disclosure form 2017 (NAT 74067)
bull RTP Category C (reportable transactions or events) expanded to cover issues
of concern to ATO (eg those in recent taxpayer alerts)
bull Category C questions must be answered if companyrsquos income year ends on
or after 30 June 2017
Tax Administration
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
3
copy Chartered Accountants Australia + New Zealand 2017
Increasing penalties for significant global entities
bull Draft legislation on 2016-17 Budget measure to increase penalties imposed
on companies with global revenue of $1bn or more who breach tax disclosure
obligations
bull Maximum penalty to be increased from $4500 to $450000
bull Proposed date of effect 1 July 2017
Taxation of Legislation
Draft legislation released
copy Chartered Accountants Australia + New Zealand 2017
Increase in unincorporated small business tax discount
bull Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016 (still in House of
Reps) seeks to lift unincorporated small business tax offset threshold to $5m
and incrementally increase offset rate
bull From 1 July 2016 tax offset will rise from 5 to 8
bull ATO will accept tax returns as lodged while Bill before Parliament
bull Taxpayers can then seek amendment if measure enacted amp they didnrsquot claim
offset or if measure not enacted
Taxation of Legislation
ATO admin treatment
14022017
4
copy Chartered Accountants Australia + New Zealand 2017
2017 Autumn Sittings
bull Treasury Laws Amendment (GST Low Value Goods) Bill 2017
ndash GST will apply to low value goods (up to $1000) supplied to Australian consumers by offshore businesses
bull Treasury Laws Amendment (Enterprise Incentives No 1) Bill 2017
ndash Gives taxpayers option to self-assess effective life of certain intangible assets
ndash Amends tax incentives for early stage investors
Bills proposed for introduction
Legislation
copy Chartered Accountants Australia + New Zealand 2017
Corporations Amt (Professional Standards of Financial Advisers) Bill 2016
bull Passed both Houses without amendment
ndash Awaits Royal Assent
bull Amends Corporations Act 2001 to require certain financial advisers to meet
specified education and training standards comply with ethics code
bull Amends Tax Agent Services Act 2009 to enable information sharing
Financial advisers education amp training standards ndash Bill passed
Legislation
14022017
5
copy Chartered Accountants Australia + New Zealand 2017
Treasury Laws Amendment (Combating Multinational Tax Avoidance) Bill
bull Bill introduced into Parliament
bull Expands Pt IVA to include 40 diverted profits tax for significant global
entities ndash from 1 July 2017
ndash Tax imposed by Diverted Profits Tax Bill 2017
bull Increases admin penalties for significant global entities that fail to lodge
returns certain other documents ndash from 1 July 2017
bull Updates transfer pricing rules to include 2016 OECD BEPS amendments to
OECD Transfer Pricing Guidelines ndash from 1 July 2016
DPT increased penalties transfer pricing guidelines
Legislation
copy Chartered Accountants Australia + New Zealand 2017
Tax and Superannuation Laws Amendment (2016 Measures No 2) Bill 2016
bull Passed both Houses without amendment
bull Measures include
ndash Remedial power for FCT to modify law by legislative instrument to ensure
intended purpose of law achieved ndash will apply from Royal Assent
ndash Primary producer income averaging replaces permanent choice to opt out of averaging with 10-year opt-out period ndash will apply from 1 July 2016
ndash LCT exemption for certain public institutions that import or acquire luxury cars for public display ndash will apply from Royal Assent
Tax Bill (No 2) 2016 awaits Royal Assent
Legislation
14022017
6
copy Chartered Accountants Australia + New Zealand 2017
ACNC releases Interpretation Statement on PBIs
bull ACNC Interpretation Statement on meaning of ldquopublic benevolent institutionrdquo
bull ACNC-registered PBIs can seek endorsement from ATO as
‒ tax concession charities (income tax and FBT exemptions GST concessions)
‒ deductible gift recipients
Income
CIS 201603 ndash Public Benevolent Institutions
copy Chartered Accountants Australia + New Zealand 2017
High Court Industry severance scheme not a unit trust for Div 6C purposes
bull FCT wins High Court case
bull Industry severance scheme not a unit trust for tax purposes
bull Workers didnrsquot have ldquounitsrdquo in scheme
Income
ElecNet (Aust) Pty Ltd v FCT [2016] HCA 51
14022017
7
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer resident of Australia under AustMalaysia DTA
bull Taxpayer born in Malaysia Australian citizenship and passport
bull Self-employed as software development consultant
bull For 2014-15 in Australia 279 days in Malaysia 88 days
bull From 1 April 2015 leased room in Malaysia from mother-in-law
bull AAT found taxpayer resident of Australia ndash Malaysian source PSI and
business profits taxable in Australia
Income
Re Tan and FCT [2016] AATA 1062
copy Chartered Accountants Australia + New Zealand 2017
No disclaimer of interest in trust
bull Following audits
‒ Trusts denied carried forward losses
‒ Beneficiaryrsquos income increased by over $12m
bull Before AAT beneficiary said she disclaimed trust interests (this wasnrsquot raised
in her objection)
bull AAT didnrsquot allow objection to be amended to rely on disclaimers ndash FCT would
be prejudiced
Income
Re TVKS and FCT [2016] AATA 1010
14022017
8
copy Chartered Accountants Australia + New Zealand 2017
Home office expenses on floor area basis ndash FCTs method preferred
bull Taxpayer ndash employee electrician
bull Applied for private ruling on home office expenses
bull AAT agreed with FCT that apportionment on ldquofloor areardquo basis appropriate
Deductions
Re HWZG and FCT [2016] AATA 1017
copy Chartered Accountants Australia + New Zealand 2017
MPs allowances reimbursements donations deductions etc
bull Substantial amendments made to Ruling TR 9910
bull Amendments clarity tax treatment of allowances and expenses incurred in
financing holding and maintaining accommodation that MPs purchase or
lease and stay in when travelling
Deductions
Addendum to TR 199910
14022017
9
copy Chartered Accountants Australia + New Zealand 2017
Deduction for bad debt beneficiary of a trust and UPEs
bull Beneficiary not entitled to bad debt deduction for unpaid present entitlement
bull ATO gives two reasons
‒ Trusteersquos equitable obligation to pay UPE not a debt at common law
‒ UPE not ldquoincludedrdquo in beneficiaryrsquos assessable income under Div 6 ITAA 1936 as required by s 25-35(1)(a) ITAA 1997
Deductions
Taxation Determination TD 201619
copy Chartered Accountants Australia + New Zealand 2017
Work-related travel expenses not deductible ndash taxpayer fails burden of proof
bull Test engineer worked for offshore division of Indian company
bull Deductions for travel to India medical insurance disallowed
bull Private expenditure
Deductions
Re Thambiannan and FCT [2016] AATA 1004
14022017
10
copy Chartered Accountants Australia + New Zealand 2017
Commercial website deductibility
bull Detailed ruling on expenditure on websites used for carrying on business
bull Covers deductions for acquiring developing maintaining or modifying
website
Deductions
Taxation Ruling TR 20163
copy Chartered Accountants Australia + New Zealand 2017
Depreciating assets - composite items
bull Draft ruling on whether composite item is single depreciating asset
bull Component parts may be separate depreciating assets if they can be
separately identified or recognised as having commercial and economic
value
Deductions
Draft Taxation Ruling TR 2017D1
14022017
11
copy Chartered Accountants Australia + New Zealand 2017
Effective life of assets ndash drafts released
bull Draft effective lives of assets used in electronic information storage services
(data centre) industry released
bull Draft effective lives of assets used in coal seam gas industry released
bull Proposed date of effect for both 1 July 2017
Deductions
Draft lists released
copy Chartered Accountants Australia + New Zealand 2017
Deduction for cost of tools rejected
bull Taxpayer claimed he bought $24750 worth of tools online paid vendor in
cash from gambling winnings had handwritten tax invoice for 87 hand tools
andor power tools
bull FCT denied deduction imposed 25 shortfall penalty
bull AAT agreed with FCT ndash no tools purchased vendor non-existent fake tax
invoice
Deductions
Re Ishaq and FCT [2017] AATA 35
14022017
12
copy Chartered Accountants Australia + New Zealand 2017
Overtime meal expenses disallowed
bull Deduction for overtime meal expenses disallowed ndash 25 shortfall penalty
affirmed
bull Taxpayer not paid allowance under industrial agreement (as required by s 32-
50 ITAA 1997)
bull Paid same amount each week regardless of how much overtime he worked
Deductions
Re Kael and FCT [2017] AATA 38
copy Chartered Accountants Australia + New Zealand 2017
No deduction or capital loss for guarantee obligation
bull Taxpayers (controllers of trusts) involved in property development
bull Income of 2 family trusts increased by $43m after capital loss of associated
unit trust disallowed
bull Taxpayers claimed they were entitled to $43m deduction or capital loss as
trusts guaranteed business loan which lender (another related entity) had
called on guarantors to meet
bull AAT found insufficient evidence to support existence of guarantee
Deductions
Re Carioti and FCT [2017] AATA 62
14022017
13
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer denied deduction for work expenses of $60000
bull AAT found that mechanical engineer not entitled to deductions for
‒ Car expenses ndash not work related
‒ Self-education costs ndash no nexus with income-producing activities
‒ Other ldquoworkrdquo expenses ndash not substantiated
bull AAT also affirmed 25 shortfall penalty for lack of reasonable care
Deductions
Re Vakiloroaya and FCT [2017] AATA 95
copy Chartered Accountants Australia + New Zealand 2017
Intangible capital improvements made to a pre-CGT asset - a separate asset
bull Intangible capital improvement to pre-CGT asset can be separate CGT asset
bull Example provided of pre-CGT land being rezoned and subdivided ndash ATO says
improvements to land may be separate CGT assets
CGT
Taxation Determination TD 20171
14022017
14
copy Chartered Accountants Australia + New Zealand 2017
GST determining if a recipient is an Australian consumer
bull Draft ruling on Netflix tax
bull Explains when suppliers can rely on automated systems and when they need
to take extra measures to determine customerrsquos GST status
bull Netflix tax applies from 1 July 2017 transitional rules started on
1 July 2016
Indirect Taxes
Draft GST Ruling GSTR 2016D1
copy Chartered Accountants Australia + New Zealand 2017
GST no recovery for margin scheme increasing adjustment
bull Developer sold land to local council
bull Subject to margin scheme
bull Council required to pay GST on the supply
bull Court held council not required to pay increasing adjustment in developerrsquos
BAS
Indirect Taxes
McEwans Australia Pty Ltd v Brisbane City Council [2016] QDC 347
14022017
15
copy Chartered Accountants Australia + New Zealand 2017
GST cross-border law changes and currency conversion
bull Draft determination provides currency conversion options for businesses
impacted by GST cross-border changes
bull Includes method to convert foreign consideration into Australian currency
Indirect Taxes
Draft FOREX 2016D1 GST Foreign Currency Conversion Determination
copy Chartered Accountants Australia + New Zealand 2017
GST on home care and residential care
bull ATO draft guidance documents to help home amp residential care suppliers work
out if their services are GST-free
bull Also explains how GST applies to sub-contracted services
Indirect Taxes
ATO seeks views on guidance material
14022017
16
copy Chartered Accountants Australia + New Zealand 2017
ATO guidance on concessional contributions and constitutionally protected super funds
bull Draft guidance on calculating concessional contributions for defined benefit
interests and constitutionally protected funds
bull Under super reforms extra amount included in concessional contributions
from 1 July 2017 to reflect full amount of accrued benefits for defined benefit
interests
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D11
copy Chartered Accountants Australia + New Zealand 2017
ATO releases 2014-15 SMSF statistical overview
bull 996 of super funds are SMSFs
bull 29 of super assets (totalling $622 billion) in SMSFs
bull 6 of SMSFs held assets under LRBAs with gt 90 of LRBA investments in
real estate
bull 31 growth in number of SMSFs over five years
Taxation of Superannuation
14022017
17
copy Chartered Accountants Australia + New Zealand 2017
SMSFs LRBAs and non-arms length income
bull ATO says two-step process to determine if non-armrsquos length income rules
apply to SMSF limited recourse borrowing arrangement
‒ Are terms of LRBA consistent with safe harbours in PCG 20165
‒ Can SMSF trustee otherwise show that LRBA on armrsquos length terms
bull If yes donrsquot consider TD 201616 (non-armrsquos length LRBAs)
Taxation of Superannuation
ATO info re interaction and application of PCG 20165 and TD 201616
copy Chartered Accountants Australia + New Zealand 2017
Superannuation objective - draft reg released
bull Draft reg sets out subsidiary objectives of super system eg
‒ Managing risks in retirement
‒ Being invested in best interests of fund members
‒ Alleviating fiscal pressures on government
Taxation of Superannuation
Draft Superannuation (Objective) Regulation
14022017
18
copy Chartered Accountants Australia + New Zealand 2017
Superannuation reform total superannuation balance
bull Explains how individuals total superannuation balance is calculated from 30
June 2017
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D12
copy Chartered Accountants Australia + New Zealand 2017
Super reforms $16m pension cap commutations actuarial certificates
bull Draft regs to complement super reforms amp $16m transfer balance cap
released
bull Allow commutation of certain super income streams to reduce excess transfer
balance
bull Actuarial certificate exemption re income stream benefits in retirement phase
bull Broader range of death benefits to be treated as roll-over benefits
Taxation of Superannuation
Draft Treasury Laws Amendment (Fair and Sustainable Super) Regulation
14022017
19
copy Chartered Accountants Australia + New Zealand 2017
Super trustee rollover obligations amid ATO website outage
bull APRA advised RSE licensees in December 2016
‒ It wonrsquot take action for breaches directly related to ATO website outage
‒ RSE licensees not required to give APRA formal notice of such breaches
Taxation of Superannuation
copy Chartered Accountants Australia + New Zealand 2017
Super reforms Defined benefit income streams life expectancy and market-linked pensions
bull Draft Guideline on defined benefit income cap rules and income stream
pensionsannuities paid from non-commutable life expectancy and market-
linked products
bull From 1 July 2017 capped defined benefit income streams
‒ Will count towards $16 million transfer balance cap
‒ Wonrsquot of themselves lead to excess transfer balance
Taxation of Superannuation
Draft Law Companion Guideline LCG 2017D1
14022017
20
copy Chartered Accountants Australia + New Zealand 2017
ATO SuperSeeker
bull SuperSeeker online service for individuals now decommissioned
bull Individuals can findmanage super via myGov
Taxation of Superannuation
Service decommissioned
copy Chartered Accountants Australia + New Zealand 2017
ATO corporate tax transparency report for 2014-15
bull Second annual report on corporate tax transparency released
bull Data from 2015 tax returns of large corporates operating in Australia
bull Once third of listed taxpayers reported no tax payable ndash FCT said donrsquot
assume tax avoidance
bull Of top 100 public or foreign companies six in highest risk quadrant
Tax Administration
2014-15 Report of Entity Tax Information
14022017
21
copy Chartered Accountants Australia + New Zealand 2017
Backpackers tax registration deadline extended for employers
bull From 1 Jan 2017 working holiday maker WHT rate of 15
bull Employers can withhold 15 even if unregistered
bull Unregistered employers wonrsquot be penalised if they register by 31 Jan 2017
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
SMSF trustees (and LRBA trustees) garnishee notices invalid for group payroll tax
bull Custodian company amp SMSFLRBA trustees had payroll tax liability under
grouping rules
bull Custodian sold property held on trust for SMSF trustees
bull Garnishee notices issued to purchasers invalid
bull Garnishee notice canrsquot be used to recover tax from trust property to satisfy
trusteersquos tax debt if debt incurred in another capacity
Tax Administration
Comr of State Revenue v Can Barz Pty Ltd amp Anor [2016] QCA 323
14022017
22
copy Chartered Accountants Australia + New Zealand 2017
Court gives judgment for full tax debt of $11m
bull Taxpayer with $11m tax debt
bull During recovery proceedings taxpayer produced $600000 bank cheque
reducing tax debt to $500000
bull Court gave judgment against taxpayer for $11m ndash said cheque is conditional
payment could be dishonoured
Tax Administration
DCT v Dukes [2016] NSWSC 1759
copy Chartered Accountants Australia + New Zealand 2017
Taxpayersrsquo rights and obligations
bull IGT recommends ATO implement measures to ensure
‒ Taxpayersrsquo Charter at forefront of ATOrsquos interactions with community
‒ ATOrsquos performance against Charter principles measured and publicly reported
bull If stakeholder concerns persist IGT may undertake follow-up review and
make recommendations to government
Tax Administration
IGT Review into the Taxpayers Charter and Taxpayer Protections released
14022017
23
copy Chartered Accountants Australia + New Zealand 2017
Default assessments upheld - burden of proof not satisfied
bull Unexplained deposits to bank accounts controlled by taxpayer
bull Significant gambling at casinos
bull AAT affirmed default assessments
bull Taxpayerrsquos claims that money came from family gifts loans from friends
gambling wins rejected
Tax Administration
Re Nguyen and FCT [2016] AATA 1041
copy Chartered Accountants Australia + New Zealand 2017
No summary judgment for DPN liability - unresolved facts re whether director took reasonable steps
bull Summary judgment in respect of $167000 director penalty notice not granted
bull Unresolved question of fact ndash whether director took reasonable steps to
ensure company complied with ATO payment arrangement
Tax Administration
DCT v Pedley [2016] WADC 166
14022017
24
copy Chartered Accountants Australia + New Zealand 2017
Reminder of easier GST reporting for new small businesses from 19 Jan 2017
bull Newly registered SMEs can lodge simpler BAS from 19 January 2017
‒ Quarterly reporters select Option 2 Calculate GST quarterly and report annually
‒ Monthly reports insert 0 at labels G2 G3 G10 and G11
‒ Annual reporters leave labels G2 G3 G10 and G11 blank
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Review of tax and corporate whistleblower provisions in Australia
bull 2016-17 Federal Budget plan to better protect tax whistleblowers
bull Government now seeks public comments on proposed tax whistleblower
protection
Tax Administration
Consultation paper released
14022017
25
copy Chartered Accountants Australia + New Zealand 2017
Ride sourcing providers
bull ATO to identify ride sourcing drivers who donrsquot meet tax obligations
(registration reporting lodgment payment)
bull Data from financial institutions for 2016-17 and 2017-18
bull ATO wants details of payments from ride sourcing facilitator to ride sourcing
provider
bull Records relating to up to 60000 individuals to be collected
Tax Administration
ATO data matching
copy Chartered Accountants Australia + New Zealand 2017
Simplifying income recognition for NFPs
bull New standards to apply from 1 January 2019
‒ AASB 1058 Income of Not-for-Profit Entities
‒ AASB 2016-7 Amendments to Australian Accounting Standards ndash Deferral of
AASB 15 for Not-for-Profit Entities
‒ AASB 2016-8 Amendments to Australian Accounting Standards ndash Australian Implementation Guidance for Not-for-Profit Entities
Tax Administration
New standards coming
14022017
26
copy Chartered Accountants Australia + New Zealand 2017
Summary judgment against taxpayers for $305m upheld ndashtaxpayers lose appeal re ATO use of Cayman Islands info
bull $305m summary judgment against Vanda Gould and company he controlled
bull Assessments based on info from Cayman Islands tax authority
bull Taxpayers alleged ATO obtained info unlawfully
bull Held assessments valid
Tax Administration
Gould amp Anor v DCT [2017] FCAFC 1
copy Chartered Accountants Australia + New Zealand 2017
TPB Information sheet on payroll service providers
bull Information Sheet gives examples to help payroll service providers determine
if they must register with TPB
Tax Administration
TPB(I) 312016 - Payroll service providers
14022017
27
copy Chartered Accountants Australia + New Zealand 2017
Current ATO data-matching activities
bull ATO collecting data from banks on
‒ Credit and debit card payments received by businesses
‒ Payments to ride-sourcing drivers
bull Also collecting data from on-selling sites about sellers who sold at least
$12000 worth of goods or services
Tax Administration
Credit and debit card online selling ride-sourcing data-matching
copy Chartered Accountants Australia + New Zealand 2017
Incorrect PAYG instalment variations and GIC
bull ATO says some taxpayers incorrectly varying PAYG instalment rate or
amount
bull Liable to penalty GIC if variation significantly incorrect
bull ATO may contact tax agents to discuss clientsrsquo variations
Tax Administration
14022017
28
copy Chartered Accountants Australia + New Zealand 2017
ATO explains what caused system outage
bull Cause of ATOrsquos Dec 2016 system outage major malfunction of data storage
infrastructure in central computing system
bull ATO insists taxpayer data not lost or compromised
bull PwC to independently review system outage (has expertise with ICT storage
at heart of incident)
bull ATO also conducting internal review focus on key stakeholders
Tax Administration
Announces independent review
copy Chartered Accountants Australia + New Zealand 2017
No grounds to set aside DPO
bull Dubai resident served with amended assessments departure prohibition
order (DPO) while going through customs
bull Federal Court dismissed application to set aside DPO
ndash DPO not issued for improper purpose given taxpayerrsquos significant tax liability ($45m) amp poor compliance record
ndash Australian tax debt not enforceable in UAE
Tax Administration
Bakri v DCT [2017] FCA 20
14022017
29
copy Chartered Accountants Australia + New Zealand 2017
Exemptions from registering with ATO re foreign ownership of water or agricultural land
bull Draft rules to support Register of Foreign Ownership of Water or Agricultural
Land Act 2015 released
bull Water Register from 1 July 2017
bull Draft rules provide reporting exemptions for
ndash Harvestable rights
ndash Irrigation infrastructure operators
ndash Foreign persons re security held under money lending agreement
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Guide to Reportable Tax Positions 2017
bull ATO guide to help companies complete
bull Reportable tax position schedule 2017 (NAT 74066)
bull Reportable tax position early disclosure form 2017 (NAT 74067)
bull RTP Category C (reportable transactions or events) expanded to cover issues
of concern to ATO (eg those in recent taxpayer alerts)
bull Category C questions must be answered if companyrsquos income year ends on
or after 30 June 2017
Tax Administration
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
4
copy Chartered Accountants Australia + New Zealand 2017
2017 Autumn Sittings
bull Treasury Laws Amendment (GST Low Value Goods) Bill 2017
ndash GST will apply to low value goods (up to $1000) supplied to Australian consumers by offshore businesses
bull Treasury Laws Amendment (Enterprise Incentives No 1) Bill 2017
ndash Gives taxpayers option to self-assess effective life of certain intangible assets
ndash Amends tax incentives for early stage investors
Bills proposed for introduction
Legislation
copy Chartered Accountants Australia + New Zealand 2017
Corporations Amt (Professional Standards of Financial Advisers) Bill 2016
bull Passed both Houses without amendment
ndash Awaits Royal Assent
bull Amends Corporations Act 2001 to require certain financial advisers to meet
specified education and training standards comply with ethics code
bull Amends Tax Agent Services Act 2009 to enable information sharing
Financial advisers education amp training standards ndash Bill passed
Legislation
14022017
5
copy Chartered Accountants Australia + New Zealand 2017
Treasury Laws Amendment (Combating Multinational Tax Avoidance) Bill
bull Bill introduced into Parliament
bull Expands Pt IVA to include 40 diverted profits tax for significant global
entities ndash from 1 July 2017
ndash Tax imposed by Diverted Profits Tax Bill 2017
bull Increases admin penalties for significant global entities that fail to lodge
returns certain other documents ndash from 1 July 2017
bull Updates transfer pricing rules to include 2016 OECD BEPS amendments to
OECD Transfer Pricing Guidelines ndash from 1 July 2016
DPT increased penalties transfer pricing guidelines
Legislation
copy Chartered Accountants Australia + New Zealand 2017
Tax and Superannuation Laws Amendment (2016 Measures No 2) Bill 2016
bull Passed both Houses without amendment
bull Measures include
ndash Remedial power for FCT to modify law by legislative instrument to ensure
intended purpose of law achieved ndash will apply from Royal Assent
ndash Primary producer income averaging replaces permanent choice to opt out of averaging with 10-year opt-out period ndash will apply from 1 July 2016
ndash LCT exemption for certain public institutions that import or acquire luxury cars for public display ndash will apply from Royal Assent
Tax Bill (No 2) 2016 awaits Royal Assent
Legislation
14022017
6
copy Chartered Accountants Australia + New Zealand 2017
ACNC releases Interpretation Statement on PBIs
bull ACNC Interpretation Statement on meaning of ldquopublic benevolent institutionrdquo
bull ACNC-registered PBIs can seek endorsement from ATO as
‒ tax concession charities (income tax and FBT exemptions GST concessions)
‒ deductible gift recipients
Income
CIS 201603 ndash Public Benevolent Institutions
copy Chartered Accountants Australia + New Zealand 2017
High Court Industry severance scheme not a unit trust for Div 6C purposes
bull FCT wins High Court case
bull Industry severance scheme not a unit trust for tax purposes
bull Workers didnrsquot have ldquounitsrdquo in scheme
Income
ElecNet (Aust) Pty Ltd v FCT [2016] HCA 51
14022017
7
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer resident of Australia under AustMalaysia DTA
bull Taxpayer born in Malaysia Australian citizenship and passport
bull Self-employed as software development consultant
bull For 2014-15 in Australia 279 days in Malaysia 88 days
bull From 1 April 2015 leased room in Malaysia from mother-in-law
bull AAT found taxpayer resident of Australia ndash Malaysian source PSI and
business profits taxable in Australia
Income
Re Tan and FCT [2016] AATA 1062
copy Chartered Accountants Australia + New Zealand 2017
No disclaimer of interest in trust
bull Following audits
‒ Trusts denied carried forward losses
‒ Beneficiaryrsquos income increased by over $12m
bull Before AAT beneficiary said she disclaimed trust interests (this wasnrsquot raised
in her objection)
bull AAT didnrsquot allow objection to be amended to rely on disclaimers ndash FCT would
be prejudiced
Income
Re TVKS and FCT [2016] AATA 1010
14022017
8
copy Chartered Accountants Australia + New Zealand 2017
Home office expenses on floor area basis ndash FCTs method preferred
bull Taxpayer ndash employee electrician
bull Applied for private ruling on home office expenses
bull AAT agreed with FCT that apportionment on ldquofloor areardquo basis appropriate
Deductions
Re HWZG and FCT [2016] AATA 1017
copy Chartered Accountants Australia + New Zealand 2017
MPs allowances reimbursements donations deductions etc
bull Substantial amendments made to Ruling TR 9910
bull Amendments clarity tax treatment of allowances and expenses incurred in
financing holding and maintaining accommodation that MPs purchase or
lease and stay in when travelling
Deductions
Addendum to TR 199910
14022017
9
copy Chartered Accountants Australia + New Zealand 2017
Deduction for bad debt beneficiary of a trust and UPEs
bull Beneficiary not entitled to bad debt deduction for unpaid present entitlement
bull ATO gives two reasons
‒ Trusteersquos equitable obligation to pay UPE not a debt at common law
‒ UPE not ldquoincludedrdquo in beneficiaryrsquos assessable income under Div 6 ITAA 1936 as required by s 25-35(1)(a) ITAA 1997
Deductions
Taxation Determination TD 201619
copy Chartered Accountants Australia + New Zealand 2017
Work-related travel expenses not deductible ndash taxpayer fails burden of proof
bull Test engineer worked for offshore division of Indian company
bull Deductions for travel to India medical insurance disallowed
bull Private expenditure
Deductions
Re Thambiannan and FCT [2016] AATA 1004
14022017
10
copy Chartered Accountants Australia + New Zealand 2017
Commercial website deductibility
bull Detailed ruling on expenditure on websites used for carrying on business
bull Covers deductions for acquiring developing maintaining or modifying
website
Deductions
Taxation Ruling TR 20163
copy Chartered Accountants Australia + New Zealand 2017
Depreciating assets - composite items
bull Draft ruling on whether composite item is single depreciating asset
bull Component parts may be separate depreciating assets if they can be
separately identified or recognised as having commercial and economic
value
Deductions
Draft Taxation Ruling TR 2017D1
14022017
11
copy Chartered Accountants Australia + New Zealand 2017
Effective life of assets ndash drafts released
bull Draft effective lives of assets used in electronic information storage services
(data centre) industry released
bull Draft effective lives of assets used in coal seam gas industry released
bull Proposed date of effect for both 1 July 2017
Deductions
Draft lists released
copy Chartered Accountants Australia + New Zealand 2017
Deduction for cost of tools rejected
bull Taxpayer claimed he bought $24750 worth of tools online paid vendor in
cash from gambling winnings had handwritten tax invoice for 87 hand tools
andor power tools
bull FCT denied deduction imposed 25 shortfall penalty
bull AAT agreed with FCT ndash no tools purchased vendor non-existent fake tax
invoice
Deductions
Re Ishaq and FCT [2017] AATA 35
14022017
12
copy Chartered Accountants Australia + New Zealand 2017
Overtime meal expenses disallowed
bull Deduction for overtime meal expenses disallowed ndash 25 shortfall penalty
affirmed
bull Taxpayer not paid allowance under industrial agreement (as required by s 32-
50 ITAA 1997)
bull Paid same amount each week regardless of how much overtime he worked
Deductions
Re Kael and FCT [2017] AATA 38
copy Chartered Accountants Australia + New Zealand 2017
No deduction or capital loss for guarantee obligation
bull Taxpayers (controllers of trusts) involved in property development
bull Income of 2 family trusts increased by $43m after capital loss of associated
unit trust disallowed
bull Taxpayers claimed they were entitled to $43m deduction or capital loss as
trusts guaranteed business loan which lender (another related entity) had
called on guarantors to meet
bull AAT found insufficient evidence to support existence of guarantee
Deductions
Re Carioti and FCT [2017] AATA 62
14022017
13
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer denied deduction for work expenses of $60000
bull AAT found that mechanical engineer not entitled to deductions for
‒ Car expenses ndash not work related
‒ Self-education costs ndash no nexus with income-producing activities
‒ Other ldquoworkrdquo expenses ndash not substantiated
bull AAT also affirmed 25 shortfall penalty for lack of reasonable care
Deductions
Re Vakiloroaya and FCT [2017] AATA 95
copy Chartered Accountants Australia + New Zealand 2017
Intangible capital improvements made to a pre-CGT asset - a separate asset
bull Intangible capital improvement to pre-CGT asset can be separate CGT asset
bull Example provided of pre-CGT land being rezoned and subdivided ndash ATO says
improvements to land may be separate CGT assets
CGT
Taxation Determination TD 20171
14022017
14
copy Chartered Accountants Australia + New Zealand 2017
GST determining if a recipient is an Australian consumer
bull Draft ruling on Netflix tax
bull Explains when suppliers can rely on automated systems and when they need
to take extra measures to determine customerrsquos GST status
bull Netflix tax applies from 1 July 2017 transitional rules started on
1 July 2016
Indirect Taxes
Draft GST Ruling GSTR 2016D1
copy Chartered Accountants Australia + New Zealand 2017
GST no recovery for margin scheme increasing adjustment
bull Developer sold land to local council
bull Subject to margin scheme
bull Council required to pay GST on the supply
bull Court held council not required to pay increasing adjustment in developerrsquos
BAS
Indirect Taxes
McEwans Australia Pty Ltd v Brisbane City Council [2016] QDC 347
14022017
15
copy Chartered Accountants Australia + New Zealand 2017
GST cross-border law changes and currency conversion
bull Draft determination provides currency conversion options for businesses
impacted by GST cross-border changes
bull Includes method to convert foreign consideration into Australian currency
Indirect Taxes
Draft FOREX 2016D1 GST Foreign Currency Conversion Determination
copy Chartered Accountants Australia + New Zealand 2017
GST on home care and residential care
bull ATO draft guidance documents to help home amp residential care suppliers work
out if their services are GST-free
bull Also explains how GST applies to sub-contracted services
Indirect Taxes
ATO seeks views on guidance material
14022017
16
copy Chartered Accountants Australia + New Zealand 2017
ATO guidance on concessional contributions and constitutionally protected super funds
bull Draft guidance on calculating concessional contributions for defined benefit
interests and constitutionally protected funds
bull Under super reforms extra amount included in concessional contributions
from 1 July 2017 to reflect full amount of accrued benefits for defined benefit
interests
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D11
copy Chartered Accountants Australia + New Zealand 2017
ATO releases 2014-15 SMSF statistical overview
bull 996 of super funds are SMSFs
bull 29 of super assets (totalling $622 billion) in SMSFs
bull 6 of SMSFs held assets under LRBAs with gt 90 of LRBA investments in
real estate
bull 31 growth in number of SMSFs over five years
Taxation of Superannuation
14022017
17
copy Chartered Accountants Australia + New Zealand 2017
SMSFs LRBAs and non-arms length income
bull ATO says two-step process to determine if non-armrsquos length income rules
apply to SMSF limited recourse borrowing arrangement
‒ Are terms of LRBA consistent with safe harbours in PCG 20165
‒ Can SMSF trustee otherwise show that LRBA on armrsquos length terms
bull If yes donrsquot consider TD 201616 (non-armrsquos length LRBAs)
Taxation of Superannuation
ATO info re interaction and application of PCG 20165 and TD 201616
copy Chartered Accountants Australia + New Zealand 2017
Superannuation objective - draft reg released
bull Draft reg sets out subsidiary objectives of super system eg
‒ Managing risks in retirement
‒ Being invested in best interests of fund members
‒ Alleviating fiscal pressures on government
Taxation of Superannuation
Draft Superannuation (Objective) Regulation
14022017
18
copy Chartered Accountants Australia + New Zealand 2017
Superannuation reform total superannuation balance
bull Explains how individuals total superannuation balance is calculated from 30
June 2017
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D12
copy Chartered Accountants Australia + New Zealand 2017
Super reforms $16m pension cap commutations actuarial certificates
bull Draft regs to complement super reforms amp $16m transfer balance cap
released
bull Allow commutation of certain super income streams to reduce excess transfer
balance
bull Actuarial certificate exemption re income stream benefits in retirement phase
bull Broader range of death benefits to be treated as roll-over benefits
Taxation of Superannuation
Draft Treasury Laws Amendment (Fair and Sustainable Super) Regulation
14022017
19
copy Chartered Accountants Australia + New Zealand 2017
Super trustee rollover obligations amid ATO website outage
bull APRA advised RSE licensees in December 2016
‒ It wonrsquot take action for breaches directly related to ATO website outage
‒ RSE licensees not required to give APRA formal notice of such breaches
Taxation of Superannuation
copy Chartered Accountants Australia + New Zealand 2017
Super reforms Defined benefit income streams life expectancy and market-linked pensions
bull Draft Guideline on defined benefit income cap rules and income stream
pensionsannuities paid from non-commutable life expectancy and market-
linked products
bull From 1 July 2017 capped defined benefit income streams
‒ Will count towards $16 million transfer balance cap
‒ Wonrsquot of themselves lead to excess transfer balance
Taxation of Superannuation
Draft Law Companion Guideline LCG 2017D1
14022017
20
copy Chartered Accountants Australia + New Zealand 2017
ATO SuperSeeker
bull SuperSeeker online service for individuals now decommissioned
bull Individuals can findmanage super via myGov
Taxation of Superannuation
Service decommissioned
copy Chartered Accountants Australia + New Zealand 2017
ATO corporate tax transparency report for 2014-15
bull Second annual report on corporate tax transparency released
bull Data from 2015 tax returns of large corporates operating in Australia
bull Once third of listed taxpayers reported no tax payable ndash FCT said donrsquot
assume tax avoidance
bull Of top 100 public or foreign companies six in highest risk quadrant
Tax Administration
2014-15 Report of Entity Tax Information
14022017
21
copy Chartered Accountants Australia + New Zealand 2017
Backpackers tax registration deadline extended for employers
bull From 1 Jan 2017 working holiday maker WHT rate of 15
bull Employers can withhold 15 even if unregistered
bull Unregistered employers wonrsquot be penalised if they register by 31 Jan 2017
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
SMSF trustees (and LRBA trustees) garnishee notices invalid for group payroll tax
bull Custodian company amp SMSFLRBA trustees had payroll tax liability under
grouping rules
bull Custodian sold property held on trust for SMSF trustees
bull Garnishee notices issued to purchasers invalid
bull Garnishee notice canrsquot be used to recover tax from trust property to satisfy
trusteersquos tax debt if debt incurred in another capacity
Tax Administration
Comr of State Revenue v Can Barz Pty Ltd amp Anor [2016] QCA 323
14022017
22
copy Chartered Accountants Australia + New Zealand 2017
Court gives judgment for full tax debt of $11m
bull Taxpayer with $11m tax debt
bull During recovery proceedings taxpayer produced $600000 bank cheque
reducing tax debt to $500000
bull Court gave judgment against taxpayer for $11m ndash said cheque is conditional
payment could be dishonoured
Tax Administration
DCT v Dukes [2016] NSWSC 1759
copy Chartered Accountants Australia + New Zealand 2017
Taxpayersrsquo rights and obligations
bull IGT recommends ATO implement measures to ensure
‒ Taxpayersrsquo Charter at forefront of ATOrsquos interactions with community
‒ ATOrsquos performance against Charter principles measured and publicly reported
bull If stakeholder concerns persist IGT may undertake follow-up review and
make recommendations to government
Tax Administration
IGT Review into the Taxpayers Charter and Taxpayer Protections released
14022017
23
copy Chartered Accountants Australia + New Zealand 2017
Default assessments upheld - burden of proof not satisfied
bull Unexplained deposits to bank accounts controlled by taxpayer
bull Significant gambling at casinos
bull AAT affirmed default assessments
bull Taxpayerrsquos claims that money came from family gifts loans from friends
gambling wins rejected
Tax Administration
Re Nguyen and FCT [2016] AATA 1041
copy Chartered Accountants Australia + New Zealand 2017
No summary judgment for DPN liability - unresolved facts re whether director took reasonable steps
bull Summary judgment in respect of $167000 director penalty notice not granted
bull Unresolved question of fact ndash whether director took reasonable steps to
ensure company complied with ATO payment arrangement
Tax Administration
DCT v Pedley [2016] WADC 166
14022017
24
copy Chartered Accountants Australia + New Zealand 2017
Reminder of easier GST reporting for new small businesses from 19 Jan 2017
bull Newly registered SMEs can lodge simpler BAS from 19 January 2017
‒ Quarterly reporters select Option 2 Calculate GST quarterly and report annually
‒ Monthly reports insert 0 at labels G2 G3 G10 and G11
‒ Annual reporters leave labels G2 G3 G10 and G11 blank
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Review of tax and corporate whistleblower provisions in Australia
bull 2016-17 Federal Budget plan to better protect tax whistleblowers
bull Government now seeks public comments on proposed tax whistleblower
protection
Tax Administration
Consultation paper released
14022017
25
copy Chartered Accountants Australia + New Zealand 2017
Ride sourcing providers
bull ATO to identify ride sourcing drivers who donrsquot meet tax obligations
(registration reporting lodgment payment)
bull Data from financial institutions for 2016-17 and 2017-18
bull ATO wants details of payments from ride sourcing facilitator to ride sourcing
provider
bull Records relating to up to 60000 individuals to be collected
Tax Administration
ATO data matching
copy Chartered Accountants Australia + New Zealand 2017
Simplifying income recognition for NFPs
bull New standards to apply from 1 January 2019
‒ AASB 1058 Income of Not-for-Profit Entities
‒ AASB 2016-7 Amendments to Australian Accounting Standards ndash Deferral of
AASB 15 for Not-for-Profit Entities
‒ AASB 2016-8 Amendments to Australian Accounting Standards ndash Australian Implementation Guidance for Not-for-Profit Entities
Tax Administration
New standards coming
14022017
26
copy Chartered Accountants Australia + New Zealand 2017
Summary judgment against taxpayers for $305m upheld ndashtaxpayers lose appeal re ATO use of Cayman Islands info
bull $305m summary judgment against Vanda Gould and company he controlled
bull Assessments based on info from Cayman Islands tax authority
bull Taxpayers alleged ATO obtained info unlawfully
bull Held assessments valid
Tax Administration
Gould amp Anor v DCT [2017] FCAFC 1
copy Chartered Accountants Australia + New Zealand 2017
TPB Information sheet on payroll service providers
bull Information Sheet gives examples to help payroll service providers determine
if they must register with TPB
Tax Administration
TPB(I) 312016 - Payroll service providers
14022017
27
copy Chartered Accountants Australia + New Zealand 2017
Current ATO data-matching activities
bull ATO collecting data from banks on
‒ Credit and debit card payments received by businesses
‒ Payments to ride-sourcing drivers
bull Also collecting data from on-selling sites about sellers who sold at least
$12000 worth of goods or services
Tax Administration
Credit and debit card online selling ride-sourcing data-matching
copy Chartered Accountants Australia + New Zealand 2017
Incorrect PAYG instalment variations and GIC
bull ATO says some taxpayers incorrectly varying PAYG instalment rate or
amount
bull Liable to penalty GIC if variation significantly incorrect
bull ATO may contact tax agents to discuss clientsrsquo variations
Tax Administration
14022017
28
copy Chartered Accountants Australia + New Zealand 2017
ATO explains what caused system outage
bull Cause of ATOrsquos Dec 2016 system outage major malfunction of data storage
infrastructure in central computing system
bull ATO insists taxpayer data not lost or compromised
bull PwC to independently review system outage (has expertise with ICT storage
at heart of incident)
bull ATO also conducting internal review focus on key stakeholders
Tax Administration
Announces independent review
copy Chartered Accountants Australia + New Zealand 2017
No grounds to set aside DPO
bull Dubai resident served with amended assessments departure prohibition
order (DPO) while going through customs
bull Federal Court dismissed application to set aside DPO
ndash DPO not issued for improper purpose given taxpayerrsquos significant tax liability ($45m) amp poor compliance record
ndash Australian tax debt not enforceable in UAE
Tax Administration
Bakri v DCT [2017] FCA 20
14022017
29
copy Chartered Accountants Australia + New Zealand 2017
Exemptions from registering with ATO re foreign ownership of water or agricultural land
bull Draft rules to support Register of Foreign Ownership of Water or Agricultural
Land Act 2015 released
bull Water Register from 1 July 2017
bull Draft rules provide reporting exemptions for
ndash Harvestable rights
ndash Irrigation infrastructure operators
ndash Foreign persons re security held under money lending agreement
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Guide to Reportable Tax Positions 2017
bull ATO guide to help companies complete
bull Reportable tax position schedule 2017 (NAT 74066)
bull Reportable tax position early disclosure form 2017 (NAT 74067)
bull RTP Category C (reportable transactions or events) expanded to cover issues
of concern to ATO (eg those in recent taxpayer alerts)
bull Category C questions must be answered if companyrsquos income year ends on
or after 30 June 2017
Tax Administration
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
5
copy Chartered Accountants Australia + New Zealand 2017
Treasury Laws Amendment (Combating Multinational Tax Avoidance) Bill
bull Bill introduced into Parliament
bull Expands Pt IVA to include 40 diverted profits tax for significant global
entities ndash from 1 July 2017
ndash Tax imposed by Diverted Profits Tax Bill 2017
bull Increases admin penalties for significant global entities that fail to lodge
returns certain other documents ndash from 1 July 2017
bull Updates transfer pricing rules to include 2016 OECD BEPS amendments to
OECD Transfer Pricing Guidelines ndash from 1 July 2016
DPT increased penalties transfer pricing guidelines
Legislation
copy Chartered Accountants Australia + New Zealand 2017
Tax and Superannuation Laws Amendment (2016 Measures No 2) Bill 2016
bull Passed both Houses without amendment
bull Measures include
ndash Remedial power for FCT to modify law by legislative instrument to ensure
intended purpose of law achieved ndash will apply from Royal Assent
ndash Primary producer income averaging replaces permanent choice to opt out of averaging with 10-year opt-out period ndash will apply from 1 July 2016
ndash LCT exemption for certain public institutions that import or acquire luxury cars for public display ndash will apply from Royal Assent
Tax Bill (No 2) 2016 awaits Royal Assent
Legislation
14022017
6
copy Chartered Accountants Australia + New Zealand 2017
ACNC releases Interpretation Statement on PBIs
bull ACNC Interpretation Statement on meaning of ldquopublic benevolent institutionrdquo
bull ACNC-registered PBIs can seek endorsement from ATO as
‒ tax concession charities (income tax and FBT exemptions GST concessions)
‒ deductible gift recipients
Income
CIS 201603 ndash Public Benevolent Institutions
copy Chartered Accountants Australia + New Zealand 2017
High Court Industry severance scheme not a unit trust for Div 6C purposes
bull FCT wins High Court case
bull Industry severance scheme not a unit trust for tax purposes
bull Workers didnrsquot have ldquounitsrdquo in scheme
Income
ElecNet (Aust) Pty Ltd v FCT [2016] HCA 51
14022017
7
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer resident of Australia under AustMalaysia DTA
bull Taxpayer born in Malaysia Australian citizenship and passport
bull Self-employed as software development consultant
bull For 2014-15 in Australia 279 days in Malaysia 88 days
bull From 1 April 2015 leased room in Malaysia from mother-in-law
bull AAT found taxpayer resident of Australia ndash Malaysian source PSI and
business profits taxable in Australia
Income
Re Tan and FCT [2016] AATA 1062
copy Chartered Accountants Australia + New Zealand 2017
No disclaimer of interest in trust
bull Following audits
‒ Trusts denied carried forward losses
‒ Beneficiaryrsquos income increased by over $12m
bull Before AAT beneficiary said she disclaimed trust interests (this wasnrsquot raised
in her objection)
bull AAT didnrsquot allow objection to be amended to rely on disclaimers ndash FCT would
be prejudiced
Income
Re TVKS and FCT [2016] AATA 1010
14022017
8
copy Chartered Accountants Australia + New Zealand 2017
Home office expenses on floor area basis ndash FCTs method preferred
bull Taxpayer ndash employee electrician
bull Applied for private ruling on home office expenses
bull AAT agreed with FCT that apportionment on ldquofloor areardquo basis appropriate
Deductions
Re HWZG and FCT [2016] AATA 1017
copy Chartered Accountants Australia + New Zealand 2017
MPs allowances reimbursements donations deductions etc
bull Substantial amendments made to Ruling TR 9910
bull Amendments clarity tax treatment of allowances and expenses incurred in
financing holding and maintaining accommodation that MPs purchase or
lease and stay in when travelling
Deductions
Addendum to TR 199910
14022017
9
copy Chartered Accountants Australia + New Zealand 2017
Deduction for bad debt beneficiary of a trust and UPEs
bull Beneficiary not entitled to bad debt deduction for unpaid present entitlement
bull ATO gives two reasons
‒ Trusteersquos equitable obligation to pay UPE not a debt at common law
‒ UPE not ldquoincludedrdquo in beneficiaryrsquos assessable income under Div 6 ITAA 1936 as required by s 25-35(1)(a) ITAA 1997
Deductions
Taxation Determination TD 201619
copy Chartered Accountants Australia + New Zealand 2017
Work-related travel expenses not deductible ndash taxpayer fails burden of proof
bull Test engineer worked for offshore division of Indian company
bull Deductions for travel to India medical insurance disallowed
bull Private expenditure
Deductions
Re Thambiannan and FCT [2016] AATA 1004
14022017
10
copy Chartered Accountants Australia + New Zealand 2017
Commercial website deductibility
bull Detailed ruling on expenditure on websites used for carrying on business
bull Covers deductions for acquiring developing maintaining or modifying
website
Deductions
Taxation Ruling TR 20163
copy Chartered Accountants Australia + New Zealand 2017
Depreciating assets - composite items
bull Draft ruling on whether composite item is single depreciating asset
bull Component parts may be separate depreciating assets if they can be
separately identified or recognised as having commercial and economic
value
Deductions
Draft Taxation Ruling TR 2017D1
14022017
11
copy Chartered Accountants Australia + New Zealand 2017
Effective life of assets ndash drafts released
bull Draft effective lives of assets used in electronic information storage services
(data centre) industry released
bull Draft effective lives of assets used in coal seam gas industry released
bull Proposed date of effect for both 1 July 2017
Deductions
Draft lists released
copy Chartered Accountants Australia + New Zealand 2017
Deduction for cost of tools rejected
bull Taxpayer claimed he bought $24750 worth of tools online paid vendor in
cash from gambling winnings had handwritten tax invoice for 87 hand tools
andor power tools
bull FCT denied deduction imposed 25 shortfall penalty
bull AAT agreed with FCT ndash no tools purchased vendor non-existent fake tax
invoice
Deductions
Re Ishaq and FCT [2017] AATA 35
14022017
12
copy Chartered Accountants Australia + New Zealand 2017
Overtime meal expenses disallowed
bull Deduction for overtime meal expenses disallowed ndash 25 shortfall penalty
affirmed
bull Taxpayer not paid allowance under industrial agreement (as required by s 32-
50 ITAA 1997)
bull Paid same amount each week regardless of how much overtime he worked
Deductions
Re Kael and FCT [2017] AATA 38
copy Chartered Accountants Australia + New Zealand 2017
No deduction or capital loss for guarantee obligation
bull Taxpayers (controllers of trusts) involved in property development
bull Income of 2 family trusts increased by $43m after capital loss of associated
unit trust disallowed
bull Taxpayers claimed they were entitled to $43m deduction or capital loss as
trusts guaranteed business loan which lender (another related entity) had
called on guarantors to meet
bull AAT found insufficient evidence to support existence of guarantee
Deductions
Re Carioti and FCT [2017] AATA 62
14022017
13
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer denied deduction for work expenses of $60000
bull AAT found that mechanical engineer not entitled to deductions for
‒ Car expenses ndash not work related
‒ Self-education costs ndash no nexus with income-producing activities
‒ Other ldquoworkrdquo expenses ndash not substantiated
bull AAT also affirmed 25 shortfall penalty for lack of reasonable care
Deductions
Re Vakiloroaya and FCT [2017] AATA 95
copy Chartered Accountants Australia + New Zealand 2017
Intangible capital improvements made to a pre-CGT asset - a separate asset
bull Intangible capital improvement to pre-CGT asset can be separate CGT asset
bull Example provided of pre-CGT land being rezoned and subdivided ndash ATO says
improvements to land may be separate CGT assets
CGT
Taxation Determination TD 20171
14022017
14
copy Chartered Accountants Australia + New Zealand 2017
GST determining if a recipient is an Australian consumer
bull Draft ruling on Netflix tax
bull Explains when suppliers can rely on automated systems and when they need
to take extra measures to determine customerrsquos GST status
bull Netflix tax applies from 1 July 2017 transitional rules started on
1 July 2016
Indirect Taxes
Draft GST Ruling GSTR 2016D1
copy Chartered Accountants Australia + New Zealand 2017
GST no recovery for margin scheme increasing adjustment
bull Developer sold land to local council
bull Subject to margin scheme
bull Council required to pay GST on the supply
bull Court held council not required to pay increasing adjustment in developerrsquos
BAS
Indirect Taxes
McEwans Australia Pty Ltd v Brisbane City Council [2016] QDC 347
14022017
15
copy Chartered Accountants Australia + New Zealand 2017
GST cross-border law changes and currency conversion
bull Draft determination provides currency conversion options for businesses
impacted by GST cross-border changes
bull Includes method to convert foreign consideration into Australian currency
Indirect Taxes
Draft FOREX 2016D1 GST Foreign Currency Conversion Determination
copy Chartered Accountants Australia + New Zealand 2017
GST on home care and residential care
bull ATO draft guidance documents to help home amp residential care suppliers work
out if their services are GST-free
bull Also explains how GST applies to sub-contracted services
Indirect Taxes
ATO seeks views on guidance material
14022017
16
copy Chartered Accountants Australia + New Zealand 2017
ATO guidance on concessional contributions and constitutionally protected super funds
bull Draft guidance on calculating concessional contributions for defined benefit
interests and constitutionally protected funds
bull Under super reforms extra amount included in concessional contributions
from 1 July 2017 to reflect full amount of accrued benefits for defined benefit
interests
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D11
copy Chartered Accountants Australia + New Zealand 2017
ATO releases 2014-15 SMSF statistical overview
bull 996 of super funds are SMSFs
bull 29 of super assets (totalling $622 billion) in SMSFs
bull 6 of SMSFs held assets under LRBAs with gt 90 of LRBA investments in
real estate
bull 31 growth in number of SMSFs over five years
Taxation of Superannuation
14022017
17
copy Chartered Accountants Australia + New Zealand 2017
SMSFs LRBAs and non-arms length income
bull ATO says two-step process to determine if non-armrsquos length income rules
apply to SMSF limited recourse borrowing arrangement
‒ Are terms of LRBA consistent with safe harbours in PCG 20165
‒ Can SMSF trustee otherwise show that LRBA on armrsquos length terms
bull If yes donrsquot consider TD 201616 (non-armrsquos length LRBAs)
Taxation of Superannuation
ATO info re interaction and application of PCG 20165 and TD 201616
copy Chartered Accountants Australia + New Zealand 2017
Superannuation objective - draft reg released
bull Draft reg sets out subsidiary objectives of super system eg
‒ Managing risks in retirement
‒ Being invested in best interests of fund members
‒ Alleviating fiscal pressures on government
Taxation of Superannuation
Draft Superannuation (Objective) Regulation
14022017
18
copy Chartered Accountants Australia + New Zealand 2017
Superannuation reform total superannuation balance
bull Explains how individuals total superannuation balance is calculated from 30
June 2017
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D12
copy Chartered Accountants Australia + New Zealand 2017
Super reforms $16m pension cap commutations actuarial certificates
bull Draft regs to complement super reforms amp $16m transfer balance cap
released
bull Allow commutation of certain super income streams to reduce excess transfer
balance
bull Actuarial certificate exemption re income stream benefits in retirement phase
bull Broader range of death benefits to be treated as roll-over benefits
Taxation of Superannuation
Draft Treasury Laws Amendment (Fair and Sustainable Super) Regulation
14022017
19
copy Chartered Accountants Australia + New Zealand 2017
Super trustee rollover obligations amid ATO website outage
bull APRA advised RSE licensees in December 2016
‒ It wonrsquot take action for breaches directly related to ATO website outage
‒ RSE licensees not required to give APRA formal notice of such breaches
Taxation of Superannuation
copy Chartered Accountants Australia + New Zealand 2017
Super reforms Defined benefit income streams life expectancy and market-linked pensions
bull Draft Guideline on defined benefit income cap rules and income stream
pensionsannuities paid from non-commutable life expectancy and market-
linked products
bull From 1 July 2017 capped defined benefit income streams
‒ Will count towards $16 million transfer balance cap
‒ Wonrsquot of themselves lead to excess transfer balance
Taxation of Superannuation
Draft Law Companion Guideline LCG 2017D1
14022017
20
copy Chartered Accountants Australia + New Zealand 2017
ATO SuperSeeker
bull SuperSeeker online service for individuals now decommissioned
bull Individuals can findmanage super via myGov
Taxation of Superannuation
Service decommissioned
copy Chartered Accountants Australia + New Zealand 2017
ATO corporate tax transparency report for 2014-15
bull Second annual report on corporate tax transparency released
bull Data from 2015 tax returns of large corporates operating in Australia
bull Once third of listed taxpayers reported no tax payable ndash FCT said donrsquot
assume tax avoidance
bull Of top 100 public or foreign companies six in highest risk quadrant
Tax Administration
2014-15 Report of Entity Tax Information
14022017
21
copy Chartered Accountants Australia + New Zealand 2017
Backpackers tax registration deadline extended for employers
bull From 1 Jan 2017 working holiday maker WHT rate of 15
bull Employers can withhold 15 even if unregistered
bull Unregistered employers wonrsquot be penalised if they register by 31 Jan 2017
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
SMSF trustees (and LRBA trustees) garnishee notices invalid for group payroll tax
bull Custodian company amp SMSFLRBA trustees had payroll tax liability under
grouping rules
bull Custodian sold property held on trust for SMSF trustees
bull Garnishee notices issued to purchasers invalid
bull Garnishee notice canrsquot be used to recover tax from trust property to satisfy
trusteersquos tax debt if debt incurred in another capacity
Tax Administration
Comr of State Revenue v Can Barz Pty Ltd amp Anor [2016] QCA 323
14022017
22
copy Chartered Accountants Australia + New Zealand 2017
Court gives judgment for full tax debt of $11m
bull Taxpayer with $11m tax debt
bull During recovery proceedings taxpayer produced $600000 bank cheque
reducing tax debt to $500000
bull Court gave judgment against taxpayer for $11m ndash said cheque is conditional
payment could be dishonoured
Tax Administration
DCT v Dukes [2016] NSWSC 1759
copy Chartered Accountants Australia + New Zealand 2017
Taxpayersrsquo rights and obligations
bull IGT recommends ATO implement measures to ensure
‒ Taxpayersrsquo Charter at forefront of ATOrsquos interactions with community
‒ ATOrsquos performance against Charter principles measured and publicly reported
bull If stakeholder concerns persist IGT may undertake follow-up review and
make recommendations to government
Tax Administration
IGT Review into the Taxpayers Charter and Taxpayer Protections released
14022017
23
copy Chartered Accountants Australia + New Zealand 2017
Default assessments upheld - burden of proof not satisfied
bull Unexplained deposits to bank accounts controlled by taxpayer
bull Significant gambling at casinos
bull AAT affirmed default assessments
bull Taxpayerrsquos claims that money came from family gifts loans from friends
gambling wins rejected
Tax Administration
Re Nguyen and FCT [2016] AATA 1041
copy Chartered Accountants Australia + New Zealand 2017
No summary judgment for DPN liability - unresolved facts re whether director took reasonable steps
bull Summary judgment in respect of $167000 director penalty notice not granted
bull Unresolved question of fact ndash whether director took reasonable steps to
ensure company complied with ATO payment arrangement
Tax Administration
DCT v Pedley [2016] WADC 166
14022017
24
copy Chartered Accountants Australia + New Zealand 2017
Reminder of easier GST reporting for new small businesses from 19 Jan 2017
bull Newly registered SMEs can lodge simpler BAS from 19 January 2017
‒ Quarterly reporters select Option 2 Calculate GST quarterly and report annually
‒ Monthly reports insert 0 at labels G2 G3 G10 and G11
‒ Annual reporters leave labels G2 G3 G10 and G11 blank
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Review of tax and corporate whistleblower provisions in Australia
bull 2016-17 Federal Budget plan to better protect tax whistleblowers
bull Government now seeks public comments on proposed tax whistleblower
protection
Tax Administration
Consultation paper released
14022017
25
copy Chartered Accountants Australia + New Zealand 2017
Ride sourcing providers
bull ATO to identify ride sourcing drivers who donrsquot meet tax obligations
(registration reporting lodgment payment)
bull Data from financial institutions for 2016-17 and 2017-18
bull ATO wants details of payments from ride sourcing facilitator to ride sourcing
provider
bull Records relating to up to 60000 individuals to be collected
Tax Administration
ATO data matching
copy Chartered Accountants Australia + New Zealand 2017
Simplifying income recognition for NFPs
bull New standards to apply from 1 January 2019
‒ AASB 1058 Income of Not-for-Profit Entities
‒ AASB 2016-7 Amendments to Australian Accounting Standards ndash Deferral of
AASB 15 for Not-for-Profit Entities
‒ AASB 2016-8 Amendments to Australian Accounting Standards ndash Australian Implementation Guidance for Not-for-Profit Entities
Tax Administration
New standards coming
14022017
26
copy Chartered Accountants Australia + New Zealand 2017
Summary judgment against taxpayers for $305m upheld ndashtaxpayers lose appeal re ATO use of Cayman Islands info
bull $305m summary judgment against Vanda Gould and company he controlled
bull Assessments based on info from Cayman Islands tax authority
bull Taxpayers alleged ATO obtained info unlawfully
bull Held assessments valid
Tax Administration
Gould amp Anor v DCT [2017] FCAFC 1
copy Chartered Accountants Australia + New Zealand 2017
TPB Information sheet on payroll service providers
bull Information Sheet gives examples to help payroll service providers determine
if they must register with TPB
Tax Administration
TPB(I) 312016 - Payroll service providers
14022017
27
copy Chartered Accountants Australia + New Zealand 2017
Current ATO data-matching activities
bull ATO collecting data from banks on
‒ Credit and debit card payments received by businesses
‒ Payments to ride-sourcing drivers
bull Also collecting data from on-selling sites about sellers who sold at least
$12000 worth of goods or services
Tax Administration
Credit and debit card online selling ride-sourcing data-matching
copy Chartered Accountants Australia + New Zealand 2017
Incorrect PAYG instalment variations and GIC
bull ATO says some taxpayers incorrectly varying PAYG instalment rate or
amount
bull Liable to penalty GIC if variation significantly incorrect
bull ATO may contact tax agents to discuss clientsrsquo variations
Tax Administration
14022017
28
copy Chartered Accountants Australia + New Zealand 2017
ATO explains what caused system outage
bull Cause of ATOrsquos Dec 2016 system outage major malfunction of data storage
infrastructure in central computing system
bull ATO insists taxpayer data not lost or compromised
bull PwC to independently review system outage (has expertise with ICT storage
at heart of incident)
bull ATO also conducting internal review focus on key stakeholders
Tax Administration
Announces independent review
copy Chartered Accountants Australia + New Zealand 2017
No grounds to set aside DPO
bull Dubai resident served with amended assessments departure prohibition
order (DPO) while going through customs
bull Federal Court dismissed application to set aside DPO
ndash DPO not issued for improper purpose given taxpayerrsquos significant tax liability ($45m) amp poor compliance record
ndash Australian tax debt not enforceable in UAE
Tax Administration
Bakri v DCT [2017] FCA 20
14022017
29
copy Chartered Accountants Australia + New Zealand 2017
Exemptions from registering with ATO re foreign ownership of water or agricultural land
bull Draft rules to support Register of Foreign Ownership of Water or Agricultural
Land Act 2015 released
bull Water Register from 1 July 2017
bull Draft rules provide reporting exemptions for
ndash Harvestable rights
ndash Irrigation infrastructure operators
ndash Foreign persons re security held under money lending agreement
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Guide to Reportable Tax Positions 2017
bull ATO guide to help companies complete
bull Reportable tax position schedule 2017 (NAT 74066)
bull Reportable tax position early disclosure form 2017 (NAT 74067)
bull RTP Category C (reportable transactions or events) expanded to cover issues
of concern to ATO (eg those in recent taxpayer alerts)
bull Category C questions must be answered if companyrsquos income year ends on
or after 30 June 2017
Tax Administration
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
6
copy Chartered Accountants Australia + New Zealand 2017
ACNC releases Interpretation Statement on PBIs
bull ACNC Interpretation Statement on meaning of ldquopublic benevolent institutionrdquo
bull ACNC-registered PBIs can seek endorsement from ATO as
‒ tax concession charities (income tax and FBT exemptions GST concessions)
‒ deductible gift recipients
Income
CIS 201603 ndash Public Benevolent Institutions
copy Chartered Accountants Australia + New Zealand 2017
High Court Industry severance scheme not a unit trust for Div 6C purposes
bull FCT wins High Court case
bull Industry severance scheme not a unit trust for tax purposes
bull Workers didnrsquot have ldquounitsrdquo in scheme
Income
ElecNet (Aust) Pty Ltd v FCT [2016] HCA 51
14022017
7
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer resident of Australia under AustMalaysia DTA
bull Taxpayer born in Malaysia Australian citizenship and passport
bull Self-employed as software development consultant
bull For 2014-15 in Australia 279 days in Malaysia 88 days
bull From 1 April 2015 leased room in Malaysia from mother-in-law
bull AAT found taxpayer resident of Australia ndash Malaysian source PSI and
business profits taxable in Australia
Income
Re Tan and FCT [2016] AATA 1062
copy Chartered Accountants Australia + New Zealand 2017
No disclaimer of interest in trust
bull Following audits
‒ Trusts denied carried forward losses
‒ Beneficiaryrsquos income increased by over $12m
bull Before AAT beneficiary said she disclaimed trust interests (this wasnrsquot raised
in her objection)
bull AAT didnrsquot allow objection to be amended to rely on disclaimers ndash FCT would
be prejudiced
Income
Re TVKS and FCT [2016] AATA 1010
14022017
8
copy Chartered Accountants Australia + New Zealand 2017
Home office expenses on floor area basis ndash FCTs method preferred
bull Taxpayer ndash employee electrician
bull Applied for private ruling on home office expenses
bull AAT agreed with FCT that apportionment on ldquofloor areardquo basis appropriate
Deductions
Re HWZG and FCT [2016] AATA 1017
copy Chartered Accountants Australia + New Zealand 2017
MPs allowances reimbursements donations deductions etc
bull Substantial amendments made to Ruling TR 9910
bull Amendments clarity tax treatment of allowances and expenses incurred in
financing holding and maintaining accommodation that MPs purchase or
lease and stay in when travelling
Deductions
Addendum to TR 199910
14022017
9
copy Chartered Accountants Australia + New Zealand 2017
Deduction for bad debt beneficiary of a trust and UPEs
bull Beneficiary not entitled to bad debt deduction for unpaid present entitlement
bull ATO gives two reasons
‒ Trusteersquos equitable obligation to pay UPE not a debt at common law
‒ UPE not ldquoincludedrdquo in beneficiaryrsquos assessable income under Div 6 ITAA 1936 as required by s 25-35(1)(a) ITAA 1997
Deductions
Taxation Determination TD 201619
copy Chartered Accountants Australia + New Zealand 2017
Work-related travel expenses not deductible ndash taxpayer fails burden of proof
bull Test engineer worked for offshore division of Indian company
bull Deductions for travel to India medical insurance disallowed
bull Private expenditure
Deductions
Re Thambiannan and FCT [2016] AATA 1004
14022017
10
copy Chartered Accountants Australia + New Zealand 2017
Commercial website deductibility
bull Detailed ruling on expenditure on websites used for carrying on business
bull Covers deductions for acquiring developing maintaining or modifying
website
Deductions
Taxation Ruling TR 20163
copy Chartered Accountants Australia + New Zealand 2017
Depreciating assets - composite items
bull Draft ruling on whether composite item is single depreciating asset
bull Component parts may be separate depreciating assets if they can be
separately identified or recognised as having commercial and economic
value
Deductions
Draft Taxation Ruling TR 2017D1
14022017
11
copy Chartered Accountants Australia + New Zealand 2017
Effective life of assets ndash drafts released
bull Draft effective lives of assets used in electronic information storage services
(data centre) industry released
bull Draft effective lives of assets used in coal seam gas industry released
bull Proposed date of effect for both 1 July 2017
Deductions
Draft lists released
copy Chartered Accountants Australia + New Zealand 2017
Deduction for cost of tools rejected
bull Taxpayer claimed he bought $24750 worth of tools online paid vendor in
cash from gambling winnings had handwritten tax invoice for 87 hand tools
andor power tools
bull FCT denied deduction imposed 25 shortfall penalty
bull AAT agreed with FCT ndash no tools purchased vendor non-existent fake tax
invoice
Deductions
Re Ishaq and FCT [2017] AATA 35
14022017
12
copy Chartered Accountants Australia + New Zealand 2017
Overtime meal expenses disallowed
bull Deduction for overtime meal expenses disallowed ndash 25 shortfall penalty
affirmed
bull Taxpayer not paid allowance under industrial agreement (as required by s 32-
50 ITAA 1997)
bull Paid same amount each week regardless of how much overtime he worked
Deductions
Re Kael and FCT [2017] AATA 38
copy Chartered Accountants Australia + New Zealand 2017
No deduction or capital loss for guarantee obligation
bull Taxpayers (controllers of trusts) involved in property development
bull Income of 2 family trusts increased by $43m after capital loss of associated
unit trust disallowed
bull Taxpayers claimed they were entitled to $43m deduction or capital loss as
trusts guaranteed business loan which lender (another related entity) had
called on guarantors to meet
bull AAT found insufficient evidence to support existence of guarantee
Deductions
Re Carioti and FCT [2017] AATA 62
14022017
13
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer denied deduction for work expenses of $60000
bull AAT found that mechanical engineer not entitled to deductions for
‒ Car expenses ndash not work related
‒ Self-education costs ndash no nexus with income-producing activities
‒ Other ldquoworkrdquo expenses ndash not substantiated
bull AAT also affirmed 25 shortfall penalty for lack of reasonable care
Deductions
Re Vakiloroaya and FCT [2017] AATA 95
copy Chartered Accountants Australia + New Zealand 2017
Intangible capital improvements made to a pre-CGT asset - a separate asset
bull Intangible capital improvement to pre-CGT asset can be separate CGT asset
bull Example provided of pre-CGT land being rezoned and subdivided ndash ATO says
improvements to land may be separate CGT assets
CGT
Taxation Determination TD 20171
14022017
14
copy Chartered Accountants Australia + New Zealand 2017
GST determining if a recipient is an Australian consumer
bull Draft ruling on Netflix tax
bull Explains when suppliers can rely on automated systems and when they need
to take extra measures to determine customerrsquos GST status
bull Netflix tax applies from 1 July 2017 transitional rules started on
1 July 2016
Indirect Taxes
Draft GST Ruling GSTR 2016D1
copy Chartered Accountants Australia + New Zealand 2017
GST no recovery for margin scheme increasing adjustment
bull Developer sold land to local council
bull Subject to margin scheme
bull Council required to pay GST on the supply
bull Court held council not required to pay increasing adjustment in developerrsquos
BAS
Indirect Taxes
McEwans Australia Pty Ltd v Brisbane City Council [2016] QDC 347
14022017
15
copy Chartered Accountants Australia + New Zealand 2017
GST cross-border law changes and currency conversion
bull Draft determination provides currency conversion options for businesses
impacted by GST cross-border changes
bull Includes method to convert foreign consideration into Australian currency
Indirect Taxes
Draft FOREX 2016D1 GST Foreign Currency Conversion Determination
copy Chartered Accountants Australia + New Zealand 2017
GST on home care and residential care
bull ATO draft guidance documents to help home amp residential care suppliers work
out if their services are GST-free
bull Also explains how GST applies to sub-contracted services
Indirect Taxes
ATO seeks views on guidance material
14022017
16
copy Chartered Accountants Australia + New Zealand 2017
ATO guidance on concessional contributions and constitutionally protected super funds
bull Draft guidance on calculating concessional contributions for defined benefit
interests and constitutionally protected funds
bull Under super reforms extra amount included in concessional contributions
from 1 July 2017 to reflect full amount of accrued benefits for defined benefit
interests
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D11
copy Chartered Accountants Australia + New Zealand 2017
ATO releases 2014-15 SMSF statistical overview
bull 996 of super funds are SMSFs
bull 29 of super assets (totalling $622 billion) in SMSFs
bull 6 of SMSFs held assets under LRBAs with gt 90 of LRBA investments in
real estate
bull 31 growth in number of SMSFs over five years
Taxation of Superannuation
14022017
17
copy Chartered Accountants Australia + New Zealand 2017
SMSFs LRBAs and non-arms length income
bull ATO says two-step process to determine if non-armrsquos length income rules
apply to SMSF limited recourse borrowing arrangement
‒ Are terms of LRBA consistent with safe harbours in PCG 20165
‒ Can SMSF trustee otherwise show that LRBA on armrsquos length terms
bull If yes donrsquot consider TD 201616 (non-armrsquos length LRBAs)
Taxation of Superannuation
ATO info re interaction and application of PCG 20165 and TD 201616
copy Chartered Accountants Australia + New Zealand 2017
Superannuation objective - draft reg released
bull Draft reg sets out subsidiary objectives of super system eg
‒ Managing risks in retirement
‒ Being invested in best interests of fund members
‒ Alleviating fiscal pressures on government
Taxation of Superannuation
Draft Superannuation (Objective) Regulation
14022017
18
copy Chartered Accountants Australia + New Zealand 2017
Superannuation reform total superannuation balance
bull Explains how individuals total superannuation balance is calculated from 30
June 2017
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D12
copy Chartered Accountants Australia + New Zealand 2017
Super reforms $16m pension cap commutations actuarial certificates
bull Draft regs to complement super reforms amp $16m transfer balance cap
released
bull Allow commutation of certain super income streams to reduce excess transfer
balance
bull Actuarial certificate exemption re income stream benefits in retirement phase
bull Broader range of death benefits to be treated as roll-over benefits
Taxation of Superannuation
Draft Treasury Laws Amendment (Fair and Sustainable Super) Regulation
14022017
19
copy Chartered Accountants Australia + New Zealand 2017
Super trustee rollover obligations amid ATO website outage
bull APRA advised RSE licensees in December 2016
‒ It wonrsquot take action for breaches directly related to ATO website outage
‒ RSE licensees not required to give APRA formal notice of such breaches
Taxation of Superannuation
copy Chartered Accountants Australia + New Zealand 2017
Super reforms Defined benefit income streams life expectancy and market-linked pensions
bull Draft Guideline on defined benefit income cap rules and income stream
pensionsannuities paid from non-commutable life expectancy and market-
linked products
bull From 1 July 2017 capped defined benefit income streams
‒ Will count towards $16 million transfer balance cap
‒ Wonrsquot of themselves lead to excess transfer balance
Taxation of Superannuation
Draft Law Companion Guideline LCG 2017D1
14022017
20
copy Chartered Accountants Australia + New Zealand 2017
ATO SuperSeeker
bull SuperSeeker online service for individuals now decommissioned
bull Individuals can findmanage super via myGov
Taxation of Superannuation
Service decommissioned
copy Chartered Accountants Australia + New Zealand 2017
ATO corporate tax transparency report for 2014-15
bull Second annual report on corporate tax transparency released
bull Data from 2015 tax returns of large corporates operating in Australia
bull Once third of listed taxpayers reported no tax payable ndash FCT said donrsquot
assume tax avoidance
bull Of top 100 public or foreign companies six in highest risk quadrant
Tax Administration
2014-15 Report of Entity Tax Information
14022017
21
copy Chartered Accountants Australia + New Zealand 2017
Backpackers tax registration deadline extended for employers
bull From 1 Jan 2017 working holiday maker WHT rate of 15
bull Employers can withhold 15 even if unregistered
bull Unregistered employers wonrsquot be penalised if they register by 31 Jan 2017
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
SMSF trustees (and LRBA trustees) garnishee notices invalid for group payroll tax
bull Custodian company amp SMSFLRBA trustees had payroll tax liability under
grouping rules
bull Custodian sold property held on trust for SMSF trustees
bull Garnishee notices issued to purchasers invalid
bull Garnishee notice canrsquot be used to recover tax from trust property to satisfy
trusteersquos tax debt if debt incurred in another capacity
Tax Administration
Comr of State Revenue v Can Barz Pty Ltd amp Anor [2016] QCA 323
14022017
22
copy Chartered Accountants Australia + New Zealand 2017
Court gives judgment for full tax debt of $11m
bull Taxpayer with $11m tax debt
bull During recovery proceedings taxpayer produced $600000 bank cheque
reducing tax debt to $500000
bull Court gave judgment against taxpayer for $11m ndash said cheque is conditional
payment could be dishonoured
Tax Administration
DCT v Dukes [2016] NSWSC 1759
copy Chartered Accountants Australia + New Zealand 2017
Taxpayersrsquo rights and obligations
bull IGT recommends ATO implement measures to ensure
‒ Taxpayersrsquo Charter at forefront of ATOrsquos interactions with community
‒ ATOrsquos performance against Charter principles measured and publicly reported
bull If stakeholder concerns persist IGT may undertake follow-up review and
make recommendations to government
Tax Administration
IGT Review into the Taxpayers Charter and Taxpayer Protections released
14022017
23
copy Chartered Accountants Australia + New Zealand 2017
Default assessments upheld - burden of proof not satisfied
bull Unexplained deposits to bank accounts controlled by taxpayer
bull Significant gambling at casinos
bull AAT affirmed default assessments
bull Taxpayerrsquos claims that money came from family gifts loans from friends
gambling wins rejected
Tax Administration
Re Nguyen and FCT [2016] AATA 1041
copy Chartered Accountants Australia + New Zealand 2017
No summary judgment for DPN liability - unresolved facts re whether director took reasonable steps
bull Summary judgment in respect of $167000 director penalty notice not granted
bull Unresolved question of fact ndash whether director took reasonable steps to
ensure company complied with ATO payment arrangement
Tax Administration
DCT v Pedley [2016] WADC 166
14022017
24
copy Chartered Accountants Australia + New Zealand 2017
Reminder of easier GST reporting for new small businesses from 19 Jan 2017
bull Newly registered SMEs can lodge simpler BAS from 19 January 2017
‒ Quarterly reporters select Option 2 Calculate GST quarterly and report annually
‒ Monthly reports insert 0 at labels G2 G3 G10 and G11
‒ Annual reporters leave labels G2 G3 G10 and G11 blank
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Review of tax and corporate whistleblower provisions in Australia
bull 2016-17 Federal Budget plan to better protect tax whistleblowers
bull Government now seeks public comments on proposed tax whistleblower
protection
Tax Administration
Consultation paper released
14022017
25
copy Chartered Accountants Australia + New Zealand 2017
Ride sourcing providers
bull ATO to identify ride sourcing drivers who donrsquot meet tax obligations
(registration reporting lodgment payment)
bull Data from financial institutions for 2016-17 and 2017-18
bull ATO wants details of payments from ride sourcing facilitator to ride sourcing
provider
bull Records relating to up to 60000 individuals to be collected
Tax Administration
ATO data matching
copy Chartered Accountants Australia + New Zealand 2017
Simplifying income recognition for NFPs
bull New standards to apply from 1 January 2019
‒ AASB 1058 Income of Not-for-Profit Entities
‒ AASB 2016-7 Amendments to Australian Accounting Standards ndash Deferral of
AASB 15 for Not-for-Profit Entities
‒ AASB 2016-8 Amendments to Australian Accounting Standards ndash Australian Implementation Guidance for Not-for-Profit Entities
Tax Administration
New standards coming
14022017
26
copy Chartered Accountants Australia + New Zealand 2017
Summary judgment against taxpayers for $305m upheld ndashtaxpayers lose appeal re ATO use of Cayman Islands info
bull $305m summary judgment against Vanda Gould and company he controlled
bull Assessments based on info from Cayman Islands tax authority
bull Taxpayers alleged ATO obtained info unlawfully
bull Held assessments valid
Tax Administration
Gould amp Anor v DCT [2017] FCAFC 1
copy Chartered Accountants Australia + New Zealand 2017
TPB Information sheet on payroll service providers
bull Information Sheet gives examples to help payroll service providers determine
if they must register with TPB
Tax Administration
TPB(I) 312016 - Payroll service providers
14022017
27
copy Chartered Accountants Australia + New Zealand 2017
Current ATO data-matching activities
bull ATO collecting data from banks on
‒ Credit and debit card payments received by businesses
‒ Payments to ride-sourcing drivers
bull Also collecting data from on-selling sites about sellers who sold at least
$12000 worth of goods or services
Tax Administration
Credit and debit card online selling ride-sourcing data-matching
copy Chartered Accountants Australia + New Zealand 2017
Incorrect PAYG instalment variations and GIC
bull ATO says some taxpayers incorrectly varying PAYG instalment rate or
amount
bull Liable to penalty GIC if variation significantly incorrect
bull ATO may contact tax agents to discuss clientsrsquo variations
Tax Administration
14022017
28
copy Chartered Accountants Australia + New Zealand 2017
ATO explains what caused system outage
bull Cause of ATOrsquos Dec 2016 system outage major malfunction of data storage
infrastructure in central computing system
bull ATO insists taxpayer data not lost or compromised
bull PwC to independently review system outage (has expertise with ICT storage
at heart of incident)
bull ATO also conducting internal review focus on key stakeholders
Tax Administration
Announces independent review
copy Chartered Accountants Australia + New Zealand 2017
No grounds to set aside DPO
bull Dubai resident served with amended assessments departure prohibition
order (DPO) while going through customs
bull Federal Court dismissed application to set aside DPO
ndash DPO not issued for improper purpose given taxpayerrsquos significant tax liability ($45m) amp poor compliance record
ndash Australian tax debt not enforceable in UAE
Tax Administration
Bakri v DCT [2017] FCA 20
14022017
29
copy Chartered Accountants Australia + New Zealand 2017
Exemptions from registering with ATO re foreign ownership of water or agricultural land
bull Draft rules to support Register of Foreign Ownership of Water or Agricultural
Land Act 2015 released
bull Water Register from 1 July 2017
bull Draft rules provide reporting exemptions for
ndash Harvestable rights
ndash Irrigation infrastructure operators
ndash Foreign persons re security held under money lending agreement
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Guide to Reportable Tax Positions 2017
bull ATO guide to help companies complete
bull Reportable tax position schedule 2017 (NAT 74066)
bull Reportable tax position early disclosure form 2017 (NAT 74067)
bull RTP Category C (reportable transactions or events) expanded to cover issues
of concern to ATO (eg those in recent taxpayer alerts)
bull Category C questions must be answered if companyrsquos income year ends on
or after 30 June 2017
Tax Administration
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
7
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer resident of Australia under AustMalaysia DTA
bull Taxpayer born in Malaysia Australian citizenship and passport
bull Self-employed as software development consultant
bull For 2014-15 in Australia 279 days in Malaysia 88 days
bull From 1 April 2015 leased room in Malaysia from mother-in-law
bull AAT found taxpayer resident of Australia ndash Malaysian source PSI and
business profits taxable in Australia
Income
Re Tan and FCT [2016] AATA 1062
copy Chartered Accountants Australia + New Zealand 2017
No disclaimer of interest in trust
bull Following audits
‒ Trusts denied carried forward losses
‒ Beneficiaryrsquos income increased by over $12m
bull Before AAT beneficiary said she disclaimed trust interests (this wasnrsquot raised
in her objection)
bull AAT didnrsquot allow objection to be amended to rely on disclaimers ndash FCT would
be prejudiced
Income
Re TVKS and FCT [2016] AATA 1010
14022017
8
copy Chartered Accountants Australia + New Zealand 2017
Home office expenses on floor area basis ndash FCTs method preferred
bull Taxpayer ndash employee electrician
bull Applied for private ruling on home office expenses
bull AAT agreed with FCT that apportionment on ldquofloor areardquo basis appropriate
Deductions
Re HWZG and FCT [2016] AATA 1017
copy Chartered Accountants Australia + New Zealand 2017
MPs allowances reimbursements donations deductions etc
bull Substantial amendments made to Ruling TR 9910
bull Amendments clarity tax treatment of allowances and expenses incurred in
financing holding and maintaining accommodation that MPs purchase or
lease and stay in when travelling
Deductions
Addendum to TR 199910
14022017
9
copy Chartered Accountants Australia + New Zealand 2017
Deduction for bad debt beneficiary of a trust and UPEs
bull Beneficiary not entitled to bad debt deduction for unpaid present entitlement
bull ATO gives two reasons
‒ Trusteersquos equitable obligation to pay UPE not a debt at common law
‒ UPE not ldquoincludedrdquo in beneficiaryrsquos assessable income under Div 6 ITAA 1936 as required by s 25-35(1)(a) ITAA 1997
Deductions
Taxation Determination TD 201619
copy Chartered Accountants Australia + New Zealand 2017
Work-related travel expenses not deductible ndash taxpayer fails burden of proof
bull Test engineer worked for offshore division of Indian company
bull Deductions for travel to India medical insurance disallowed
bull Private expenditure
Deductions
Re Thambiannan and FCT [2016] AATA 1004
14022017
10
copy Chartered Accountants Australia + New Zealand 2017
Commercial website deductibility
bull Detailed ruling on expenditure on websites used for carrying on business
bull Covers deductions for acquiring developing maintaining or modifying
website
Deductions
Taxation Ruling TR 20163
copy Chartered Accountants Australia + New Zealand 2017
Depreciating assets - composite items
bull Draft ruling on whether composite item is single depreciating asset
bull Component parts may be separate depreciating assets if they can be
separately identified or recognised as having commercial and economic
value
Deductions
Draft Taxation Ruling TR 2017D1
14022017
11
copy Chartered Accountants Australia + New Zealand 2017
Effective life of assets ndash drafts released
bull Draft effective lives of assets used in electronic information storage services
(data centre) industry released
bull Draft effective lives of assets used in coal seam gas industry released
bull Proposed date of effect for both 1 July 2017
Deductions
Draft lists released
copy Chartered Accountants Australia + New Zealand 2017
Deduction for cost of tools rejected
bull Taxpayer claimed he bought $24750 worth of tools online paid vendor in
cash from gambling winnings had handwritten tax invoice for 87 hand tools
andor power tools
bull FCT denied deduction imposed 25 shortfall penalty
bull AAT agreed with FCT ndash no tools purchased vendor non-existent fake tax
invoice
Deductions
Re Ishaq and FCT [2017] AATA 35
14022017
12
copy Chartered Accountants Australia + New Zealand 2017
Overtime meal expenses disallowed
bull Deduction for overtime meal expenses disallowed ndash 25 shortfall penalty
affirmed
bull Taxpayer not paid allowance under industrial agreement (as required by s 32-
50 ITAA 1997)
bull Paid same amount each week regardless of how much overtime he worked
Deductions
Re Kael and FCT [2017] AATA 38
copy Chartered Accountants Australia + New Zealand 2017
No deduction or capital loss for guarantee obligation
bull Taxpayers (controllers of trusts) involved in property development
bull Income of 2 family trusts increased by $43m after capital loss of associated
unit trust disallowed
bull Taxpayers claimed they were entitled to $43m deduction or capital loss as
trusts guaranteed business loan which lender (another related entity) had
called on guarantors to meet
bull AAT found insufficient evidence to support existence of guarantee
Deductions
Re Carioti and FCT [2017] AATA 62
14022017
13
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer denied deduction for work expenses of $60000
bull AAT found that mechanical engineer not entitled to deductions for
‒ Car expenses ndash not work related
‒ Self-education costs ndash no nexus with income-producing activities
‒ Other ldquoworkrdquo expenses ndash not substantiated
bull AAT also affirmed 25 shortfall penalty for lack of reasonable care
Deductions
Re Vakiloroaya and FCT [2017] AATA 95
copy Chartered Accountants Australia + New Zealand 2017
Intangible capital improvements made to a pre-CGT asset - a separate asset
bull Intangible capital improvement to pre-CGT asset can be separate CGT asset
bull Example provided of pre-CGT land being rezoned and subdivided ndash ATO says
improvements to land may be separate CGT assets
CGT
Taxation Determination TD 20171
14022017
14
copy Chartered Accountants Australia + New Zealand 2017
GST determining if a recipient is an Australian consumer
bull Draft ruling on Netflix tax
bull Explains when suppliers can rely on automated systems and when they need
to take extra measures to determine customerrsquos GST status
bull Netflix tax applies from 1 July 2017 transitional rules started on
1 July 2016
Indirect Taxes
Draft GST Ruling GSTR 2016D1
copy Chartered Accountants Australia + New Zealand 2017
GST no recovery for margin scheme increasing adjustment
bull Developer sold land to local council
bull Subject to margin scheme
bull Council required to pay GST on the supply
bull Court held council not required to pay increasing adjustment in developerrsquos
BAS
Indirect Taxes
McEwans Australia Pty Ltd v Brisbane City Council [2016] QDC 347
14022017
15
copy Chartered Accountants Australia + New Zealand 2017
GST cross-border law changes and currency conversion
bull Draft determination provides currency conversion options for businesses
impacted by GST cross-border changes
bull Includes method to convert foreign consideration into Australian currency
Indirect Taxes
Draft FOREX 2016D1 GST Foreign Currency Conversion Determination
copy Chartered Accountants Australia + New Zealand 2017
GST on home care and residential care
bull ATO draft guidance documents to help home amp residential care suppliers work
out if their services are GST-free
bull Also explains how GST applies to sub-contracted services
Indirect Taxes
ATO seeks views on guidance material
14022017
16
copy Chartered Accountants Australia + New Zealand 2017
ATO guidance on concessional contributions and constitutionally protected super funds
bull Draft guidance on calculating concessional contributions for defined benefit
interests and constitutionally protected funds
bull Under super reforms extra amount included in concessional contributions
from 1 July 2017 to reflect full amount of accrued benefits for defined benefit
interests
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D11
copy Chartered Accountants Australia + New Zealand 2017
ATO releases 2014-15 SMSF statistical overview
bull 996 of super funds are SMSFs
bull 29 of super assets (totalling $622 billion) in SMSFs
bull 6 of SMSFs held assets under LRBAs with gt 90 of LRBA investments in
real estate
bull 31 growth in number of SMSFs over five years
Taxation of Superannuation
14022017
17
copy Chartered Accountants Australia + New Zealand 2017
SMSFs LRBAs and non-arms length income
bull ATO says two-step process to determine if non-armrsquos length income rules
apply to SMSF limited recourse borrowing arrangement
‒ Are terms of LRBA consistent with safe harbours in PCG 20165
‒ Can SMSF trustee otherwise show that LRBA on armrsquos length terms
bull If yes donrsquot consider TD 201616 (non-armrsquos length LRBAs)
Taxation of Superannuation
ATO info re interaction and application of PCG 20165 and TD 201616
copy Chartered Accountants Australia + New Zealand 2017
Superannuation objective - draft reg released
bull Draft reg sets out subsidiary objectives of super system eg
‒ Managing risks in retirement
‒ Being invested in best interests of fund members
‒ Alleviating fiscal pressures on government
Taxation of Superannuation
Draft Superannuation (Objective) Regulation
14022017
18
copy Chartered Accountants Australia + New Zealand 2017
Superannuation reform total superannuation balance
bull Explains how individuals total superannuation balance is calculated from 30
June 2017
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D12
copy Chartered Accountants Australia + New Zealand 2017
Super reforms $16m pension cap commutations actuarial certificates
bull Draft regs to complement super reforms amp $16m transfer balance cap
released
bull Allow commutation of certain super income streams to reduce excess transfer
balance
bull Actuarial certificate exemption re income stream benefits in retirement phase
bull Broader range of death benefits to be treated as roll-over benefits
Taxation of Superannuation
Draft Treasury Laws Amendment (Fair and Sustainable Super) Regulation
14022017
19
copy Chartered Accountants Australia + New Zealand 2017
Super trustee rollover obligations amid ATO website outage
bull APRA advised RSE licensees in December 2016
‒ It wonrsquot take action for breaches directly related to ATO website outage
‒ RSE licensees not required to give APRA formal notice of such breaches
Taxation of Superannuation
copy Chartered Accountants Australia + New Zealand 2017
Super reforms Defined benefit income streams life expectancy and market-linked pensions
bull Draft Guideline on defined benefit income cap rules and income stream
pensionsannuities paid from non-commutable life expectancy and market-
linked products
bull From 1 July 2017 capped defined benefit income streams
‒ Will count towards $16 million transfer balance cap
‒ Wonrsquot of themselves lead to excess transfer balance
Taxation of Superannuation
Draft Law Companion Guideline LCG 2017D1
14022017
20
copy Chartered Accountants Australia + New Zealand 2017
ATO SuperSeeker
bull SuperSeeker online service for individuals now decommissioned
bull Individuals can findmanage super via myGov
Taxation of Superannuation
Service decommissioned
copy Chartered Accountants Australia + New Zealand 2017
ATO corporate tax transparency report for 2014-15
bull Second annual report on corporate tax transparency released
bull Data from 2015 tax returns of large corporates operating in Australia
bull Once third of listed taxpayers reported no tax payable ndash FCT said donrsquot
assume tax avoidance
bull Of top 100 public or foreign companies six in highest risk quadrant
Tax Administration
2014-15 Report of Entity Tax Information
14022017
21
copy Chartered Accountants Australia + New Zealand 2017
Backpackers tax registration deadline extended for employers
bull From 1 Jan 2017 working holiday maker WHT rate of 15
bull Employers can withhold 15 even if unregistered
bull Unregistered employers wonrsquot be penalised if they register by 31 Jan 2017
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
SMSF trustees (and LRBA trustees) garnishee notices invalid for group payroll tax
bull Custodian company amp SMSFLRBA trustees had payroll tax liability under
grouping rules
bull Custodian sold property held on trust for SMSF trustees
bull Garnishee notices issued to purchasers invalid
bull Garnishee notice canrsquot be used to recover tax from trust property to satisfy
trusteersquos tax debt if debt incurred in another capacity
Tax Administration
Comr of State Revenue v Can Barz Pty Ltd amp Anor [2016] QCA 323
14022017
22
copy Chartered Accountants Australia + New Zealand 2017
Court gives judgment for full tax debt of $11m
bull Taxpayer with $11m tax debt
bull During recovery proceedings taxpayer produced $600000 bank cheque
reducing tax debt to $500000
bull Court gave judgment against taxpayer for $11m ndash said cheque is conditional
payment could be dishonoured
Tax Administration
DCT v Dukes [2016] NSWSC 1759
copy Chartered Accountants Australia + New Zealand 2017
Taxpayersrsquo rights and obligations
bull IGT recommends ATO implement measures to ensure
‒ Taxpayersrsquo Charter at forefront of ATOrsquos interactions with community
‒ ATOrsquos performance against Charter principles measured and publicly reported
bull If stakeholder concerns persist IGT may undertake follow-up review and
make recommendations to government
Tax Administration
IGT Review into the Taxpayers Charter and Taxpayer Protections released
14022017
23
copy Chartered Accountants Australia + New Zealand 2017
Default assessments upheld - burden of proof not satisfied
bull Unexplained deposits to bank accounts controlled by taxpayer
bull Significant gambling at casinos
bull AAT affirmed default assessments
bull Taxpayerrsquos claims that money came from family gifts loans from friends
gambling wins rejected
Tax Administration
Re Nguyen and FCT [2016] AATA 1041
copy Chartered Accountants Australia + New Zealand 2017
No summary judgment for DPN liability - unresolved facts re whether director took reasonable steps
bull Summary judgment in respect of $167000 director penalty notice not granted
bull Unresolved question of fact ndash whether director took reasonable steps to
ensure company complied with ATO payment arrangement
Tax Administration
DCT v Pedley [2016] WADC 166
14022017
24
copy Chartered Accountants Australia + New Zealand 2017
Reminder of easier GST reporting for new small businesses from 19 Jan 2017
bull Newly registered SMEs can lodge simpler BAS from 19 January 2017
‒ Quarterly reporters select Option 2 Calculate GST quarterly and report annually
‒ Monthly reports insert 0 at labels G2 G3 G10 and G11
‒ Annual reporters leave labels G2 G3 G10 and G11 blank
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Review of tax and corporate whistleblower provisions in Australia
bull 2016-17 Federal Budget plan to better protect tax whistleblowers
bull Government now seeks public comments on proposed tax whistleblower
protection
Tax Administration
Consultation paper released
14022017
25
copy Chartered Accountants Australia + New Zealand 2017
Ride sourcing providers
bull ATO to identify ride sourcing drivers who donrsquot meet tax obligations
(registration reporting lodgment payment)
bull Data from financial institutions for 2016-17 and 2017-18
bull ATO wants details of payments from ride sourcing facilitator to ride sourcing
provider
bull Records relating to up to 60000 individuals to be collected
Tax Administration
ATO data matching
copy Chartered Accountants Australia + New Zealand 2017
Simplifying income recognition for NFPs
bull New standards to apply from 1 January 2019
‒ AASB 1058 Income of Not-for-Profit Entities
‒ AASB 2016-7 Amendments to Australian Accounting Standards ndash Deferral of
AASB 15 for Not-for-Profit Entities
‒ AASB 2016-8 Amendments to Australian Accounting Standards ndash Australian Implementation Guidance for Not-for-Profit Entities
Tax Administration
New standards coming
14022017
26
copy Chartered Accountants Australia + New Zealand 2017
Summary judgment against taxpayers for $305m upheld ndashtaxpayers lose appeal re ATO use of Cayman Islands info
bull $305m summary judgment against Vanda Gould and company he controlled
bull Assessments based on info from Cayman Islands tax authority
bull Taxpayers alleged ATO obtained info unlawfully
bull Held assessments valid
Tax Administration
Gould amp Anor v DCT [2017] FCAFC 1
copy Chartered Accountants Australia + New Zealand 2017
TPB Information sheet on payroll service providers
bull Information Sheet gives examples to help payroll service providers determine
if they must register with TPB
Tax Administration
TPB(I) 312016 - Payroll service providers
14022017
27
copy Chartered Accountants Australia + New Zealand 2017
Current ATO data-matching activities
bull ATO collecting data from banks on
‒ Credit and debit card payments received by businesses
‒ Payments to ride-sourcing drivers
bull Also collecting data from on-selling sites about sellers who sold at least
$12000 worth of goods or services
Tax Administration
Credit and debit card online selling ride-sourcing data-matching
copy Chartered Accountants Australia + New Zealand 2017
Incorrect PAYG instalment variations and GIC
bull ATO says some taxpayers incorrectly varying PAYG instalment rate or
amount
bull Liable to penalty GIC if variation significantly incorrect
bull ATO may contact tax agents to discuss clientsrsquo variations
Tax Administration
14022017
28
copy Chartered Accountants Australia + New Zealand 2017
ATO explains what caused system outage
bull Cause of ATOrsquos Dec 2016 system outage major malfunction of data storage
infrastructure in central computing system
bull ATO insists taxpayer data not lost or compromised
bull PwC to independently review system outage (has expertise with ICT storage
at heart of incident)
bull ATO also conducting internal review focus on key stakeholders
Tax Administration
Announces independent review
copy Chartered Accountants Australia + New Zealand 2017
No grounds to set aside DPO
bull Dubai resident served with amended assessments departure prohibition
order (DPO) while going through customs
bull Federal Court dismissed application to set aside DPO
ndash DPO not issued for improper purpose given taxpayerrsquos significant tax liability ($45m) amp poor compliance record
ndash Australian tax debt not enforceable in UAE
Tax Administration
Bakri v DCT [2017] FCA 20
14022017
29
copy Chartered Accountants Australia + New Zealand 2017
Exemptions from registering with ATO re foreign ownership of water or agricultural land
bull Draft rules to support Register of Foreign Ownership of Water or Agricultural
Land Act 2015 released
bull Water Register from 1 July 2017
bull Draft rules provide reporting exemptions for
ndash Harvestable rights
ndash Irrigation infrastructure operators
ndash Foreign persons re security held under money lending agreement
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Guide to Reportable Tax Positions 2017
bull ATO guide to help companies complete
bull Reportable tax position schedule 2017 (NAT 74066)
bull Reportable tax position early disclosure form 2017 (NAT 74067)
bull RTP Category C (reportable transactions or events) expanded to cover issues
of concern to ATO (eg those in recent taxpayer alerts)
bull Category C questions must be answered if companyrsquos income year ends on
or after 30 June 2017
Tax Administration
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
8
copy Chartered Accountants Australia + New Zealand 2017
Home office expenses on floor area basis ndash FCTs method preferred
bull Taxpayer ndash employee electrician
bull Applied for private ruling on home office expenses
bull AAT agreed with FCT that apportionment on ldquofloor areardquo basis appropriate
Deductions
Re HWZG and FCT [2016] AATA 1017
copy Chartered Accountants Australia + New Zealand 2017
MPs allowances reimbursements donations deductions etc
bull Substantial amendments made to Ruling TR 9910
bull Amendments clarity tax treatment of allowances and expenses incurred in
financing holding and maintaining accommodation that MPs purchase or
lease and stay in when travelling
Deductions
Addendum to TR 199910
14022017
9
copy Chartered Accountants Australia + New Zealand 2017
Deduction for bad debt beneficiary of a trust and UPEs
bull Beneficiary not entitled to bad debt deduction for unpaid present entitlement
bull ATO gives two reasons
‒ Trusteersquos equitable obligation to pay UPE not a debt at common law
‒ UPE not ldquoincludedrdquo in beneficiaryrsquos assessable income under Div 6 ITAA 1936 as required by s 25-35(1)(a) ITAA 1997
Deductions
Taxation Determination TD 201619
copy Chartered Accountants Australia + New Zealand 2017
Work-related travel expenses not deductible ndash taxpayer fails burden of proof
bull Test engineer worked for offshore division of Indian company
bull Deductions for travel to India medical insurance disallowed
bull Private expenditure
Deductions
Re Thambiannan and FCT [2016] AATA 1004
14022017
10
copy Chartered Accountants Australia + New Zealand 2017
Commercial website deductibility
bull Detailed ruling on expenditure on websites used for carrying on business
bull Covers deductions for acquiring developing maintaining or modifying
website
Deductions
Taxation Ruling TR 20163
copy Chartered Accountants Australia + New Zealand 2017
Depreciating assets - composite items
bull Draft ruling on whether composite item is single depreciating asset
bull Component parts may be separate depreciating assets if they can be
separately identified or recognised as having commercial and economic
value
Deductions
Draft Taxation Ruling TR 2017D1
14022017
11
copy Chartered Accountants Australia + New Zealand 2017
Effective life of assets ndash drafts released
bull Draft effective lives of assets used in electronic information storage services
(data centre) industry released
bull Draft effective lives of assets used in coal seam gas industry released
bull Proposed date of effect for both 1 July 2017
Deductions
Draft lists released
copy Chartered Accountants Australia + New Zealand 2017
Deduction for cost of tools rejected
bull Taxpayer claimed he bought $24750 worth of tools online paid vendor in
cash from gambling winnings had handwritten tax invoice for 87 hand tools
andor power tools
bull FCT denied deduction imposed 25 shortfall penalty
bull AAT agreed with FCT ndash no tools purchased vendor non-existent fake tax
invoice
Deductions
Re Ishaq and FCT [2017] AATA 35
14022017
12
copy Chartered Accountants Australia + New Zealand 2017
Overtime meal expenses disallowed
bull Deduction for overtime meal expenses disallowed ndash 25 shortfall penalty
affirmed
bull Taxpayer not paid allowance under industrial agreement (as required by s 32-
50 ITAA 1997)
bull Paid same amount each week regardless of how much overtime he worked
Deductions
Re Kael and FCT [2017] AATA 38
copy Chartered Accountants Australia + New Zealand 2017
No deduction or capital loss for guarantee obligation
bull Taxpayers (controllers of trusts) involved in property development
bull Income of 2 family trusts increased by $43m after capital loss of associated
unit trust disallowed
bull Taxpayers claimed they were entitled to $43m deduction or capital loss as
trusts guaranteed business loan which lender (another related entity) had
called on guarantors to meet
bull AAT found insufficient evidence to support existence of guarantee
Deductions
Re Carioti and FCT [2017] AATA 62
14022017
13
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer denied deduction for work expenses of $60000
bull AAT found that mechanical engineer not entitled to deductions for
‒ Car expenses ndash not work related
‒ Self-education costs ndash no nexus with income-producing activities
‒ Other ldquoworkrdquo expenses ndash not substantiated
bull AAT also affirmed 25 shortfall penalty for lack of reasonable care
Deductions
Re Vakiloroaya and FCT [2017] AATA 95
copy Chartered Accountants Australia + New Zealand 2017
Intangible capital improvements made to a pre-CGT asset - a separate asset
bull Intangible capital improvement to pre-CGT asset can be separate CGT asset
bull Example provided of pre-CGT land being rezoned and subdivided ndash ATO says
improvements to land may be separate CGT assets
CGT
Taxation Determination TD 20171
14022017
14
copy Chartered Accountants Australia + New Zealand 2017
GST determining if a recipient is an Australian consumer
bull Draft ruling on Netflix tax
bull Explains when suppliers can rely on automated systems and when they need
to take extra measures to determine customerrsquos GST status
bull Netflix tax applies from 1 July 2017 transitional rules started on
1 July 2016
Indirect Taxes
Draft GST Ruling GSTR 2016D1
copy Chartered Accountants Australia + New Zealand 2017
GST no recovery for margin scheme increasing adjustment
bull Developer sold land to local council
bull Subject to margin scheme
bull Council required to pay GST on the supply
bull Court held council not required to pay increasing adjustment in developerrsquos
BAS
Indirect Taxes
McEwans Australia Pty Ltd v Brisbane City Council [2016] QDC 347
14022017
15
copy Chartered Accountants Australia + New Zealand 2017
GST cross-border law changes and currency conversion
bull Draft determination provides currency conversion options for businesses
impacted by GST cross-border changes
bull Includes method to convert foreign consideration into Australian currency
Indirect Taxes
Draft FOREX 2016D1 GST Foreign Currency Conversion Determination
copy Chartered Accountants Australia + New Zealand 2017
GST on home care and residential care
bull ATO draft guidance documents to help home amp residential care suppliers work
out if their services are GST-free
bull Also explains how GST applies to sub-contracted services
Indirect Taxes
ATO seeks views on guidance material
14022017
16
copy Chartered Accountants Australia + New Zealand 2017
ATO guidance on concessional contributions and constitutionally protected super funds
bull Draft guidance on calculating concessional contributions for defined benefit
interests and constitutionally protected funds
bull Under super reforms extra amount included in concessional contributions
from 1 July 2017 to reflect full amount of accrued benefits for defined benefit
interests
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D11
copy Chartered Accountants Australia + New Zealand 2017
ATO releases 2014-15 SMSF statistical overview
bull 996 of super funds are SMSFs
bull 29 of super assets (totalling $622 billion) in SMSFs
bull 6 of SMSFs held assets under LRBAs with gt 90 of LRBA investments in
real estate
bull 31 growth in number of SMSFs over five years
Taxation of Superannuation
14022017
17
copy Chartered Accountants Australia + New Zealand 2017
SMSFs LRBAs and non-arms length income
bull ATO says two-step process to determine if non-armrsquos length income rules
apply to SMSF limited recourse borrowing arrangement
‒ Are terms of LRBA consistent with safe harbours in PCG 20165
‒ Can SMSF trustee otherwise show that LRBA on armrsquos length terms
bull If yes donrsquot consider TD 201616 (non-armrsquos length LRBAs)
Taxation of Superannuation
ATO info re interaction and application of PCG 20165 and TD 201616
copy Chartered Accountants Australia + New Zealand 2017
Superannuation objective - draft reg released
bull Draft reg sets out subsidiary objectives of super system eg
‒ Managing risks in retirement
‒ Being invested in best interests of fund members
‒ Alleviating fiscal pressures on government
Taxation of Superannuation
Draft Superannuation (Objective) Regulation
14022017
18
copy Chartered Accountants Australia + New Zealand 2017
Superannuation reform total superannuation balance
bull Explains how individuals total superannuation balance is calculated from 30
June 2017
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D12
copy Chartered Accountants Australia + New Zealand 2017
Super reforms $16m pension cap commutations actuarial certificates
bull Draft regs to complement super reforms amp $16m transfer balance cap
released
bull Allow commutation of certain super income streams to reduce excess transfer
balance
bull Actuarial certificate exemption re income stream benefits in retirement phase
bull Broader range of death benefits to be treated as roll-over benefits
Taxation of Superannuation
Draft Treasury Laws Amendment (Fair and Sustainable Super) Regulation
14022017
19
copy Chartered Accountants Australia + New Zealand 2017
Super trustee rollover obligations amid ATO website outage
bull APRA advised RSE licensees in December 2016
‒ It wonrsquot take action for breaches directly related to ATO website outage
‒ RSE licensees not required to give APRA formal notice of such breaches
Taxation of Superannuation
copy Chartered Accountants Australia + New Zealand 2017
Super reforms Defined benefit income streams life expectancy and market-linked pensions
bull Draft Guideline on defined benefit income cap rules and income stream
pensionsannuities paid from non-commutable life expectancy and market-
linked products
bull From 1 July 2017 capped defined benefit income streams
‒ Will count towards $16 million transfer balance cap
‒ Wonrsquot of themselves lead to excess transfer balance
Taxation of Superannuation
Draft Law Companion Guideline LCG 2017D1
14022017
20
copy Chartered Accountants Australia + New Zealand 2017
ATO SuperSeeker
bull SuperSeeker online service for individuals now decommissioned
bull Individuals can findmanage super via myGov
Taxation of Superannuation
Service decommissioned
copy Chartered Accountants Australia + New Zealand 2017
ATO corporate tax transparency report for 2014-15
bull Second annual report on corporate tax transparency released
bull Data from 2015 tax returns of large corporates operating in Australia
bull Once third of listed taxpayers reported no tax payable ndash FCT said donrsquot
assume tax avoidance
bull Of top 100 public or foreign companies six in highest risk quadrant
Tax Administration
2014-15 Report of Entity Tax Information
14022017
21
copy Chartered Accountants Australia + New Zealand 2017
Backpackers tax registration deadline extended for employers
bull From 1 Jan 2017 working holiday maker WHT rate of 15
bull Employers can withhold 15 even if unregistered
bull Unregistered employers wonrsquot be penalised if they register by 31 Jan 2017
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
SMSF trustees (and LRBA trustees) garnishee notices invalid for group payroll tax
bull Custodian company amp SMSFLRBA trustees had payroll tax liability under
grouping rules
bull Custodian sold property held on trust for SMSF trustees
bull Garnishee notices issued to purchasers invalid
bull Garnishee notice canrsquot be used to recover tax from trust property to satisfy
trusteersquos tax debt if debt incurred in another capacity
Tax Administration
Comr of State Revenue v Can Barz Pty Ltd amp Anor [2016] QCA 323
14022017
22
copy Chartered Accountants Australia + New Zealand 2017
Court gives judgment for full tax debt of $11m
bull Taxpayer with $11m tax debt
bull During recovery proceedings taxpayer produced $600000 bank cheque
reducing tax debt to $500000
bull Court gave judgment against taxpayer for $11m ndash said cheque is conditional
payment could be dishonoured
Tax Administration
DCT v Dukes [2016] NSWSC 1759
copy Chartered Accountants Australia + New Zealand 2017
Taxpayersrsquo rights and obligations
bull IGT recommends ATO implement measures to ensure
‒ Taxpayersrsquo Charter at forefront of ATOrsquos interactions with community
‒ ATOrsquos performance against Charter principles measured and publicly reported
bull If stakeholder concerns persist IGT may undertake follow-up review and
make recommendations to government
Tax Administration
IGT Review into the Taxpayers Charter and Taxpayer Protections released
14022017
23
copy Chartered Accountants Australia + New Zealand 2017
Default assessments upheld - burden of proof not satisfied
bull Unexplained deposits to bank accounts controlled by taxpayer
bull Significant gambling at casinos
bull AAT affirmed default assessments
bull Taxpayerrsquos claims that money came from family gifts loans from friends
gambling wins rejected
Tax Administration
Re Nguyen and FCT [2016] AATA 1041
copy Chartered Accountants Australia + New Zealand 2017
No summary judgment for DPN liability - unresolved facts re whether director took reasonable steps
bull Summary judgment in respect of $167000 director penalty notice not granted
bull Unresolved question of fact ndash whether director took reasonable steps to
ensure company complied with ATO payment arrangement
Tax Administration
DCT v Pedley [2016] WADC 166
14022017
24
copy Chartered Accountants Australia + New Zealand 2017
Reminder of easier GST reporting for new small businesses from 19 Jan 2017
bull Newly registered SMEs can lodge simpler BAS from 19 January 2017
‒ Quarterly reporters select Option 2 Calculate GST quarterly and report annually
‒ Monthly reports insert 0 at labels G2 G3 G10 and G11
‒ Annual reporters leave labels G2 G3 G10 and G11 blank
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Review of tax and corporate whistleblower provisions in Australia
bull 2016-17 Federal Budget plan to better protect tax whistleblowers
bull Government now seeks public comments on proposed tax whistleblower
protection
Tax Administration
Consultation paper released
14022017
25
copy Chartered Accountants Australia + New Zealand 2017
Ride sourcing providers
bull ATO to identify ride sourcing drivers who donrsquot meet tax obligations
(registration reporting lodgment payment)
bull Data from financial institutions for 2016-17 and 2017-18
bull ATO wants details of payments from ride sourcing facilitator to ride sourcing
provider
bull Records relating to up to 60000 individuals to be collected
Tax Administration
ATO data matching
copy Chartered Accountants Australia + New Zealand 2017
Simplifying income recognition for NFPs
bull New standards to apply from 1 January 2019
‒ AASB 1058 Income of Not-for-Profit Entities
‒ AASB 2016-7 Amendments to Australian Accounting Standards ndash Deferral of
AASB 15 for Not-for-Profit Entities
‒ AASB 2016-8 Amendments to Australian Accounting Standards ndash Australian Implementation Guidance for Not-for-Profit Entities
Tax Administration
New standards coming
14022017
26
copy Chartered Accountants Australia + New Zealand 2017
Summary judgment against taxpayers for $305m upheld ndashtaxpayers lose appeal re ATO use of Cayman Islands info
bull $305m summary judgment against Vanda Gould and company he controlled
bull Assessments based on info from Cayman Islands tax authority
bull Taxpayers alleged ATO obtained info unlawfully
bull Held assessments valid
Tax Administration
Gould amp Anor v DCT [2017] FCAFC 1
copy Chartered Accountants Australia + New Zealand 2017
TPB Information sheet on payroll service providers
bull Information Sheet gives examples to help payroll service providers determine
if they must register with TPB
Tax Administration
TPB(I) 312016 - Payroll service providers
14022017
27
copy Chartered Accountants Australia + New Zealand 2017
Current ATO data-matching activities
bull ATO collecting data from banks on
‒ Credit and debit card payments received by businesses
‒ Payments to ride-sourcing drivers
bull Also collecting data from on-selling sites about sellers who sold at least
$12000 worth of goods or services
Tax Administration
Credit and debit card online selling ride-sourcing data-matching
copy Chartered Accountants Australia + New Zealand 2017
Incorrect PAYG instalment variations and GIC
bull ATO says some taxpayers incorrectly varying PAYG instalment rate or
amount
bull Liable to penalty GIC if variation significantly incorrect
bull ATO may contact tax agents to discuss clientsrsquo variations
Tax Administration
14022017
28
copy Chartered Accountants Australia + New Zealand 2017
ATO explains what caused system outage
bull Cause of ATOrsquos Dec 2016 system outage major malfunction of data storage
infrastructure in central computing system
bull ATO insists taxpayer data not lost or compromised
bull PwC to independently review system outage (has expertise with ICT storage
at heart of incident)
bull ATO also conducting internal review focus on key stakeholders
Tax Administration
Announces independent review
copy Chartered Accountants Australia + New Zealand 2017
No grounds to set aside DPO
bull Dubai resident served with amended assessments departure prohibition
order (DPO) while going through customs
bull Federal Court dismissed application to set aside DPO
ndash DPO not issued for improper purpose given taxpayerrsquos significant tax liability ($45m) amp poor compliance record
ndash Australian tax debt not enforceable in UAE
Tax Administration
Bakri v DCT [2017] FCA 20
14022017
29
copy Chartered Accountants Australia + New Zealand 2017
Exemptions from registering with ATO re foreign ownership of water or agricultural land
bull Draft rules to support Register of Foreign Ownership of Water or Agricultural
Land Act 2015 released
bull Water Register from 1 July 2017
bull Draft rules provide reporting exemptions for
ndash Harvestable rights
ndash Irrigation infrastructure operators
ndash Foreign persons re security held under money lending agreement
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Guide to Reportable Tax Positions 2017
bull ATO guide to help companies complete
bull Reportable tax position schedule 2017 (NAT 74066)
bull Reportable tax position early disclosure form 2017 (NAT 74067)
bull RTP Category C (reportable transactions or events) expanded to cover issues
of concern to ATO (eg those in recent taxpayer alerts)
bull Category C questions must be answered if companyrsquos income year ends on
or after 30 June 2017
Tax Administration
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
9
copy Chartered Accountants Australia + New Zealand 2017
Deduction for bad debt beneficiary of a trust and UPEs
bull Beneficiary not entitled to bad debt deduction for unpaid present entitlement
bull ATO gives two reasons
‒ Trusteersquos equitable obligation to pay UPE not a debt at common law
‒ UPE not ldquoincludedrdquo in beneficiaryrsquos assessable income under Div 6 ITAA 1936 as required by s 25-35(1)(a) ITAA 1997
Deductions
Taxation Determination TD 201619
copy Chartered Accountants Australia + New Zealand 2017
Work-related travel expenses not deductible ndash taxpayer fails burden of proof
bull Test engineer worked for offshore division of Indian company
bull Deductions for travel to India medical insurance disallowed
bull Private expenditure
Deductions
Re Thambiannan and FCT [2016] AATA 1004
14022017
10
copy Chartered Accountants Australia + New Zealand 2017
Commercial website deductibility
bull Detailed ruling on expenditure on websites used for carrying on business
bull Covers deductions for acquiring developing maintaining or modifying
website
Deductions
Taxation Ruling TR 20163
copy Chartered Accountants Australia + New Zealand 2017
Depreciating assets - composite items
bull Draft ruling on whether composite item is single depreciating asset
bull Component parts may be separate depreciating assets if they can be
separately identified or recognised as having commercial and economic
value
Deductions
Draft Taxation Ruling TR 2017D1
14022017
11
copy Chartered Accountants Australia + New Zealand 2017
Effective life of assets ndash drafts released
bull Draft effective lives of assets used in electronic information storage services
(data centre) industry released
bull Draft effective lives of assets used in coal seam gas industry released
bull Proposed date of effect for both 1 July 2017
Deductions
Draft lists released
copy Chartered Accountants Australia + New Zealand 2017
Deduction for cost of tools rejected
bull Taxpayer claimed he bought $24750 worth of tools online paid vendor in
cash from gambling winnings had handwritten tax invoice for 87 hand tools
andor power tools
bull FCT denied deduction imposed 25 shortfall penalty
bull AAT agreed with FCT ndash no tools purchased vendor non-existent fake tax
invoice
Deductions
Re Ishaq and FCT [2017] AATA 35
14022017
12
copy Chartered Accountants Australia + New Zealand 2017
Overtime meal expenses disallowed
bull Deduction for overtime meal expenses disallowed ndash 25 shortfall penalty
affirmed
bull Taxpayer not paid allowance under industrial agreement (as required by s 32-
50 ITAA 1997)
bull Paid same amount each week regardless of how much overtime he worked
Deductions
Re Kael and FCT [2017] AATA 38
copy Chartered Accountants Australia + New Zealand 2017
No deduction or capital loss for guarantee obligation
bull Taxpayers (controllers of trusts) involved in property development
bull Income of 2 family trusts increased by $43m after capital loss of associated
unit trust disallowed
bull Taxpayers claimed they were entitled to $43m deduction or capital loss as
trusts guaranteed business loan which lender (another related entity) had
called on guarantors to meet
bull AAT found insufficient evidence to support existence of guarantee
Deductions
Re Carioti and FCT [2017] AATA 62
14022017
13
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer denied deduction for work expenses of $60000
bull AAT found that mechanical engineer not entitled to deductions for
‒ Car expenses ndash not work related
‒ Self-education costs ndash no nexus with income-producing activities
‒ Other ldquoworkrdquo expenses ndash not substantiated
bull AAT also affirmed 25 shortfall penalty for lack of reasonable care
Deductions
Re Vakiloroaya and FCT [2017] AATA 95
copy Chartered Accountants Australia + New Zealand 2017
Intangible capital improvements made to a pre-CGT asset - a separate asset
bull Intangible capital improvement to pre-CGT asset can be separate CGT asset
bull Example provided of pre-CGT land being rezoned and subdivided ndash ATO says
improvements to land may be separate CGT assets
CGT
Taxation Determination TD 20171
14022017
14
copy Chartered Accountants Australia + New Zealand 2017
GST determining if a recipient is an Australian consumer
bull Draft ruling on Netflix tax
bull Explains when suppliers can rely on automated systems and when they need
to take extra measures to determine customerrsquos GST status
bull Netflix tax applies from 1 July 2017 transitional rules started on
1 July 2016
Indirect Taxes
Draft GST Ruling GSTR 2016D1
copy Chartered Accountants Australia + New Zealand 2017
GST no recovery for margin scheme increasing adjustment
bull Developer sold land to local council
bull Subject to margin scheme
bull Council required to pay GST on the supply
bull Court held council not required to pay increasing adjustment in developerrsquos
BAS
Indirect Taxes
McEwans Australia Pty Ltd v Brisbane City Council [2016] QDC 347
14022017
15
copy Chartered Accountants Australia + New Zealand 2017
GST cross-border law changes and currency conversion
bull Draft determination provides currency conversion options for businesses
impacted by GST cross-border changes
bull Includes method to convert foreign consideration into Australian currency
Indirect Taxes
Draft FOREX 2016D1 GST Foreign Currency Conversion Determination
copy Chartered Accountants Australia + New Zealand 2017
GST on home care and residential care
bull ATO draft guidance documents to help home amp residential care suppliers work
out if their services are GST-free
bull Also explains how GST applies to sub-contracted services
Indirect Taxes
ATO seeks views on guidance material
14022017
16
copy Chartered Accountants Australia + New Zealand 2017
ATO guidance on concessional contributions and constitutionally protected super funds
bull Draft guidance on calculating concessional contributions for defined benefit
interests and constitutionally protected funds
bull Under super reforms extra amount included in concessional contributions
from 1 July 2017 to reflect full amount of accrued benefits for defined benefit
interests
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D11
copy Chartered Accountants Australia + New Zealand 2017
ATO releases 2014-15 SMSF statistical overview
bull 996 of super funds are SMSFs
bull 29 of super assets (totalling $622 billion) in SMSFs
bull 6 of SMSFs held assets under LRBAs with gt 90 of LRBA investments in
real estate
bull 31 growth in number of SMSFs over five years
Taxation of Superannuation
14022017
17
copy Chartered Accountants Australia + New Zealand 2017
SMSFs LRBAs and non-arms length income
bull ATO says two-step process to determine if non-armrsquos length income rules
apply to SMSF limited recourse borrowing arrangement
‒ Are terms of LRBA consistent with safe harbours in PCG 20165
‒ Can SMSF trustee otherwise show that LRBA on armrsquos length terms
bull If yes donrsquot consider TD 201616 (non-armrsquos length LRBAs)
Taxation of Superannuation
ATO info re interaction and application of PCG 20165 and TD 201616
copy Chartered Accountants Australia + New Zealand 2017
Superannuation objective - draft reg released
bull Draft reg sets out subsidiary objectives of super system eg
‒ Managing risks in retirement
‒ Being invested in best interests of fund members
‒ Alleviating fiscal pressures on government
Taxation of Superannuation
Draft Superannuation (Objective) Regulation
14022017
18
copy Chartered Accountants Australia + New Zealand 2017
Superannuation reform total superannuation balance
bull Explains how individuals total superannuation balance is calculated from 30
June 2017
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D12
copy Chartered Accountants Australia + New Zealand 2017
Super reforms $16m pension cap commutations actuarial certificates
bull Draft regs to complement super reforms amp $16m transfer balance cap
released
bull Allow commutation of certain super income streams to reduce excess transfer
balance
bull Actuarial certificate exemption re income stream benefits in retirement phase
bull Broader range of death benefits to be treated as roll-over benefits
Taxation of Superannuation
Draft Treasury Laws Amendment (Fair and Sustainable Super) Regulation
14022017
19
copy Chartered Accountants Australia + New Zealand 2017
Super trustee rollover obligations amid ATO website outage
bull APRA advised RSE licensees in December 2016
‒ It wonrsquot take action for breaches directly related to ATO website outage
‒ RSE licensees not required to give APRA formal notice of such breaches
Taxation of Superannuation
copy Chartered Accountants Australia + New Zealand 2017
Super reforms Defined benefit income streams life expectancy and market-linked pensions
bull Draft Guideline on defined benefit income cap rules and income stream
pensionsannuities paid from non-commutable life expectancy and market-
linked products
bull From 1 July 2017 capped defined benefit income streams
‒ Will count towards $16 million transfer balance cap
‒ Wonrsquot of themselves lead to excess transfer balance
Taxation of Superannuation
Draft Law Companion Guideline LCG 2017D1
14022017
20
copy Chartered Accountants Australia + New Zealand 2017
ATO SuperSeeker
bull SuperSeeker online service for individuals now decommissioned
bull Individuals can findmanage super via myGov
Taxation of Superannuation
Service decommissioned
copy Chartered Accountants Australia + New Zealand 2017
ATO corporate tax transparency report for 2014-15
bull Second annual report on corporate tax transparency released
bull Data from 2015 tax returns of large corporates operating in Australia
bull Once third of listed taxpayers reported no tax payable ndash FCT said donrsquot
assume tax avoidance
bull Of top 100 public or foreign companies six in highest risk quadrant
Tax Administration
2014-15 Report of Entity Tax Information
14022017
21
copy Chartered Accountants Australia + New Zealand 2017
Backpackers tax registration deadline extended for employers
bull From 1 Jan 2017 working holiday maker WHT rate of 15
bull Employers can withhold 15 even if unregistered
bull Unregistered employers wonrsquot be penalised if they register by 31 Jan 2017
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
SMSF trustees (and LRBA trustees) garnishee notices invalid for group payroll tax
bull Custodian company amp SMSFLRBA trustees had payroll tax liability under
grouping rules
bull Custodian sold property held on trust for SMSF trustees
bull Garnishee notices issued to purchasers invalid
bull Garnishee notice canrsquot be used to recover tax from trust property to satisfy
trusteersquos tax debt if debt incurred in another capacity
Tax Administration
Comr of State Revenue v Can Barz Pty Ltd amp Anor [2016] QCA 323
14022017
22
copy Chartered Accountants Australia + New Zealand 2017
Court gives judgment for full tax debt of $11m
bull Taxpayer with $11m tax debt
bull During recovery proceedings taxpayer produced $600000 bank cheque
reducing tax debt to $500000
bull Court gave judgment against taxpayer for $11m ndash said cheque is conditional
payment could be dishonoured
Tax Administration
DCT v Dukes [2016] NSWSC 1759
copy Chartered Accountants Australia + New Zealand 2017
Taxpayersrsquo rights and obligations
bull IGT recommends ATO implement measures to ensure
‒ Taxpayersrsquo Charter at forefront of ATOrsquos interactions with community
‒ ATOrsquos performance against Charter principles measured and publicly reported
bull If stakeholder concerns persist IGT may undertake follow-up review and
make recommendations to government
Tax Administration
IGT Review into the Taxpayers Charter and Taxpayer Protections released
14022017
23
copy Chartered Accountants Australia + New Zealand 2017
Default assessments upheld - burden of proof not satisfied
bull Unexplained deposits to bank accounts controlled by taxpayer
bull Significant gambling at casinos
bull AAT affirmed default assessments
bull Taxpayerrsquos claims that money came from family gifts loans from friends
gambling wins rejected
Tax Administration
Re Nguyen and FCT [2016] AATA 1041
copy Chartered Accountants Australia + New Zealand 2017
No summary judgment for DPN liability - unresolved facts re whether director took reasonable steps
bull Summary judgment in respect of $167000 director penalty notice not granted
bull Unresolved question of fact ndash whether director took reasonable steps to
ensure company complied with ATO payment arrangement
Tax Administration
DCT v Pedley [2016] WADC 166
14022017
24
copy Chartered Accountants Australia + New Zealand 2017
Reminder of easier GST reporting for new small businesses from 19 Jan 2017
bull Newly registered SMEs can lodge simpler BAS from 19 January 2017
‒ Quarterly reporters select Option 2 Calculate GST quarterly and report annually
‒ Monthly reports insert 0 at labels G2 G3 G10 and G11
‒ Annual reporters leave labels G2 G3 G10 and G11 blank
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Review of tax and corporate whistleblower provisions in Australia
bull 2016-17 Federal Budget plan to better protect tax whistleblowers
bull Government now seeks public comments on proposed tax whistleblower
protection
Tax Administration
Consultation paper released
14022017
25
copy Chartered Accountants Australia + New Zealand 2017
Ride sourcing providers
bull ATO to identify ride sourcing drivers who donrsquot meet tax obligations
(registration reporting lodgment payment)
bull Data from financial institutions for 2016-17 and 2017-18
bull ATO wants details of payments from ride sourcing facilitator to ride sourcing
provider
bull Records relating to up to 60000 individuals to be collected
Tax Administration
ATO data matching
copy Chartered Accountants Australia + New Zealand 2017
Simplifying income recognition for NFPs
bull New standards to apply from 1 January 2019
‒ AASB 1058 Income of Not-for-Profit Entities
‒ AASB 2016-7 Amendments to Australian Accounting Standards ndash Deferral of
AASB 15 for Not-for-Profit Entities
‒ AASB 2016-8 Amendments to Australian Accounting Standards ndash Australian Implementation Guidance for Not-for-Profit Entities
Tax Administration
New standards coming
14022017
26
copy Chartered Accountants Australia + New Zealand 2017
Summary judgment against taxpayers for $305m upheld ndashtaxpayers lose appeal re ATO use of Cayman Islands info
bull $305m summary judgment against Vanda Gould and company he controlled
bull Assessments based on info from Cayman Islands tax authority
bull Taxpayers alleged ATO obtained info unlawfully
bull Held assessments valid
Tax Administration
Gould amp Anor v DCT [2017] FCAFC 1
copy Chartered Accountants Australia + New Zealand 2017
TPB Information sheet on payroll service providers
bull Information Sheet gives examples to help payroll service providers determine
if they must register with TPB
Tax Administration
TPB(I) 312016 - Payroll service providers
14022017
27
copy Chartered Accountants Australia + New Zealand 2017
Current ATO data-matching activities
bull ATO collecting data from banks on
‒ Credit and debit card payments received by businesses
‒ Payments to ride-sourcing drivers
bull Also collecting data from on-selling sites about sellers who sold at least
$12000 worth of goods or services
Tax Administration
Credit and debit card online selling ride-sourcing data-matching
copy Chartered Accountants Australia + New Zealand 2017
Incorrect PAYG instalment variations and GIC
bull ATO says some taxpayers incorrectly varying PAYG instalment rate or
amount
bull Liable to penalty GIC if variation significantly incorrect
bull ATO may contact tax agents to discuss clientsrsquo variations
Tax Administration
14022017
28
copy Chartered Accountants Australia + New Zealand 2017
ATO explains what caused system outage
bull Cause of ATOrsquos Dec 2016 system outage major malfunction of data storage
infrastructure in central computing system
bull ATO insists taxpayer data not lost or compromised
bull PwC to independently review system outage (has expertise with ICT storage
at heart of incident)
bull ATO also conducting internal review focus on key stakeholders
Tax Administration
Announces independent review
copy Chartered Accountants Australia + New Zealand 2017
No grounds to set aside DPO
bull Dubai resident served with amended assessments departure prohibition
order (DPO) while going through customs
bull Federal Court dismissed application to set aside DPO
ndash DPO not issued for improper purpose given taxpayerrsquos significant tax liability ($45m) amp poor compliance record
ndash Australian tax debt not enforceable in UAE
Tax Administration
Bakri v DCT [2017] FCA 20
14022017
29
copy Chartered Accountants Australia + New Zealand 2017
Exemptions from registering with ATO re foreign ownership of water or agricultural land
bull Draft rules to support Register of Foreign Ownership of Water or Agricultural
Land Act 2015 released
bull Water Register from 1 July 2017
bull Draft rules provide reporting exemptions for
ndash Harvestable rights
ndash Irrigation infrastructure operators
ndash Foreign persons re security held under money lending agreement
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Guide to Reportable Tax Positions 2017
bull ATO guide to help companies complete
bull Reportable tax position schedule 2017 (NAT 74066)
bull Reportable tax position early disclosure form 2017 (NAT 74067)
bull RTP Category C (reportable transactions or events) expanded to cover issues
of concern to ATO (eg those in recent taxpayer alerts)
bull Category C questions must be answered if companyrsquos income year ends on
or after 30 June 2017
Tax Administration
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
10
copy Chartered Accountants Australia + New Zealand 2017
Commercial website deductibility
bull Detailed ruling on expenditure on websites used for carrying on business
bull Covers deductions for acquiring developing maintaining or modifying
website
Deductions
Taxation Ruling TR 20163
copy Chartered Accountants Australia + New Zealand 2017
Depreciating assets - composite items
bull Draft ruling on whether composite item is single depreciating asset
bull Component parts may be separate depreciating assets if they can be
separately identified or recognised as having commercial and economic
value
Deductions
Draft Taxation Ruling TR 2017D1
14022017
11
copy Chartered Accountants Australia + New Zealand 2017
Effective life of assets ndash drafts released
bull Draft effective lives of assets used in electronic information storage services
(data centre) industry released
bull Draft effective lives of assets used in coal seam gas industry released
bull Proposed date of effect for both 1 July 2017
Deductions
Draft lists released
copy Chartered Accountants Australia + New Zealand 2017
Deduction for cost of tools rejected
bull Taxpayer claimed he bought $24750 worth of tools online paid vendor in
cash from gambling winnings had handwritten tax invoice for 87 hand tools
andor power tools
bull FCT denied deduction imposed 25 shortfall penalty
bull AAT agreed with FCT ndash no tools purchased vendor non-existent fake tax
invoice
Deductions
Re Ishaq and FCT [2017] AATA 35
14022017
12
copy Chartered Accountants Australia + New Zealand 2017
Overtime meal expenses disallowed
bull Deduction for overtime meal expenses disallowed ndash 25 shortfall penalty
affirmed
bull Taxpayer not paid allowance under industrial agreement (as required by s 32-
50 ITAA 1997)
bull Paid same amount each week regardless of how much overtime he worked
Deductions
Re Kael and FCT [2017] AATA 38
copy Chartered Accountants Australia + New Zealand 2017
No deduction or capital loss for guarantee obligation
bull Taxpayers (controllers of trusts) involved in property development
bull Income of 2 family trusts increased by $43m after capital loss of associated
unit trust disallowed
bull Taxpayers claimed they were entitled to $43m deduction or capital loss as
trusts guaranteed business loan which lender (another related entity) had
called on guarantors to meet
bull AAT found insufficient evidence to support existence of guarantee
Deductions
Re Carioti and FCT [2017] AATA 62
14022017
13
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer denied deduction for work expenses of $60000
bull AAT found that mechanical engineer not entitled to deductions for
‒ Car expenses ndash not work related
‒ Self-education costs ndash no nexus with income-producing activities
‒ Other ldquoworkrdquo expenses ndash not substantiated
bull AAT also affirmed 25 shortfall penalty for lack of reasonable care
Deductions
Re Vakiloroaya and FCT [2017] AATA 95
copy Chartered Accountants Australia + New Zealand 2017
Intangible capital improvements made to a pre-CGT asset - a separate asset
bull Intangible capital improvement to pre-CGT asset can be separate CGT asset
bull Example provided of pre-CGT land being rezoned and subdivided ndash ATO says
improvements to land may be separate CGT assets
CGT
Taxation Determination TD 20171
14022017
14
copy Chartered Accountants Australia + New Zealand 2017
GST determining if a recipient is an Australian consumer
bull Draft ruling on Netflix tax
bull Explains when suppliers can rely on automated systems and when they need
to take extra measures to determine customerrsquos GST status
bull Netflix tax applies from 1 July 2017 transitional rules started on
1 July 2016
Indirect Taxes
Draft GST Ruling GSTR 2016D1
copy Chartered Accountants Australia + New Zealand 2017
GST no recovery for margin scheme increasing adjustment
bull Developer sold land to local council
bull Subject to margin scheme
bull Council required to pay GST on the supply
bull Court held council not required to pay increasing adjustment in developerrsquos
BAS
Indirect Taxes
McEwans Australia Pty Ltd v Brisbane City Council [2016] QDC 347
14022017
15
copy Chartered Accountants Australia + New Zealand 2017
GST cross-border law changes and currency conversion
bull Draft determination provides currency conversion options for businesses
impacted by GST cross-border changes
bull Includes method to convert foreign consideration into Australian currency
Indirect Taxes
Draft FOREX 2016D1 GST Foreign Currency Conversion Determination
copy Chartered Accountants Australia + New Zealand 2017
GST on home care and residential care
bull ATO draft guidance documents to help home amp residential care suppliers work
out if their services are GST-free
bull Also explains how GST applies to sub-contracted services
Indirect Taxes
ATO seeks views on guidance material
14022017
16
copy Chartered Accountants Australia + New Zealand 2017
ATO guidance on concessional contributions and constitutionally protected super funds
bull Draft guidance on calculating concessional contributions for defined benefit
interests and constitutionally protected funds
bull Under super reforms extra amount included in concessional contributions
from 1 July 2017 to reflect full amount of accrued benefits for defined benefit
interests
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D11
copy Chartered Accountants Australia + New Zealand 2017
ATO releases 2014-15 SMSF statistical overview
bull 996 of super funds are SMSFs
bull 29 of super assets (totalling $622 billion) in SMSFs
bull 6 of SMSFs held assets under LRBAs with gt 90 of LRBA investments in
real estate
bull 31 growth in number of SMSFs over five years
Taxation of Superannuation
14022017
17
copy Chartered Accountants Australia + New Zealand 2017
SMSFs LRBAs and non-arms length income
bull ATO says two-step process to determine if non-armrsquos length income rules
apply to SMSF limited recourse borrowing arrangement
‒ Are terms of LRBA consistent with safe harbours in PCG 20165
‒ Can SMSF trustee otherwise show that LRBA on armrsquos length terms
bull If yes donrsquot consider TD 201616 (non-armrsquos length LRBAs)
Taxation of Superannuation
ATO info re interaction and application of PCG 20165 and TD 201616
copy Chartered Accountants Australia + New Zealand 2017
Superannuation objective - draft reg released
bull Draft reg sets out subsidiary objectives of super system eg
‒ Managing risks in retirement
‒ Being invested in best interests of fund members
‒ Alleviating fiscal pressures on government
Taxation of Superannuation
Draft Superannuation (Objective) Regulation
14022017
18
copy Chartered Accountants Australia + New Zealand 2017
Superannuation reform total superannuation balance
bull Explains how individuals total superannuation balance is calculated from 30
June 2017
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D12
copy Chartered Accountants Australia + New Zealand 2017
Super reforms $16m pension cap commutations actuarial certificates
bull Draft regs to complement super reforms amp $16m transfer balance cap
released
bull Allow commutation of certain super income streams to reduce excess transfer
balance
bull Actuarial certificate exemption re income stream benefits in retirement phase
bull Broader range of death benefits to be treated as roll-over benefits
Taxation of Superannuation
Draft Treasury Laws Amendment (Fair and Sustainable Super) Regulation
14022017
19
copy Chartered Accountants Australia + New Zealand 2017
Super trustee rollover obligations amid ATO website outage
bull APRA advised RSE licensees in December 2016
‒ It wonrsquot take action for breaches directly related to ATO website outage
‒ RSE licensees not required to give APRA formal notice of such breaches
Taxation of Superannuation
copy Chartered Accountants Australia + New Zealand 2017
Super reforms Defined benefit income streams life expectancy and market-linked pensions
bull Draft Guideline on defined benefit income cap rules and income stream
pensionsannuities paid from non-commutable life expectancy and market-
linked products
bull From 1 July 2017 capped defined benefit income streams
‒ Will count towards $16 million transfer balance cap
‒ Wonrsquot of themselves lead to excess transfer balance
Taxation of Superannuation
Draft Law Companion Guideline LCG 2017D1
14022017
20
copy Chartered Accountants Australia + New Zealand 2017
ATO SuperSeeker
bull SuperSeeker online service for individuals now decommissioned
bull Individuals can findmanage super via myGov
Taxation of Superannuation
Service decommissioned
copy Chartered Accountants Australia + New Zealand 2017
ATO corporate tax transparency report for 2014-15
bull Second annual report on corporate tax transparency released
bull Data from 2015 tax returns of large corporates operating in Australia
bull Once third of listed taxpayers reported no tax payable ndash FCT said donrsquot
assume tax avoidance
bull Of top 100 public or foreign companies six in highest risk quadrant
Tax Administration
2014-15 Report of Entity Tax Information
14022017
21
copy Chartered Accountants Australia + New Zealand 2017
Backpackers tax registration deadline extended for employers
bull From 1 Jan 2017 working holiday maker WHT rate of 15
bull Employers can withhold 15 even if unregistered
bull Unregistered employers wonrsquot be penalised if they register by 31 Jan 2017
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
SMSF trustees (and LRBA trustees) garnishee notices invalid for group payroll tax
bull Custodian company amp SMSFLRBA trustees had payroll tax liability under
grouping rules
bull Custodian sold property held on trust for SMSF trustees
bull Garnishee notices issued to purchasers invalid
bull Garnishee notice canrsquot be used to recover tax from trust property to satisfy
trusteersquos tax debt if debt incurred in another capacity
Tax Administration
Comr of State Revenue v Can Barz Pty Ltd amp Anor [2016] QCA 323
14022017
22
copy Chartered Accountants Australia + New Zealand 2017
Court gives judgment for full tax debt of $11m
bull Taxpayer with $11m tax debt
bull During recovery proceedings taxpayer produced $600000 bank cheque
reducing tax debt to $500000
bull Court gave judgment against taxpayer for $11m ndash said cheque is conditional
payment could be dishonoured
Tax Administration
DCT v Dukes [2016] NSWSC 1759
copy Chartered Accountants Australia + New Zealand 2017
Taxpayersrsquo rights and obligations
bull IGT recommends ATO implement measures to ensure
‒ Taxpayersrsquo Charter at forefront of ATOrsquos interactions with community
‒ ATOrsquos performance against Charter principles measured and publicly reported
bull If stakeholder concerns persist IGT may undertake follow-up review and
make recommendations to government
Tax Administration
IGT Review into the Taxpayers Charter and Taxpayer Protections released
14022017
23
copy Chartered Accountants Australia + New Zealand 2017
Default assessments upheld - burden of proof not satisfied
bull Unexplained deposits to bank accounts controlled by taxpayer
bull Significant gambling at casinos
bull AAT affirmed default assessments
bull Taxpayerrsquos claims that money came from family gifts loans from friends
gambling wins rejected
Tax Administration
Re Nguyen and FCT [2016] AATA 1041
copy Chartered Accountants Australia + New Zealand 2017
No summary judgment for DPN liability - unresolved facts re whether director took reasonable steps
bull Summary judgment in respect of $167000 director penalty notice not granted
bull Unresolved question of fact ndash whether director took reasonable steps to
ensure company complied with ATO payment arrangement
Tax Administration
DCT v Pedley [2016] WADC 166
14022017
24
copy Chartered Accountants Australia + New Zealand 2017
Reminder of easier GST reporting for new small businesses from 19 Jan 2017
bull Newly registered SMEs can lodge simpler BAS from 19 January 2017
‒ Quarterly reporters select Option 2 Calculate GST quarterly and report annually
‒ Monthly reports insert 0 at labels G2 G3 G10 and G11
‒ Annual reporters leave labels G2 G3 G10 and G11 blank
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Review of tax and corporate whistleblower provisions in Australia
bull 2016-17 Federal Budget plan to better protect tax whistleblowers
bull Government now seeks public comments on proposed tax whistleblower
protection
Tax Administration
Consultation paper released
14022017
25
copy Chartered Accountants Australia + New Zealand 2017
Ride sourcing providers
bull ATO to identify ride sourcing drivers who donrsquot meet tax obligations
(registration reporting lodgment payment)
bull Data from financial institutions for 2016-17 and 2017-18
bull ATO wants details of payments from ride sourcing facilitator to ride sourcing
provider
bull Records relating to up to 60000 individuals to be collected
Tax Administration
ATO data matching
copy Chartered Accountants Australia + New Zealand 2017
Simplifying income recognition for NFPs
bull New standards to apply from 1 January 2019
‒ AASB 1058 Income of Not-for-Profit Entities
‒ AASB 2016-7 Amendments to Australian Accounting Standards ndash Deferral of
AASB 15 for Not-for-Profit Entities
‒ AASB 2016-8 Amendments to Australian Accounting Standards ndash Australian Implementation Guidance for Not-for-Profit Entities
Tax Administration
New standards coming
14022017
26
copy Chartered Accountants Australia + New Zealand 2017
Summary judgment against taxpayers for $305m upheld ndashtaxpayers lose appeal re ATO use of Cayman Islands info
bull $305m summary judgment against Vanda Gould and company he controlled
bull Assessments based on info from Cayman Islands tax authority
bull Taxpayers alleged ATO obtained info unlawfully
bull Held assessments valid
Tax Administration
Gould amp Anor v DCT [2017] FCAFC 1
copy Chartered Accountants Australia + New Zealand 2017
TPB Information sheet on payroll service providers
bull Information Sheet gives examples to help payroll service providers determine
if they must register with TPB
Tax Administration
TPB(I) 312016 - Payroll service providers
14022017
27
copy Chartered Accountants Australia + New Zealand 2017
Current ATO data-matching activities
bull ATO collecting data from banks on
‒ Credit and debit card payments received by businesses
‒ Payments to ride-sourcing drivers
bull Also collecting data from on-selling sites about sellers who sold at least
$12000 worth of goods or services
Tax Administration
Credit and debit card online selling ride-sourcing data-matching
copy Chartered Accountants Australia + New Zealand 2017
Incorrect PAYG instalment variations and GIC
bull ATO says some taxpayers incorrectly varying PAYG instalment rate or
amount
bull Liable to penalty GIC if variation significantly incorrect
bull ATO may contact tax agents to discuss clientsrsquo variations
Tax Administration
14022017
28
copy Chartered Accountants Australia + New Zealand 2017
ATO explains what caused system outage
bull Cause of ATOrsquos Dec 2016 system outage major malfunction of data storage
infrastructure in central computing system
bull ATO insists taxpayer data not lost or compromised
bull PwC to independently review system outage (has expertise with ICT storage
at heart of incident)
bull ATO also conducting internal review focus on key stakeholders
Tax Administration
Announces independent review
copy Chartered Accountants Australia + New Zealand 2017
No grounds to set aside DPO
bull Dubai resident served with amended assessments departure prohibition
order (DPO) while going through customs
bull Federal Court dismissed application to set aside DPO
ndash DPO not issued for improper purpose given taxpayerrsquos significant tax liability ($45m) amp poor compliance record
ndash Australian tax debt not enforceable in UAE
Tax Administration
Bakri v DCT [2017] FCA 20
14022017
29
copy Chartered Accountants Australia + New Zealand 2017
Exemptions from registering with ATO re foreign ownership of water or agricultural land
bull Draft rules to support Register of Foreign Ownership of Water or Agricultural
Land Act 2015 released
bull Water Register from 1 July 2017
bull Draft rules provide reporting exemptions for
ndash Harvestable rights
ndash Irrigation infrastructure operators
ndash Foreign persons re security held under money lending agreement
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Guide to Reportable Tax Positions 2017
bull ATO guide to help companies complete
bull Reportable tax position schedule 2017 (NAT 74066)
bull Reportable tax position early disclosure form 2017 (NAT 74067)
bull RTP Category C (reportable transactions or events) expanded to cover issues
of concern to ATO (eg those in recent taxpayer alerts)
bull Category C questions must be answered if companyrsquos income year ends on
or after 30 June 2017
Tax Administration
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
11
copy Chartered Accountants Australia + New Zealand 2017
Effective life of assets ndash drafts released
bull Draft effective lives of assets used in electronic information storage services
(data centre) industry released
bull Draft effective lives of assets used in coal seam gas industry released
bull Proposed date of effect for both 1 July 2017
Deductions
Draft lists released
copy Chartered Accountants Australia + New Zealand 2017
Deduction for cost of tools rejected
bull Taxpayer claimed he bought $24750 worth of tools online paid vendor in
cash from gambling winnings had handwritten tax invoice for 87 hand tools
andor power tools
bull FCT denied deduction imposed 25 shortfall penalty
bull AAT agreed with FCT ndash no tools purchased vendor non-existent fake tax
invoice
Deductions
Re Ishaq and FCT [2017] AATA 35
14022017
12
copy Chartered Accountants Australia + New Zealand 2017
Overtime meal expenses disallowed
bull Deduction for overtime meal expenses disallowed ndash 25 shortfall penalty
affirmed
bull Taxpayer not paid allowance under industrial agreement (as required by s 32-
50 ITAA 1997)
bull Paid same amount each week regardless of how much overtime he worked
Deductions
Re Kael and FCT [2017] AATA 38
copy Chartered Accountants Australia + New Zealand 2017
No deduction or capital loss for guarantee obligation
bull Taxpayers (controllers of trusts) involved in property development
bull Income of 2 family trusts increased by $43m after capital loss of associated
unit trust disallowed
bull Taxpayers claimed they were entitled to $43m deduction or capital loss as
trusts guaranteed business loan which lender (another related entity) had
called on guarantors to meet
bull AAT found insufficient evidence to support existence of guarantee
Deductions
Re Carioti and FCT [2017] AATA 62
14022017
13
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer denied deduction for work expenses of $60000
bull AAT found that mechanical engineer not entitled to deductions for
‒ Car expenses ndash not work related
‒ Self-education costs ndash no nexus with income-producing activities
‒ Other ldquoworkrdquo expenses ndash not substantiated
bull AAT also affirmed 25 shortfall penalty for lack of reasonable care
Deductions
Re Vakiloroaya and FCT [2017] AATA 95
copy Chartered Accountants Australia + New Zealand 2017
Intangible capital improvements made to a pre-CGT asset - a separate asset
bull Intangible capital improvement to pre-CGT asset can be separate CGT asset
bull Example provided of pre-CGT land being rezoned and subdivided ndash ATO says
improvements to land may be separate CGT assets
CGT
Taxation Determination TD 20171
14022017
14
copy Chartered Accountants Australia + New Zealand 2017
GST determining if a recipient is an Australian consumer
bull Draft ruling on Netflix tax
bull Explains when suppliers can rely on automated systems and when they need
to take extra measures to determine customerrsquos GST status
bull Netflix tax applies from 1 July 2017 transitional rules started on
1 July 2016
Indirect Taxes
Draft GST Ruling GSTR 2016D1
copy Chartered Accountants Australia + New Zealand 2017
GST no recovery for margin scheme increasing adjustment
bull Developer sold land to local council
bull Subject to margin scheme
bull Council required to pay GST on the supply
bull Court held council not required to pay increasing adjustment in developerrsquos
BAS
Indirect Taxes
McEwans Australia Pty Ltd v Brisbane City Council [2016] QDC 347
14022017
15
copy Chartered Accountants Australia + New Zealand 2017
GST cross-border law changes and currency conversion
bull Draft determination provides currency conversion options for businesses
impacted by GST cross-border changes
bull Includes method to convert foreign consideration into Australian currency
Indirect Taxes
Draft FOREX 2016D1 GST Foreign Currency Conversion Determination
copy Chartered Accountants Australia + New Zealand 2017
GST on home care and residential care
bull ATO draft guidance documents to help home amp residential care suppliers work
out if their services are GST-free
bull Also explains how GST applies to sub-contracted services
Indirect Taxes
ATO seeks views on guidance material
14022017
16
copy Chartered Accountants Australia + New Zealand 2017
ATO guidance on concessional contributions and constitutionally protected super funds
bull Draft guidance on calculating concessional contributions for defined benefit
interests and constitutionally protected funds
bull Under super reforms extra amount included in concessional contributions
from 1 July 2017 to reflect full amount of accrued benefits for defined benefit
interests
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D11
copy Chartered Accountants Australia + New Zealand 2017
ATO releases 2014-15 SMSF statistical overview
bull 996 of super funds are SMSFs
bull 29 of super assets (totalling $622 billion) in SMSFs
bull 6 of SMSFs held assets under LRBAs with gt 90 of LRBA investments in
real estate
bull 31 growth in number of SMSFs over five years
Taxation of Superannuation
14022017
17
copy Chartered Accountants Australia + New Zealand 2017
SMSFs LRBAs and non-arms length income
bull ATO says two-step process to determine if non-armrsquos length income rules
apply to SMSF limited recourse borrowing arrangement
‒ Are terms of LRBA consistent with safe harbours in PCG 20165
‒ Can SMSF trustee otherwise show that LRBA on armrsquos length terms
bull If yes donrsquot consider TD 201616 (non-armrsquos length LRBAs)
Taxation of Superannuation
ATO info re interaction and application of PCG 20165 and TD 201616
copy Chartered Accountants Australia + New Zealand 2017
Superannuation objective - draft reg released
bull Draft reg sets out subsidiary objectives of super system eg
‒ Managing risks in retirement
‒ Being invested in best interests of fund members
‒ Alleviating fiscal pressures on government
Taxation of Superannuation
Draft Superannuation (Objective) Regulation
14022017
18
copy Chartered Accountants Australia + New Zealand 2017
Superannuation reform total superannuation balance
bull Explains how individuals total superannuation balance is calculated from 30
June 2017
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D12
copy Chartered Accountants Australia + New Zealand 2017
Super reforms $16m pension cap commutations actuarial certificates
bull Draft regs to complement super reforms amp $16m transfer balance cap
released
bull Allow commutation of certain super income streams to reduce excess transfer
balance
bull Actuarial certificate exemption re income stream benefits in retirement phase
bull Broader range of death benefits to be treated as roll-over benefits
Taxation of Superannuation
Draft Treasury Laws Amendment (Fair and Sustainable Super) Regulation
14022017
19
copy Chartered Accountants Australia + New Zealand 2017
Super trustee rollover obligations amid ATO website outage
bull APRA advised RSE licensees in December 2016
‒ It wonrsquot take action for breaches directly related to ATO website outage
‒ RSE licensees not required to give APRA formal notice of such breaches
Taxation of Superannuation
copy Chartered Accountants Australia + New Zealand 2017
Super reforms Defined benefit income streams life expectancy and market-linked pensions
bull Draft Guideline on defined benefit income cap rules and income stream
pensionsannuities paid from non-commutable life expectancy and market-
linked products
bull From 1 July 2017 capped defined benefit income streams
‒ Will count towards $16 million transfer balance cap
‒ Wonrsquot of themselves lead to excess transfer balance
Taxation of Superannuation
Draft Law Companion Guideline LCG 2017D1
14022017
20
copy Chartered Accountants Australia + New Zealand 2017
ATO SuperSeeker
bull SuperSeeker online service for individuals now decommissioned
bull Individuals can findmanage super via myGov
Taxation of Superannuation
Service decommissioned
copy Chartered Accountants Australia + New Zealand 2017
ATO corporate tax transparency report for 2014-15
bull Second annual report on corporate tax transparency released
bull Data from 2015 tax returns of large corporates operating in Australia
bull Once third of listed taxpayers reported no tax payable ndash FCT said donrsquot
assume tax avoidance
bull Of top 100 public or foreign companies six in highest risk quadrant
Tax Administration
2014-15 Report of Entity Tax Information
14022017
21
copy Chartered Accountants Australia + New Zealand 2017
Backpackers tax registration deadline extended for employers
bull From 1 Jan 2017 working holiday maker WHT rate of 15
bull Employers can withhold 15 even if unregistered
bull Unregistered employers wonrsquot be penalised if they register by 31 Jan 2017
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
SMSF trustees (and LRBA trustees) garnishee notices invalid for group payroll tax
bull Custodian company amp SMSFLRBA trustees had payroll tax liability under
grouping rules
bull Custodian sold property held on trust for SMSF trustees
bull Garnishee notices issued to purchasers invalid
bull Garnishee notice canrsquot be used to recover tax from trust property to satisfy
trusteersquos tax debt if debt incurred in another capacity
Tax Administration
Comr of State Revenue v Can Barz Pty Ltd amp Anor [2016] QCA 323
14022017
22
copy Chartered Accountants Australia + New Zealand 2017
Court gives judgment for full tax debt of $11m
bull Taxpayer with $11m tax debt
bull During recovery proceedings taxpayer produced $600000 bank cheque
reducing tax debt to $500000
bull Court gave judgment against taxpayer for $11m ndash said cheque is conditional
payment could be dishonoured
Tax Administration
DCT v Dukes [2016] NSWSC 1759
copy Chartered Accountants Australia + New Zealand 2017
Taxpayersrsquo rights and obligations
bull IGT recommends ATO implement measures to ensure
‒ Taxpayersrsquo Charter at forefront of ATOrsquos interactions with community
‒ ATOrsquos performance against Charter principles measured and publicly reported
bull If stakeholder concerns persist IGT may undertake follow-up review and
make recommendations to government
Tax Administration
IGT Review into the Taxpayers Charter and Taxpayer Protections released
14022017
23
copy Chartered Accountants Australia + New Zealand 2017
Default assessments upheld - burden of proof not satisfied
bull Unexplained deposits to bank accounts controlled by taxpayer
bull Significant gambling at casinos
bull AAT affirmed default assessments
bull Taxpayerrsquos claims that money came from family gifts loans from friends
gambling wins rejected
Tax Administration
Re Nguyen and FCT [2016] AATA 1041
copy Chartered Accountants Australia + New Zealand 2017
No summary judgment for DPN liability - unresolved facts re whether director took reasonable steps
bull Summary judgment in respect of $167000 director penalty notice not granted
bull Unresolved question of fact ndash whether director took reasonable steps to
ensure company complied with ATO payment arrangement
Tax Administration
DCT v Pedley [2016] WADC 166
14022017
24
copy Chartered Accountants Australia + New Zealand 2017
Reminder of easier GST reporting for new small businesses from 19 Jan 2017
bull Newly registered SMEs can lodge simpler BAS from 19 January 2017
‒ Quarterly reporters select Option 2 Calculate GST quarterly and report annually
‒ Monthly reports insert 0 at labels G2 G3 G10 and G11
‒ Annual reporters leave labels G2 G3 G10 and G11 blank
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Review of tax and corporate whistleblower provisions in Australia
bull 2016-17 Federal Budget plan to better protect tax whistleblowers
bull Government now seeks public comments on proposed tax whistleblower
protection
Tax Administration
Consultation paper released
14022017
25
copy Chartered Accountants Australia + New Zealand 2017
Ride sourcing providers
bull ATO to identify ride sourcing drivers who donrsquot meet tax obligations
(registration reporting lodgment payment)
bull Data from financial institutions for 2016-17 and 2017-18
bull ATO wants details of payments from ride sourcing facilitator to ride sourcing
provider
bull Records relating to up to 60000 individuals to be collected
Tax Administration
ATO data matching
copy Chartered Accountants Australia + New Zealand 2017
Simplifying income recognition for NFPs
bull New standards to apply from 1 January 2019
‒ AASB 1058 Income of Not-for-Profit Entities
‒ AASB 2016-7 Amendments to Australian Accounting Standards ndash Deferral of
AASB 15 for Not-for-Profit Entities
‒ AASB 2016-8 Amendments to Australian Accounting Standards ndash Australian Implementation Guidance for Not-for-Profit Entities
Tax Administration
New standards coming
14022017
26
copy Chartered Accountants Australia + New Zealand 2017
Summary judgment against taxpayers for $305m upheld ndashtaxpayers lose appeal re ATO use of Cayman Islands info
bull $305m summary judgment against Vanda Gould and company he controlled
bull Assessments based on info from Cayman Islands tax authority
bull Taxpayers alleged ATO obtained info unlawfully
bull Held assessments valid
Tax Administration
Gould amp Anor v DCT [2017] FCAFC 1
copy Chartered Accountants Australia + New Zealand 2017
TPB Information sheet on payroll service providers
bull Information Sheet gives examples to help payroll service providers determine
if they must register with TPB
Tax Administration
TPB(I) 312016 - Payroll service providers
14022017
27
copy Chartered Accountants Australia + New Zealand 2017
Current ATO data-matching activities
bull ATO collecting data from banks on
‒ Credit and debit card payments received by businesses
‒ Payments to ride-sourcing drivers
bull Also collecting data from on-selling sites about sellers who sold at least
$12000 worth of goods or services
Tax Administration
Credit and debit card online selling ride-sourcing data-matching
copy Chartered Accountants Australia + New Zealand 2017
Incorrect PAYG instalment variations and GIC
bull ATO says some taxpayers incorrectly varying PAYG instalment rate or
amount
bull Liable to penalty GIC if variation significantly incorrect
bull ATO may contact tax agents to discuss clientsrsquo variations
Tax Administration
14022017
28
copy Chartered Accountants Australia + New Zealand 2017
ATO explains what caused system outage
bull Cause of ATOrsquos Dec 2016 system outage major malfunction of data storage
infrastructure in central computing system
bull ATO insists taxpayer data not lost or compromised
bull PwC to independently review system outage (has expertise with ICT storage
at heart of incident)
bull ATO also conducting internal review focus on key stakeholders
Tax Administration
Announces independent review
copy Chartered Accountants Australia + New Zealand 2017
No grounds to set aside DPO
bull Dubai resident served with amended assessments departure prohibition
order (DPO) while going through customs
bull Federal Court dismissed application to set aside DPO
ndash DPO not issued for improper purpose given taxpayerrsquos significant tax liability ($45m) amp poor compliance record
ndash Australian tax debt not enforceable in UAE
Tax Administration
Bakri v DCT [2017] FCA 20
14022017
29
copy Chartered Accountants Australia + New Zealand 2017
Exemptions from registering with ATO re foreign ownership of water or agricultural land
bull Draft rules to support Register of Foreign Ownership of Water or Agricultural
Land Act 2015 released
bull Water Register from 1 July 2017
bull Draft rules provide reporting exemptions for
ndash Harvestable rights
ndash Irrigation infrastructure operators
ndash Foreign persons re security held under money lending agreement
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Guide to Reportable Tax Positions 2017
bull ATO guide to help companies complete
bull Reportable tax position schedule 2017 (NAT 74066)
bull Reportable tax position early disclosure form 2017 (NAT 74067)
bull RTP Category C (reportable transactions or events) expanded to cover issues
of concern to ATO (eg those in recent taxpayer alerts)
bull Category C questions must be answered if companyrsquos income year ends on
or after 30 June 2017
Tax Administration
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
12
copy Chartered Accountants Australia + New Zealand 2017
Overtime meal expenses disallowed
bull Deduction for overtime meal expenses disallowed ndash 25 shortfall penalty
affirmed
bull Taxpayer not paid allowance under industrial agreement (as required by s 32-
50 ITAA 1997)
bull Paid same amount each week regardless of how much overtime he worked
Deductions
Re Kael and FCT [2017] AATA 38
copy Chartered Accountants Australia + New Zealand 2017
No deduction or capital loss for guarantee obligation
bull Taxpayers (controllers of trusts) involved in property development
bull Income of 2 family trusts increased by $43m after capital loss of associated
unit trust disallowed
bull Taxpayers claimed they were entitled to $43m deduction or capital loss as
trusts guaranteed business loan which lender (another related entity) had
called on guarantors to meet
bull AAT found insufficient evidence to support existence of guarantee
Deductions
Re Carioti and FCT [2017] AATA 62
14022017
13
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer denied deduction for work expenses of $60000
bull AAT found that mechanical engineer not entitled to deductions for
‒ Car expenses ndash not work related
‒ Self-education costs ndash no nexus with income-producing activities
‒ Other ldquoworkrdquo expenses ndash not substantiated
bull AAT also affirmed 25 shortfall penalty for lack of reasonable care
Deductions
Re Vakiloroaya and FCT [2017] AATA 95
copy Chartered Accountants Australia + New Zealand 2017
Intangible capital improvements made to a pre-CGT asset - a separate asset
bull Intangible capital improvement to pre-CGT asset can be separate CGT asset
bull Example provided of pre-CGT land being rezoned and subdivided ndash ATO says
improvements to land may be separate CGT assets
CGT
Taxation Determination TD 20171
14022017
14
copy Chartered Accountants Australia + New Zealand 2017
GST determining if a recipient is an Australian consumer
bull Draft ruling on Netflix tax
bull Explains when suppliers can rely on automated systems and when they need
to take extra measures to determine customerrsquos GST status
bull Netflix tax applies from 1 July 2017 transitional rules started on
1 July 2016
Indirect Taxes
Draft GST Ruling GSTR 2016D1
copy Chartered Accountants Australia + New Zealand 2017
GST no recovery for margin scheme increasing adjustment
bull Developer sold land to local council
bull Subject to margin scheme
bull Council required to pay GST on the supply
bull Court held council not required to pay increasing adjustment in developerrsquos
BAS
Indirect Taxes
McEwans Australia Pty Ltd v Brisbane City Council [2016] QDC 347
14022017
15
copy Chartered Accountants Australia + New Zealand 2017
GST cross-border law changes and currency conversion
bull Draft determination provides currency conversion options for businesses
impacted by GST cross-border changes
bull Includes method to convert foreign consideration into Australian currency
Indirect Taxes
Draft FOREX 2016D1 GST Foreign Currency Conversion Determination
copy Chartered Accountants Australia + New Zealand 2017
GST on home care and residential care
bull ATO draft guidance documents to help home amp residential care suppliers work
out if their services are GST-free
bull Also explains how GST applies to sub-contracted services
Indirect Taxes
ATO seeks views on guidance material
14022017
16
copy Chartered Accountants Australia + New Zealand 2017
ATO guidance on concessional contributions and constitutionally protected super funds
bull Draft guidance on calculating concessional contributions for defined benefit
interests and constitutionally protected funds
bull Under super reforms extra amount included in concessional contributions
from 1 July 2017 to reflect full amount of accrued benefits for defined benefit
interests
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D11
copy Chartered Accountants Australia + New Zealand 2017
ATO releases 2014-15 SMSF statistical overview
bull 996 of super funds are SMSFs
bull 29 of super assets (totalling $622 billion) in SMSFs
bull 6 of SMSFs held assets under LRBAs with gt 90 of LRBA investments in
real estate
bull 31 growth in number of SMSFs over five years
Taxation of Superannuation
14022017
17
copy Chartered Accountants Australia + New Zealand 2017
SMSFs LRBAs and non-arms length income
bull ATO says two-step process to determine if non-armrsquos length income rules
apply to SMSF limited recourse borrowing arrangement
‒ Are terms of LRBA consistent with safe harbours in PCG 20165
‒ Can SMSF trustee otherwise show that LRBA on armrsquos length terms
bull If yes donrsquot consider TD 201616 (non-armrsquos length LRBAs)
Taxation of Superannuation
ATO info re interaction and application of PCG 20165 and TD 201616
copy Chartered Accountants Australia + New Zealand 2017
Superannuation objective - draft reg released
bull Draft reg sets out subsidiary objectives of super system eg
‒ Managing risks in retirement
‒ Being invested in best interests of fund members
‒ Alleviating fiscal pressures on government
Taxation of Superannuation
Draft Superannuation (Objective) Regulation
14022017
18
copy Chartered Accountants Australia + New Zealand 2017
Superannuation reform total superannuation balance
bull Explains how individuals total superannuation balance is calculated from 30
June 2017
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D12
copy Chartered Accountants Australia + New Zealand 2017
Super reforms $16m pension cap commutations actuarial certificates
bull Draft regs to complement super reforms amp $16m transfer balance cap
released
bull Allow commutation of certain super income streams to reduce excess transfer
balance
bull Actuarial certificate exemption re income stream benefits in retirement phase
bull Broader range of death benefits to be treated as roll-over benefits
Taxation of Superannuation
Draft Treasury Laws Amendment (Fair and Sustainable Super) Regulation
14022017
19
copy Chartered Accountants Australia + New Zealand 2017
Super trustee rollover obligations amid ATO website outage
bull APRA advised RSE licensees in December 2016
‒ It wonrsquot take action for breaches directly related to ATO website outage
‒ RSE licensees not required to give APRA formal notice of such breaches
Taxation of Superannuation
copy Chartered Accountants Australia + New Zealand 2017
Super reforms Defined benefit income streams life expectancy and market-linked pensions
bull Draft Guideline on defined benefit income cap rules and income stream
pensionsannuities paid from non-commutable life expectancy and market-
linked products
bull From 1 July 2017 capped defined benefit income streams
‒ Will count towards $16 million transfer balance cap
‒ Wonrsquot of themselves lead to excess transfer balance
Taxation of Superannuation
Draft Law Companion Guideline LCG 2017D1
14022017
20
copy Chartered Accountants Australia + New Zealand 2017
ATO SuperSeeker
bull SuperSeeker online service for individuals now decommissioned
bull Individuals can findmanage super via myGov
Taxation of Superannuation
Service decommissioned
copy Chartered Accountants Australia + New Zealand 2017
ATO corporate tax transparency report for 2014-15
bull Second annual report on corporate tax transparency released
bull Data from 2015 tax returns of large corporates operating in Australia
bull Once third of listed taxpayers reported no tax payable ndash FCT said donrsquot
assume tax avoidance
bull Of top 100 public or foreign companies six in highest risk quadrant
Tax Administration
2014-15 Report of Entity Tax Information
14022017
21
copy Chartered Accountants Australia + New Zealand 2017
Backpackers tax registration deadline extended for employers
bull From 1 Jan 2017 working holiday maker WHT rate of 15
bull Employers can withhold 15 even if unregistered
bull Unregistered employers wonrsquot be penalised if they register by 31 Jan 2017
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
SMSF trustees (and LRBA trustees) garnishee notices invalid for group payroll tax
bull Custodian company amp SMSFLRBA trustees had payroll tax liability under
grouping rules
bull Custodian sold property held on trust for SMSF trustees
bull Garnishee notices issued to purchasers invalid
bull Garnishee notice canrsquot be used to recover tax from trust property to satisfy
trusteersquos tax debt if debt incurred in another capacity
Tax Administration
Comr of State Revenue v Can Barz Pty Ltd amp Anor [2016] QCA 323
14022017
22
copy Chartered Accountants Australia + New Zealand 2017
Court gives judgment for full tax debt of $11m
bull Taxpayer with $11m tax debt
bull During recovery proceedings taxpayer produced $600000 bank cheque
reducing tax debt to $500000
bull Court gave judgment against taxpayer for $11m ndash said cheque is conditional
payment could be dishonoured
Tax Administration
DCT v Dukes [2016] NSWSC 1759
copy Chartered Accountants Australia + New Zealand 2017
Taxpayersrsquo rights and obligations
bull IGT recommends ATO implement measures to ensure
‒ Taxpayersrsquo Charter at forefront of ATOrsquos interactions with community
‒ ATOrsquos performance against Charter principles measured and publicly reported
bull If stakeholder concerns persist IGT may undertake follow-up review and
make recommendations to government
Tax Administration
IGT Review into the Taxpayers Charter and Taxpayer Protections released
14022017
23
copy Chartered Accountants Australia + New Zealand 2017
Default assessments upheld - burden of proof not satisfied
bull Unexplained deposits to bank accounts controlled by taxpayer
bull Significant gambling at casinos
bull AAT affirmed default assessments
bull Taxpayerrsquos claims that money came from family gifts loans from friends
gambling wins rejected
Tax Administration
Re Nguyen and FCT [2016] AATA 1041
copy Chartered Accountants Australia + New Zealand 2017
No summary judgment for DPN liability - unresolved facts re whether director took reasonable steps
bull Summary judgment in respect of $167000 director penalty notice not granted
bull Unresolved question of fact ndash whether director took reasonable steps to
ensure company complied with ATO payment arrangement
Tax Administration
DCT v Pedley [2016] WADC 166
14022017
24
copy Chartered Accountants Australia + New Zealand 2017
Reminder of easier GST reporting for new small businesses from 19 Jan 2017
bull Newly registered SMEs can lodge simpler BAS from 19 January 2017
‒ Quarterly reporters select Option 2 Calculate GST quarterly and report annually
‒ Monthly reports insert 0 at labels G2 G3 G10 and G11
‒ Annual reporters leave labels G2 G3 G10 and G11 blank
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Review of tax and corporate whistleblower provisions in Australia
bull 2016-17 Federal Budget plan to better protect tax whistleblowers
bull Government now seeks public comments on proposed tax whistleblower
protection
Tax Administration
Consultation paper released
14022017
25
copy Chartered Accountants Australia + New Zealand 2017
Ride sourcing providers
bull ATO to identify ride sourcing drivers who donrsquot meet tax obligations
(registration reporting lodgment payment)
bull Data from financial institutions for 2016-17 and 2017-18
bull ATO wants details of payments from ride sourcing facilitator to ride sourcing
provider
bull Records relating to up to 60000 individuals to be collected
Tax Administration
ATO data matching
copy Chartered Accountants Australia + New Zealand 2017
Simplifying income recognition for NFPs
bull New standards to apply from 1 January 2019
‒ AASB 1058 Income of Not-for-Profit Entities
‒ AASB 2016-7 Amendments to Australian Accounting Standards ndash Deferral of
AASB 15 for Not-for-Profit Entities
‒ AASB 2016-8 Amendments to Australian Accounting Standards ndash Australian Implementation Guidance for Not-for-Profit Entities
Tax Administration
New standards coming
14022017
26
copy Chartered Accountants Australia + New Zealand 2017
Summary judgment against taxpayers for $305m upheld ndashtaxpayers lose appeal re ATO use of Cayman Islands info
bull $305m summary judgment against Vanda Gould and company he controlled
bull Assessments based on info from Cayman Islands tax authority
bull Taxpayers alleged ATO obtained info unlawfully
bull Held assessments valid
Tax Administration
Gould amp Anor v DCT [2017] FCAFC 1
copy Chartered Accountants Australia + New Zealand 2017
TPB Information sheet on payroll service providers
bull Information Sheet gives examples to help payroll service providers determine
if they must register with TPB
Tax Administration
TPB(I) 312016 - Payroll service providers
14022017
27
copy Chartered Accountants Australia + New Zealand 2017
Current ATO data-matching activities
bull ATO collecting data from banks on
‒ Credit and debit card payments received by businesses
‒ Payments to ride-sourcing drivers
bull Also collecting data from on-selling sites about sellers who sold at least
$12000 worth of goods or services
Tax Administration
Credit and debit card online selling ride-sourcing data-matching
copy Chartered Accountants Australia + New Zealand 2017
Incorrect PAYG instalment variations and GIC
bull ATO says some taxpayers incorrectly varying PAYG instalment rate or
amount
bull Liable to penalty GIC if variation significantly incorrect
bull ATO may contact tax agents to discuss clientsrsquo variations
Tax Administration
14022017
28
copy Chartered Accountants Australia + New Zealand 2017
ATO explains what caused system outage
bull Cause of ATOrsquos Dec 2016 system outage major malfunction of data storage
infrastructure in central computing system
bull ATO insists taxpayer data not lost or compromised
bull PwC to independently review system outage (has expertise with ICT storage
at heart of incident)
bull ATO also conducting internal review focus on key stakeholders
Tax Administration
Announces independent review
copy Chartered Accountants Australia + New Zealand 2017
No grounds to set aside DPO
bull Dubai resident served with amended assessments departure prohibition
order (DPO) while going through customs
bull Federal Court dismissed application to set aside DPO
ndash DPO not issued for improper purpose given taxpayerrsquos significant tax liability ($45m) amp poor compliance record
ndash Australian tax debt not enforceable in UAE
Tax Administration
Bakri v DCT [2017] FCA 20
14022017
29
copy Chartered Accountants Australia + New Zealand 2017
Exemptions from registering with ATO re foreign ownership of water or agricultural land
bull Draft rules to support Register of Foreign Ownership of Water or Agricultural
Land Act 2015 released
bull Water Register from 1 July 2017
bull Draft rules provide reporting exemptions for
ndash Harvestable rights
ndash Irrigation infrastructure operators
ndash Foreign persons re security held under money lending agreement
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Guide to Reportable Tax Positions 2017
bull ATO guide to help companies complete
bull Reportable tax position schedule 2017 (NAT 74066)
bull Reportable tax position early disclosure form 2017 (NAT 74067)
bull RTP Category C (reportable transactions or events) expanded to cover issues
of concern to ATO (eg those in recent taxpayer alerts)
bull Category C questions must be answered if companyrsquos income year ends on
or after 30 June 2017
Tax Administration
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
13
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer denied deduction for work expenses of $60000
bull AAT found that mechanical engineer not entitled to deductions for
‒ Car expenses ndash not work related
‒ Self-education costs ndash no nexus with income-producing activities
‒ Other ldquoworkrdquo expenses ndash not substantiated
bull AAT also affirmed 25 shortfall penalty for lack of reasonable care
Deductions
Re Vakiloroaya and FCT [2017] AATA 95
copy Chartered Accountants Australia + New Zealand 2017
Intangible capital improvements made to a pre-CGT asset - a separate asset
bull Intangible capital improvement to pre-CGT asset can be separate CGT asset
bull Example provided of pre-CGT land being rezoned and subdivided ndash ATO says
improvements to land may be separate CGT assets
CGT
Taxation Determination TD 20171
14022017
14
copy Chartered Accountants Australia + New Zealand 2017
GST determining if a recipient is an Australian consumer
bull Draft ruling on Netflix tax
bull Explains when suppliers can rely on automated systems and when they need
to take extra measures to determine customerrsquos GST status
bull Netflix tax applies from 1 July 2017 transitional rules started on
1 July 2016
Indirect Taxes
Draft GST Ruling GSTR 2016D1
copy Chartered Accountants Australia + New Zealand 2017
GST no recovery for margin scheme increasing adjustment
bull Developer sold land to local council
bull Subject to margin scheme
bull Council required to pay GST on the supply
bull Court held council not required to pay increasing adjustment in developerrsquos
BAS
Indirect Taxes
McEwans Australia Pty Ltd v Brisbane City Council [2016] QDC 347
14022017
15
copy Chartered Accountants Australia + New Zealand 2017
GST cross-border law changes and currency conversion
bull Draft determination provides currency conversion options for businesses
impacted by GST cross-border changes
bull Includes method to convert foreign consideration into Australian currency
Indirect Taxes
Draft FOREX 2016D1 GST Foreign Currency Conversion Determination
copy Chartered Accountants Australia + New Zealand 2017
GST on home care and residential care
bull ATO draft guidance documents to help home amp residential care suppliers work
out if their services are GST-free
bull Also explains how GST applies to sub-contracted services
Indirect Taxes
ATO seeks views on guidance material
14022017
16
copy Chartered Accountants Australia + New Zealand 2017
ATO guidance on concessional contributions and constitutionally protected super funds
bull Draft guidance on calculating concessional contributions for defined benefit
interests and constitutionally protected funds
bull Under super reforms extra amount included in concessional contributions
from 1 July 2017 to reflect full amount of accrued benefits for defined benefit
interests
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D11
copy Chartered Accountants Australia + New Zealand 2017
ATO releases 2014-15 SMSF statistical overview
bull 996 of super funds are SMSFs
bull 29 of super assets (totalling $622 billion) in SMSFs
bull 6 of SMSFs held assets under LRBAs with gt 90 of LRBA investments in
real estate
bull 31 growth in number of SMSFs over five years
Taxation of Superannuation
14022017
17
copy Chartered Accountants Australia + New Zealand 2017
SMSFs LRBAs and non-arms length income
bull ATO says two-step process to determine if non-armrsquos length income rules
apply to SMSF limited recourse borrowing arrangement
‒ Are terms of LRBA consistent with safe harbours in PCG 20165
‒ Can SMSF trustee otherwise show that LRBA on armrsquos length terms
bull If yes donrsquot consider TD 201616 (non-armrsquos length LRBAs)
Taxation of Superannuation
ATO info re interaction and application of PCG 20165 and TD 201616
copy Chartered Accountants Australia + New Zealand 2017
Superannuation objective - draft reg released
bull Draft reg sets out subsidiary objectives of super system eg
‒ Managing risks in retirement
‒ Being invested in best interests of fund members
‒ Alleviating fiscal pressures on government
Taxation of Superannuation
Draft Superannuation (Objective) Regulation
14022017
18
copy Chartered Accountants Australia + New Zealand 2017
Superannuation reform total superannuation balance
bull Explains how individuals total superannuation balance is calculated from 30
June 2017
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D12
copy Chartered Accountants Australia + New Zealand 2017
Super reforms $16m pension cap commutations actuarial certificates
bull Draft regs to complement super reforms amp $16m transfer balance cap
released
bull Allow commutation of certain super income streams to reduce excess transfer
balance
bull Actuarial certificate exemption re income stream benefits in retirement phase
bull Broader range of death benefits to be treated as roll-over benefits
Taxation of Superannuation
Draft Treasury Laws Amendment (Fair and Sustainable Super) Regulation
14022017
19
copy Chartered Accountants Australia + New Zealand 2017
Super trustee rollover obligations amid ATO website outage
bull APRA advised RSE licensees in December 2016
‒ It wonrsquot take action for breaches directly related to ATO website outage
‒ RSE licensees not required to give APRA formal notice of such breaches
Taxation of Superannuation
copy Chartered Accountants Australia + New Zealand 2017
Super reforms Defined benefit income streams life expectancy and market-linked pensions
bull Draft Guideline on defined benefit income cap rules and income stream
pensionsannuities paid from non-commutable life expectancy and market-
linked products
bull From 1 July 2017 capped defined benefit income streams
‒ Will count towards $16 million transfer balance cap
‒ Wonrsquot of themselves lead to excess transfer balance
Taxation of Superannuation
Draft Law Companion Guideline LCG 2017D1
14022017
20
copy Chartered Accountants Australia + New Zealand 2017
ATO SuperSeeker
bull SuperSeeker online service for individuals now decommissioned
bull Individuals can findmanage super via myGov
Taxation of Superannuation
Service decommissioned
copy Chartered Accountants Australia + New Zealand 2017
ATO corporate tax transparency report for 2014-15
bull Second annual report on corporate tax transparency released
bull Data from 2015 tax returns of large corporates operating in Australia
bull Once third of listed taxpayers reported no tax payable ndash FCT said donrsquot
assume tax avoidance
bull Of top 100 public or foreign companies six in highest risk quadrant
Tax Administration
2014-15 Report of Entity Tax Information
14022017
21
copy Chartered Accountants Australia + New Zealand 2017
Backpackers tax registration deadline extended for employers
bull From 1 Jan 2017 working holiday maker WHT rate of 15
bull Employers can withhold 15 even if unregistered
bull Unregistered employers wonrsquot be penalised if they register by 31 Jan 2017
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
SMSF trustees (and LRBA trustees) garnishee notices invalid for group payroll tax
bull Custodian company amp SMSFLRBA trustees had payroll tax liability under
grouping rules
bull Custodian sold property held on trust for SMSF trustees
bull Garnishee notices issued to purchasers invalid
bull Garnishee notice canrsquot be used to recover tax from trust property to satisfy
trusteersquos tax debt if debt incurred in another capacity
Tax Administration
Comr of State Revenue v Can Barz Pty Ltd amp Anor [2016] QCA 323
14022017
22
copy Chartered Accountants Australia + New Zealand 2017
Court gives judgment for full tax debt of $11m
bull Taxpayer with $11m tax debt
bull During recovery proceedings taxpayer produced $600000 bank cheque
reducing tax debt to $500000
bull Court gave judgment against taxpayer for $11m ndash said cheque is conditional
payment could be dishonoured
Tax Administration
DCT v Dukes [2016] NSWSC 1759
copy Chartered Accountants Australia + New Zealand 2017
Taxpayersrsquo rights and obligations
bull IGT recommends ATO implement measures to ensure
‒ Taxpayersrsquo Charter at forefront of ATOrsquos interactions with community
‒ ATOrsquos performance against Charter principles measured and publicly reported
bull If stakeholder concerns persist IGT may undertake follow-up review and
make recommendations to government
Tax Administration
IGT Review into the Taxpayers Charter and Taxpayer Protections released
14022017
23
copy Chartered Accountants Australia + New Zealand 2017
Default assessments upheld - burden of proof not satisfied
bull Unexplained deposits to bank accounts controlled by taxpayer
bull Significant gambling at casinos
bull AAT affirmed default assessments
bull Taxpayerrsquos claims that money came from family gifts loans from friends
gambling wins rejected
Tax Administration
Re Nguyen and FCT [2016] AATA 1041
copy Chartered Accountants Australia + New Zealand 2017
No summary judgment for DPN liability - unresolved facts re whether director took reasonable steps
bull Summary judgment in respect of $167000 director penalty notice not granted
bull Unresolved question of fact ndash whether director took reasonable steps to
ensure company complied with ATO payment arrangement
Tax Administration
DCT v Pedley [2016] WADC 166
14022017
24
copy Chartered Accountants Australia + New Zealand 2017
Reminder of easier GST reporting for new small businesses from 19 Jan 2017
bull Newly registered SMEs can lodge simpler BAS from 19 January 2017
‒ Quarterly reporters select Option 2 Calculate GST quarterly and report annually
‒ Monthly reports insert 0 at labels G2 G3 G10 and G11
‒ Annual reporters leave labels G2 G3 G10 and G11 blank
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Review of tax and corporate whistleblower provisions in Australia
bull 2016-17 Federal Budget plan to better protect tax whistleblowers
bull Government now seeks public comments on proposed tax whistleblower
protection
Tax Administration
Consultation paper released
14022017
25
copy Chartered Accountants Australia + New Zealand 2017
Ride sourcing providers
bull ATO to identify ride sourcing drivers who donrsquot meet tax obligations
(registration reporting lodgment payment)
bull Data from financial institutions for 2016-17 and 2017-18
bull ATO wants details of payments from ride sourcing facilitator to ride sourcing
provider
bull Records relating to up to 60000 individuals to be collected
Tax Administration
ATO data matching
copy Chartered Accountants Australia + New Zealand 2017
Simplifying income recognition for NFPs
bull New standards to apply from 1 January 2019
‒ AASB 1058 Income of Not-for-Profit Entities
‒ AASB 2016-7 Amendments to Australian Accounting Standards ndash Deferral of
AASB 15 for Not-for-Profit Entities
‒ AASB 2016-8 Amendments to Australian Accounting Standards ndash Australian Implementation Guidance for Not-for-Profit Entities
Tax Administration
New standards coming
14022017
26
copy Chartered Accountants Australia + New Zealand 2017
Summary judgment against taxpayers for $305m upheld ndashtaxpayers lose appeal re ATO use of Cayman Islands info
bull $305m summary judgment against Vanda Gould and company he controlled
bull Assessments based on info from Cayman Islands tax authority
bull Taxpayers alleged ATO obtained info unlawfully
bull Held assessments valid
Tax Administration
Gould amp Anor v DCT [2017] FCAFC 1
copy Chartered Accountants Australia + New Zealand 2017
TPB Information sheet on payroll service providers
bull Information Sheet gives examples to help payroll service providers determine
if they must register with TPB
Tax Administration
TPB(I) 312016 - Payroll service providers
14022017
27
copy Chartered Accountants Australia + New Zealand 2017
Current ATO data-matching activities
bull ATO collecting data from banks on
‒ Credit and debit card payments received by businesses
‒ Payments to ride-sourcing drivers
bull Also collecting data from on-selling sites about sellers who sold at least
$12000 worth of goods or services
Tax Administration
Credit and debit card online selling ride-sourcing data-matching
copy Chartered Accountants Australia + New Zealand 2017
Incorrect PAYG instalment variations and GIC
bull ATO says some taxpayers incorrectly varying PAYG instalment rate or
amount
bull Liable to penalty GIC if variation significantly incorrect
bull ATO may contact tax agents to discuss clientsrsquo variations
Tax Administration
14022017
28
copy Chartered Accountants Australia + New Zealand 2017
ATO explains what caused system outage
bull Cause of ATOrsquos Dec 2016 system outage major malfunction of data storage
infrastructure in central computing system
bull ATO insists taxpayer data not lost or compromised
bull PwC to independently review system outage (has expertise with ICT storage
at heart of incident)
bull ATO also conducting internal review focus on key stakeholders
Tax Administration
Announces independent review
copy Chartered Accountants Australia + New Zealand 2017
No grounds to set aside DPO
bull Dubai resident served with amended assessments departure prohibition
order (DPO) while going through customs
bull Federal Court dismissed application to set aside DPO
ndash DPO not issued for improper purpose given taxpayerrsquos significant tax liability ($45m) amp poor compliance record
ndash Australian tax debt not enforceable in UAE
Tax Administration
Bakri v DCT [2017] FCA 20
14022017
29
copy Chartered Accountants Australia + New Zealand 2017
Exemptions from registering with ATO re foreign ownership of water or agricultural land
bull Draft rules to support Register of Foreign Ownership of Water or Agricultural
Land Act 2015 released
bull Water Register from 1 July 2017
bull Draft rules provide reporting exemptions for
ndash Harvestable rights
ndash Irrigation infrastructure operators
ndash Foreign persons re security held under money lending agreement
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Guide to Reportable Tax Positions 2017
bull ATO guide to help companies complete
bull Reportable tax position schedule 2017 (NAT 74066)
bull Reportable tax position early disclosure form 2017 (NAT 74067)
bull RTP Category C (reportable transactions or events) expanded to cover issues
of concern to ATO (eg those in recent taxpayer alerts)
bull Category C questions must be answered if companyrsquos income year ends on
or after 30 June 2017
Tax Administration
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
14
copy Chartered Accountants Australia + New Zealand 2017
GST determining if a recipient is an Australian consumer
bull Draft ruling on Netflix tax
bull Explains when suppliers can rely on automated systems and when they need
to take extra measures to determine customerrsquos GST status
bull Netflix tax applies from 1 July 2017 transitional rules started on
1 July 2016
Indirect Taxes
Draft GST Ruling GSTR 2016D1
copy Chartered Accountants Australia + New Zealand 2017
GST no recovery for margin scheme increasing adjustment
bull Developer sold land to local council
bull Subject to margin scheme
bull Council required to pay GST on the supply
bull Court held council not required to pay increasing adjustment in developerrsquos
BAS
Indirect Taxes
McEwans Australia Pty Ltd v Brisbane City Council [2016] QDC 347
14022017
15
copy Chartered Accountants Australia + New Zealand 2017
GST cross-border law changes and currency conversion
bull Draft determination provides currency conversion options for businesses
impacted by GST cross-border changes
bull Includes method to convert foreign consideration into Australian currency
Indirect Taxes
Draft FOREX 2016D1 GST Foreign Currency Conversion Determination
copy Chartered Accountants Australia + New Zealand 2017
GST on home care and residential care
bull ATO draft guidance documents to help home amp residential care suppliers work
out if their services are GST-free
bull Also explains how GST applies to sub-contracted services
Indirect Taxes
ATO seeks views on guidance material
14022017
16
copy Chartered Accountants Australia + New Zealand 2017
ATO guidance on concessional contributions and constitutionally protected super funds
bull Draft guidance on calculating concessional contributions for defined benefit
interests and constitutionally protected funds
bull Under super reforms extra amount included in concessional contributions
from 1 July 2017 to reflect full amount of accrued benefits for defined benefit
interests
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D11
copy Chartered Accountants Australia + New Zealand 2017
ATO releases 2014-15 SMSF statistical overview
bull 996 of super funds are SMSFs
bull 29 of super assets (totalling $622 billion) in SMSFs
bull 6 of SMSFs held assets under LRBAs with gt 90 of LRBA investments in
real estate
bull 31 growth in number of SMSFs over five years
Taxation of Superannuation
14022017
17
copy Chartered Accountants Australia + New Zealand 2017
SMSFs LRBAs and non-arms length income
bull ATO says two-step process to determine if non-armrsquos length income rules
apply to SMSF limited recourse borrowing arrangement
‒ Are terms of LRBA consistent with safe harbours in PCG 20165
‒ Can SMSF trustee otherwise show that LRBA on armrsquos length terms
bull If yes donrsquot consider TD 201616 (non-armrsquos length LRBAs)
Taxation of Superannuation
ATO info re interaction and application of PCG 20165 and TD 201616
copy Chartered Accountants Australia + New Zealand 2017
Superannuation objective - draft reg released
bull Draft reg sets out subsidiary objectives of super system eg
‒ Managing risks in retirement
‒ Being invested in best interests of fund members
‒ Alleviating fiscal pressures on government
Taxation of Superannuation
Draft Superannuation (Objective) Regulation
14022017
18
copy Chartered Accountants Australia + New Zealand 2017
Superannuation reform total superannuation balance
bull Explains how individuals total superannuation balance is calculated from 30
June 2017
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D12
copy Chartered Accountants Australia + New Zealand 2017
Super reforms $16m pension cap commutations actuarial certificates
bull Draft regs to complement super reforms amp $16m transfer balance cap
released
bull Allow commutation of certain super income streams to reduce excess transfer
balance
bull Actuarial certificate exemption re income stream benefits in retirement phase
bull Broader range of death benefits to be treated as roll-over benefits
Taxation of Superannuation
Draft Treasury Laws Amendment (Fair and Sustainable Super) Regulation
14022017
19
copy Chartered Accountants Australia + New Zealand 2017
Super trustee rollover obligations amid ATO website outage
bull APRA advised RSE licensees in December 2016
‒ It wonrsquot take action for breaches directly related to ATO website outage
‒ RSE licensees not required to give APRA formal notice of such breaches
Taxation of Superannuation
copy Chartered Accountants Australia + New Zealand 2017
Super reforms Defined benefit income streams life expectancy and market-linked pensions
bull Draft Guideline on defined benefit income cap rules and income stream
pensionsannuities paid from non-commutable life expectancy and market-
linked products
bull From 1 July 2017 capped defined benefit income streams
‒ Will count towards $16 million transfer balance cap
‒ Wonrsquot of themselves lead to excess transfer balance
Taxation of Superannuation
Draft Law Companion Guideline LCG 2017D1
14022017
20
copy Chartered Accountants Australia + New Zealand 2017
ATO SuperSeeker
bull SuperSeeker online service for individuals now decommissioned
bull Individuals can findmanage super via myGov
Taxation of Superannuation
Service decommissioned
copy Chartered Accountants Australia + New Zealand 2017
ATO corporate tax transparency report for 2014-15
bull Second annual report on corporate tax transparency released
bull Data from 2015 tax returns of large corporates operating in Australia
bull Once third of listed taxpayers reported no tax payable ndash FCT said donrsquot
assume tax avoidance
bull Of top 100 public or foreign companies six in highest risk quadrant
Tax Administration
2014-15 Report of Entity Tax Information
14022017
21
copy Chartered Accountants Australia + New Zealand 2017
Backpackers tax registration deadline extended for employers
bull From 1 Jan 2017 working holiday maker WHT rate of 15
bull Employers can withhold 15 even if unregistered
bull Unregistered employers wonrsquot be penalised if they register by 31 Jan 2017
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
SMSF trustees (and LRBA trustees) garnishee notices invalid for group payroll tax
bull Custodian company amp SMSFLRBA trustees had payroll tax liability under
grouping rules
bull Custodian sold property held on trust for SMSF trustees
bull Garnishee notices issued to purchasers invalid
bull Garnishee notice canrsquot be used to recover tax from trust property to satisfy
trusteersquos tax debt if debt incurred in another capacity
Tax Administration
Comr of State Revenue v Can Barz Pty Ltd amp Anor [2016] QCA 323
14022017
22
copy Chartered Accountants Australia + New Zealand 2017
Court gives judgment for full tax debt of $11m
bull Taxpayer with $11m tax debt
bull During recovery proceedings taxpayer produced $600000 bank cheque
reducing tax debt to $500000
bull Court gave judgment against taxpayer for $11m ndash said cheque is conditional
payment could be dishonoured
Tax Administration
DCT v Dukes [2016] NSWSC 1759
copy Chartered Accountants Australia + New Zealand 2017
Taxpayersrsquo rights and obligations
bull IGT recommends ATO implement measures to ensure
‒ Taxpayersrsquo Charter at forefront of ATOrsquos interactions with community
‒ ATOrsquos performance against Charter principles measured and publicly reported
bull If stakeholder concerns persist IGT may undertake follow-up review and
make recommendations to government
Tax Administration
IGT Review into the Taxpayers Charter and Taxpayer Protections released
14022017
23
copy Chartered Accountants Australia + New Zealand 2017
Default assessments upheld - burden of proof not satisfied
bull Unexplained deposits to bank accounts controlled by taxpayer
bull Significant gambling at casinos
bull AAT affirmed default assessments
bull Taxpayerrsquos claims that money came from family gifts loans from friends
gambling wins rejected
Tax Administration
Re Nguyen and FCT [2016] AATA 1041
copy Chartered Accountants Australia + New Zealand 2017
No summary judgment for DPN liability - unresolved facts re whether director took reasonable steps
bull Summary judgment in respect of $167000 director penalty notice not granted
bull Unresolved question of fact ndash whether director took reasonable steps to
ensure company complied with ATO payment arrangement
Tax Administration
DCT v Pedley [2016] WADC 166
14022017
24
copy Chartered Accountants Australia + New Zealand 2017
Reminder of easier GST reporting for new small businesses from 19 Jan 2017
bull Newly registered SMEs can lodge simpler BAS from 19 January 2017
‒ Quarterly reporters select Option 2 Calculate GST quarterly and report annually
‒ Monthly reports insert 0 at labels G2 G3 G10 and G11
‒ Annual reporters leave labels G2 G3 G10 and G11 blank
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Review of tax and corporate whistleblower provisions in Australia
bull 2016-17 Federal Budget plan to better protect tax whistleblowers
bull Government now seeks public comments on proposed tax whistleblower
protection
Tax Administration
Consultation paper released
14022017
25
copy Chartered Accountants Australia + New Zealand 2017
Ride sourcing providers
bull ATO to identify ride sourcing drivers who donrsquot meet tax obligations
(registration reporting lodgment payment)
bull Data from financial institutions for 2016-17 and 2017-18
bull ATO wants details of payments from ride sourcing facilitator to ride sourcing
provider
bull Records relating to up to 60000 individuals to be collected
Tax Administration
ATO data matching
copy Chartered Accountants Australia + New Zealand 2017
Simplifying income recognition for NFPs
bull New standards to apply from 1 January 2019
‒ AASB 1058 Income of Not-for-Profit Entities
‒ AASB 2016-7 Amendments to Australian Accounting Standards ndash Deferral of
AASB 15 for Not-for-Profit Entities
‒ AASB 2016-8 Amendments to Australian Accounting Standards ndash Australian Implementation Guidance for Not-for-Profit Entities
Tax Administration
New standards coming
14022017
26
copy Chartered Accountants Australia + New Zealand 2017
Summary judgment against taxpayers for $305m upheld ndashtaxpayers lose appeal re ATO use of Cayman Islands info
bull $305m summary judgment against Vanda Gould and company he controlled
bull Assessments based on info from Cayman Islands tax authority
bull Taxpayers alleged ATO obtained info unlawfully
bull Held assessments valid
Tax Administration
Gould amp Anor v DCT [2017] FCAFC 1
copy Chartered Accountants Australia + New Zealand 2017
TPB Information sheet on payroll service providers
bull Information Sheet gives examples to help payroll service providers determine
if they must register with TPB
Tax Administration
TPB(I) 312016 - Payroll service providers
14022017
27
copy Chartered Accountants Australia + New Zealand 2017
Current ATO data-matching activities
bull ATO collecting data from banks on
‒ Credit and debit card payments received by businesses
‒ Payments to ride-sourcing drivers
bull Also collecting data from on-selling sites about sellers who sold at least
$12000 worth of goods or services
Tax Administration
Credit and debit card online selling ride-sourcing data-matching
copy Chartered Accountants Australia + New Zealand 2017
Incorrect PAYG instalment variations and GIC
bull ATO says some taxpayers incorrectly varying PAYG instalment rate or
amount
bull Liable to penalty GIC if variation significantly incorrect
bull ATO may contact tax agents to discuss clientsrsquo variations
Tax Administration
14022017
28
copy Chartered Accountants Australia + New Zealand 2017
ATO explains what caused system outage
bull Cause of ATOrsquos Dec 2016 system outage major malfunction of data storage
infrastructure in central computing system
bull ATO insists taxpayer data not lost or compromised
bull PwC to independently review system outage (has expertise with ICT storage
at heart of incident)
bull ATO also conducting internal review focus on key stakeholders
Tax Administration
Announces independent review
copy Chartered Accountants Australia + New Zealand 2017
No grounds to set aside DPO
bull Dubai resident served with amended assessments departure prohibition
order (DPO) while going through customs
bull Federal Court dismissed application to set aside DPO
ndash DPO not issued for improper purpose given taxpayerrsquos significant tax liability ($45m) amp poor compliance record
ndash Australian tax debt not enforceable in UAE
Tax Administration
Bakri v DCT [2017] FCA 20
14022017
29
copy Chartered Accountants Australia + New Zealand 2017
Exemptions from registering with ATO re foreign ownership of water or agricultural land
bull Draft rules to support Register of Foreign Ownership of Water or Agricultural
Land Act 2015 released
bull Water Register from 1 July 2017
bull Draft rules provide reporting exemptions for
ndash Harvestable rights
ndash Irrigation infrastructure operators
ndash Foreign persons re security held under money lending agreement
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Guide to Reportable Tax Positions 2017
bull ATO guide to help companies complete
bull Reportable tax position schedule 2017 (NAT 74066)
bull Reportable tax position early disclosure form 2017 (NAT 74067)
bull RTP Category C (reportable transactions or events) expanded to cover issues
of concern to ATO (eg those in recent taxpayer alerts)
bull Category C questions must be answered if companyrsquos income year ends on
or after 30 June 2017
Tax Administration
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
15
copy Chartered Accountants Australia + New Zealand 2017
GST cross-border law changes and currency conversion
bull Draft determination provides currency conversion options for businesses
impacted by GST cross-border changes
bull Includes method to convert foreign consideration into Australian currency
Indirect Taxes
Draft FOREX 2016D1 GST Foreign Currency Conversion Determination
copy Chartered Accountants Australia + New Zealand 2017
GST on home care and residential care
bull ATO draft guidance documents to help home amp residential care suppliers work
out if their services are GST-free
bull Also explains how GST applies to sub-contracted services
Indirect Taxes
ATO seeks views on guidance material
14022017
16
copy Chartered Accountants Australia + New Zealand 2017
ATO guidance on concessional contributions and constitutionally protected super funds
bull Draft guidance on calculating concessional contributions for defined benefit
interests and constitutionally protected funds
bull Under super reforms extra amount included in concessional contributions
from 1 July 2017 to reflect full amount of accrued benefits for defined benefit
interests
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D11
copy Chartered Accountants Australia + New Zealand 2017
ATO releases 2014-15 SMSF statistical overview
bull 996 of super funds are SMSFs
bull 29 of super assets (totalling $622 billion) in SMSFs
bull 6 of SMSFs held assets under LRBAs with gt 90 of LRBA investments in
real estate
bull 31 growth in number of SMSFs over five years
Taxation of Superannuation
14022017
17
copy Chartered Accountants Australia + New Zealand 2017
SMSFs LRBAs and non-arms length income
bull ATO says two-step process to determine if non-armrsquos length income rules
apply to SMSF limited recourse borrowing arrangement
‒ Are terms of LRBA consistent with safe harbours in PCG 20165
‒ Can SMSF trustee otherwise show that LRBA on armrsquos length terms
bull If yes donrsquot consider TD 201616 (non-armrsquos length LRBAs)
Taxation of Superannuation
ATO info re interaction and application of PCG 20165 and TD 201616
copy Chartered Accountants Australia + New Zealand 2017
Superannuation objective - draft reg released
bull Draft reg sets out subsidiary objectives of super system eg
‒ Managing risks in retirement
‒ Being invested in best interests of fund members
‒ Alleviating fiscal pressures on government
Taxation of Superannuation
Draft Superannuation (Objective) Regulation
14022017
18
copy Chartered Accountants Australia + New Zealand 2017
Superannuation reform total superannuation balance
bull Explains how individuals total superannuation balance is calculated from 30
June 2017
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D12
copy Chartered Accountants Australia + New Zealand 2017
Super reforms $16m pension cap commutations actuarial certificates
bull Draft regs to complement super reforms amp $16m transfer balance cap
released
bull Allow commutation of certain super income streams to reduce excess transfer
balance
bull Actuarial certificate exemption re income stream benefits in retirement phase
bull Broader range of death benefits to be treated as roll-over benefits
Taxation of Superannuation
Draft Treasury Laws Amendment (Fair and Sustainable Super) Regulation
14022017
19
copy Chartered Accountants Australia + New Zealand 2017
Super trustee rollover obligations amid ATO website outage
bull APRA advised RSE licensees in December 2016
‒ It wonrsquot take action for breaches directly related to ATO website outage
‒ RSE licensees not required to give APRA formal notice of such breaches
Taxation of Superannuation
copy Chartered Accountants Australia + New Zealand 2017
Super reforms Defined benefit income streams life expectancy and market-linked pensions
bull Draft Guideline on defined benefit income cap rules and income stream
pensionsannuities paid from non-commutable life expectancy and market-
linked products
bull From 1 July 2017 capped defined benefit income streams
‒ Will count towards $16 million transfer balance cap
‒ Wonrsquot of themselves lead to excess transfer balance
Taxation of Superannuation
Draft Law Companion Guideline LCG 2017D1
14022017
20
copy Chartered Accountants Australia + New Zealand 2017
ATO SuperSeeker
bull SuperSeeker online service for individuals now decommissioned
bull Individuals can findmanage super via myGov
Taxation of Superannuation
Service decommissioned
copy Chartered Accountants Australia + New Zealand 2017
ATO corporate tax transparency report for 2014-15
bull Second annual report on corporate tax transparency released
bull Data from 2015 tax returns of large corporates operating in Australia
bull Once third of listed taxpayers reported no tax payable ndash FCT said donrsquot
assume tax avoidance
bull Of top 100 public or foreign companies six in highest risk quadrant
Tax Administration
2014-15 Report of Entity Tax Information
14022017
21
copy Chartered Accountants Australia + New Zealand 2017
Backpackers tax registration deadline extended for employers
bull From 1 Jan 2017 working holiday maker WHT rate of 15
bull Employers can withhold 15 even if unregistered
bull Unregistered employers wonrsquot be penalised if they register by 31 Jan 2017
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
SMSF trustees (and LRBA trustees) garnishee notices invalid for group payroll tax
bull Custodian company amp SMSFLRBA trustees had payroll tax liability under
grouping rules
bull Custodian sold property held on trust for SMSF trustees
bull Garnishee notices issued to purchasers invalid
bull Garnishee notice canrsquot be used to recover tax from trust property to satisfy
trusteersquos tax debt if debt incurred in another capacity
Tax Administration
Comr of State Revenue v Can Barz Pty Ltd amp Anor [2016] QCA 323
14022017
22
copy Chartered Accountants Australia + New Zealand 2017
Court gives judgment for full tax debt of $11m
bull Taxpayer with $11m tax debt
bull During recovery proceedings taxpayer produced $600000 bank cheque
reducing tax debt to $500000
bull Court gave judgment against taxpayer for $11m ndash said cheque is conditional
payment could be dishonoured
Tax Administration
DCT v Dukes [2016] NSWSC 1759
copy Chartered Accountants Australia + New Zealand 2017
Taxpayersrsquo rights and obligations
bull IGT recommends ATO implement measures to ensure
‒ Taxpayersrsquo Charter at forefront of ATOrsquos interactions with community
‒ ATOrsquos performance against Charter principles measured and publicly reported
bull If stakeholder concerns persist IGT may undertake follow-up review and
make recommendations to government
Tax Administration
IGT Review into the Taxpayers Charter and Taxpayer Protections released
14022017
23
copy Chartered Accountants Australia + New Zealand 2017
Default assessments upheld - burden of proof not satisfied
bull Unexplained deposits to bank accounts controlled by taxpayer
bull Significant gambling at casinos
bull AAT affirmed default assessments
bull Taxpayerrsquos claims that money came from family gifts loans from friends
gambling wins rejected
Tax Administration
Re Nguyen and FCT [2016] AATA 1041
copy Chartered Accountants Australia + New Zealand 2017
No summary judgment for DPN liability - unresolved facts re whether director took reasonable steps
bull Summary judgment in respect of $167000 director penalty notice not granted
bull Unresolved question of fact ndash whether director took reasonable steps to
ensure company complied with ATO payment arrangement
Tax Administration
DCT v Pedley [2016] WADC 166
14022017
24
copy Chartered Accountants Australia + New Zealand 2017
Reminder of easier GST reporting for new small businesses from 19 Jan 2017
bull Newly registered SMEs can lodge simpler BAS from 19 January 2017
‒ Quarterly reporters select Option 2 Calculate GST quarterly and report annually
‒ Monthly reports insert 0 at labels G2 G3 G10 and G11
‒ Annual reporters leave labels G2 G3 G10 and G11 blank
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Review of tax and corporate whistleblower provisions in Australia
bull 2016-17 Federal Budget plan to better protect tax whistleblowers
bull Government now seeks public comments on proposed tax whistleblower
protection
Tax Administration
Consultation paper released
14022017
25
copy Chartered Accountants Australia + New Zealand 2017
Ride sourcing providers
bull ATO to identify ride sourcing drivers who donrsquot meet tax obligations
(registration reporting lodgment payment)
bull Data from financial institutions for 2016-17 and 2017-18
bull ATO wants details of payments from ride sourcing facilitator to ride sourcing
provider
bull Records relating to up to 60000 individuals to be collected
Tax Administration
ATO data matching
copy Chartered Accountants Australia + New Zealand 2017
Simplifying income recognition for NFPs
bull New standards to apply from 1 January 2019
‒ AASB 1058 Income of Not-for-Profit Entities
‒ AASB 2016-7 Amendments to Australian Accounting Standards ndash Deferral of
AASB 15 for Not-for-Profit Entities
‒ AASB 2016-8 Amendments to Australian Accounting Standards ndash Australian Implementation Guidance for Not-for-Profit Entities
Tax Administration
New standards coming
14022017
26
copy Chartered Accountants Australia + New Zealand 2017
Summary judgment against taxpayers for $305m upheld ndashtaxpayers lose appeal re ATO use of Cayman Islands info
bull $305m summary judgment against Vanda Gould and company he controlled
bull Assessments based on info from Cayman Islands tax authority
bull Taxpayers alleged ATO obtained info unlawfully
bull Held assessments valid
Tax Administration
Gould amp Anor v DCT [2017] FCAFC 1
copy Chartered Accountants Australia + New Zealand 2017
TPB Information sheet on payroll service providers
bull Information Sheet gives examples to help payroll service providers determine
if they must register with TPB
Tax Administration
TPB(I) 312016 - Payroll service providers
14022017
27
copy Chartered Accountants Australia + New Zealand 2017
Current ATO data-matching activities
bull ATO collecting data from banks on
‒ Credit and debit card payments received by businesses
‒ Payments to ride-sourcing drivers
bull Also collecting data from on-selling sites about sellers who sold at least
$12000 worth of goods or services
Tax Administration
Credit and debit card online selling ride-sourcing data-matching
copy Chartered Accountants Australia + New Zealand 2017
Incorrect PAYG instalment variations and GIC
bull ATO says some taxpayers incorrectly varying PAYG instalment rate or
amount
bull Liable to penalty GIC if variation significantly incorrect
bull ATO may contact tax agents to discuss clientsrsquo variations
Tax Administration
14022017
28
copy Chartered Accountants Australia + New Zealand 2017
ATO explains what caused system outage
bull Cause of ATOrsquos Dec 2016 system outage major malfunction of data storage
infrastructure in central computing system
bull ATO insists taxpayer data not lost or compromised
bull PwC to independently review system outage (has expertise with ICT storage
at heart of incident)
bull ATO also conducting internal review focus on key stakeholders
Tax Administration
Announces independent review
copy Chartered Accountants Australia + New Zealand 2017
No grounds to set aside DPO
bull Dubai resident served with amended assessments departure prohibition
order (DPO) while going through customs
bull Federal Court dismissed application to set aside DPO
ndash DPO not issued for improper purpose given taxpayerrsquos significant tax liability ($45m) amp poor compliance record
ndash Australian tax debt not enforceable in UAE
Tax Administration
Bakri v DCT [2017] FCA 20
14022017
29
copy Chartered Accountants Australia + New Zealand 2017
Exemptions from registering with ATO re foreign ownership of water or agricultural land
bull Draft rules to support Register of Foreign Ownership of Water or Agricultural
Land Act 2015 released
bull Water Register from 1 July 2017
bull Draft rules provide reporting exemptions for
ndash Harvestable rights
ndash Irrigation infrastructure operators
ndash Foreign persons re security held under money lending agreement
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Guide to Reportable Tax Positions 2017
bull ATO guide to help companies complete
bull Reportable tax position schedule 2017 (NAT 74066)
bull Reportable tax position early disclosure form 2017 (NAT 74067)
bull RTP Category C (reportable transactions or events) expanded to cover issues
of concern to ATO (eg those in recent taxpayer alerts)
bull Category C questions must be answered if companyrsquos income year ends on
or after 30 June 2017
Tax Administration
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
16
copy Chartered Accountants Australia + New Zealand 2017
ATO guidance on concessional contributions and constitutionally protected super funds
bull Draft guidance on calculating concessional contributions for defined benefit
interests and constitutionally protected funds
bull Under super reforms extra amount included in concessional contributions
from 1 July 2017 to reflect full amount of accrued benefits for defined benefit
interests
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D11
copy Chartered Accountants Australia + New Zealand 2017
ATO releases 2014-15 SMSF statistical overview
bull 996 of super funds are SMSFs
bull 29 of super assets (totalling $622 billion) in SMSFs
bull 6 of SMSFs held assets under LRBAs with gt 90 of LRBA investments in
real estate
bull 31 growth in number of SMSFs over five years
Taxation of Superannuation
14022017
17
copy Chartered Accountants Australia + New Zealand 2017
SMSFs LRBAs and non-arms length income
bull ATO says two-step process to determine if non-armrsquos length income rules
apply to SMSF limited recourse borrowing arrangement
‒ Are terms of LRBA consistent with safe harbours in PCG 20165
‒ Can SMSF trustee otherwise show that LRBA on armrsquos length terms
bull If yes donrsquot consider TD 201616 (non-armrsquos length LRBAs)
Taxation of Superannuation
ATO info re interaction and application of PCG 20165 and TD 201616
copy Chartered Accountants Australia + New Zealand 2017
Superannuation objective - draft reg released
bull Draft reg sets out subsidiary objectives of super system eg
‒ Managing risks in retirement
‒ Being invested in best interests of fund members
‒ Alleviating fiscal pressures on government
Taxation of Superannuation
Draft Superannuation (Objective) Regulation
14022017
18
copy Chartered Accountants Australia + New Zealand 2017
Superannuation reform total superannuation balance
bull Explains how individuals total superannuation balance is calculated from 30
June 2017
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D12
copy Chartered Accountants Australia + New Zealand 2017
Super reforms $16m pension cap commutations actuarial certificates
bull Draft regs to complement super reforms amp $16m transfer balance cap
released
bull Allow commutation of certain super income streams to reduce excess transfer
balance
bull Actuarial certificate exemption re income stream benefits in retirement phase
bull Broader range of death benefits to be treated as roll-over benefits
Taxation of Superannuation
Draft Treasury Laws Amendment (Fair and Sustainable Super) Regulation
14022017
19
copy Chartered Accountants Australia + New Zealand 2017
Super trustee rollover obligations amid ATO website outage
bull APRA advised RSE licensees in December 2016
‒ It wonrsquot take action for breaches directly related to ATO website outage
‒ RSE licensees not required to give APRA formal notice of such breaches
Taxation of Superannuation
copy Chartered Accountants Australia + New Zealand 2017
Super reforms Defined benefit income streams life expectancy and market-linked pensions
bull Draft Guideline on defined benefit income cap rules and income stream
pensionsannuities paid from non-commutable life expectancy and market-
linked products
bull From 1 July 2017 capped defined benefit income streams
‒ Will count towards $16 million transfer balance cap
‒ Wonrsquot of themselves lead to excess transfer balance
Taxation of Superannuation
Draft Law Companion Guideline LCG 2017D1
14022017
20
copy Chartered Accountants Australia + New Zealand 2017
ATO SuperSeeker
bull SuperSeeker online service for individuals now decommissioned
bull Individuals can findmanage super via myGov
Taxation of Superannuation
Service decommissioned
copy Chartered Accountants Australia + New Zealand 2017
ATO corporate tax transparency report for 2014-15
bull Second annual report on corporate tax transparency released
bull Data from 2015 tax returns of large corporates operating in Australia
bull Once third of listed taxpayers reported no tax payable ndash FCT said donrsquot
assume tax avoidance
bull Of top 100 public or foreign companies six in highest risk quadrant
Tax Administration
2014-15 Report of Entity Tax Information
14022017
21
copy Chartered Accountants Australia + New Zealand 2017
Backpackers tax registration deadline extended for employers
bull From 1 Jan 2017 working holiday maker WHT rate of 15
bull Employers can withhold 15 even if unregistered
bull Unregistered employers wonrsquot be penalised if they register by 31 Jan 2017
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
SMSF trustees (and LRBA trustees) garnishee notices invalid for group payroll tax
bull Custodian company amp SMSFLRBA trustees had payroll tax liability under
grouping rules
bull Custodian sold property held on trust for SMSF trustees
bull Garnishee notices issued to purchasers invalid
bull Garnishee notice canrsquot be used to recover tax from trust property to satisfy
trusteersquos tax debt if debt incurred in another capacity
Tax Administration
Comr of State Revenue v Can Barz Pty Ltd amp Anor [2016] QCA 323
14022017
22
copy Chartered Accountants Australia + New Zealand 2017
Court gives judgment for full tax debt of $11m
bull Taxpayer with $11m tax debt
bull During recovery proceedings taxpayer produced $600000 bank cheque
reducing tax debt to $500000
bull Court gave judgment against taxpayer for $11m ndash said cheque is conditional
payment could be dishonoured
Tax Administration
DCT v Dukes [2016] NSWSC 1759
copy Chartered Accountants Australia + New Zealand 2017
Taxpayersrsquo rights and obligations
bull IGT recommends ATO implement measures to ensure
‒ Taxpayersrsquo Charter at forefront of ATOrsquos interactions with community
‒ ATOrsquos performance against Charter principles measured and publicly reported
bull If stakeholder concerns persist IGT may undertake follow-up review and
make recommendations to government
Tax Administration
IGT Review into the Taxpayers Charter and Taxpayer Protections released
14022017
23
copy Chartered Accountants Australia + New Zealand 2017
Default assessments upheld - burden of proof not satisfied
bull Unexplained deposits to bank accounts controlled by taxpayer
bull Significant gambling at casinos
bull AAT affirmed default assessments
bull Taxpayerrsquos claims that money came from family gifts loans from friends
gambling wins rejected
Tax Administration
Re Nguyen and FCT [2016] AATA 1041
copy Chartered Accountants Australia + New Zealand 2017
No summary judgment for DPN liability - unresolved facts re whether director took reasonable steps
bull Summary judgment in respect of $167000 director penalty notice not granted
bull Unresolved question of fact ndash whether director took reasonable steps to
ensure company complied with ATO payment arrangement
Tax Administration
DCT v Pedley [2016] WADC 166
14022017
24
copy Chartered Accountants Australia + New Zealand 2017
Reminder of easier GST reporting for new small businesses from 19 Jan 2017
bull Newly registered SMEs can lodge simpler BAS from 19 January 2017
‒ Quarterly reporters select Option 2 Calculate GST quarterly and report annually
‒ Monthly reports insert 0 at labels G2 G3 G10 and G11
‒ Annual reporters leave labels G2 G3 G10 and G11 blank
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Review of tax and corporate whistleblower provisions in Australia
bull 2016-17 Federal Budget plan to better protect tax whistleblowers
bull Government now seeks public comments on proposed tax whistleblower
protection
Tax Administration
Consultation paper released
14022017
25
copy Chartered Accountants Australia + New Zealand 2017
Ride sourcing providers
bull ATO to identify ride sourcing drivers who donrsquot meet tax obligations
(registration reporting lodgment payment)
bull Data from financial institutions for 2016-17 and 2017-18
bull ATO wants details of payments from ride sourcing facilitator to ride sourcing
provider
bull Records relating to up to 60000 individuals to be collected
Tax Administration
ATO data matching
copy Chartered Accountants Australia + New Zealand 2017
Simplifying income recognition for NFPs
bull New standards to apply from 1 January 2019
‒ AASB 1058 Income of Not-for-Profit Entities
‒ AASB 2016-7 Amendments to Australian Accounting Standards ndash Deferral of
AASB 15 for Not-for-Profit Entities
‒ AASB 2016-8 Amendments to Australian Accounting Standards ndash Australian Implementation Guidance for Not-for-Profit Entities
Tax Administration
New standards coming
14022017
26
copy Chartered Accountants Australia + New Zealand 2017
Summary judgment against taxpayers for $305m upheld ndashtaxpayers lose appeal re ATO use of Cayman Islands info
bull $305m summary judgment against Vanda Gould and company he controlled
bull Assessments based on info from Cayman Islands tax authority
bull Taxpayers alleged ATO obtained info unlawfully
bull Held assessments valid
Tax Administration
Gould amp Anor v DCT [2017] FCAFC 1
copy Chartered Accountants Australia + New Zealand 2017
TPB Information sheet on payroll service providers
bull Information Sheet gives examples to help payroll service providers determine
if they must register with TPB
Tax Administration
TPB(I) 312016 - Payroll service providers
14022017
27
copy Chartered Accountants Australia + New Zealand 2017
Current ATO data-matching activities
bull ATO collecting data from banks on
‒ Credit and debit card payments received by businesses
‒ Payments to ride-sourcing drivers
bull Also collecting data from on-selling sites about sellers who sold at least
$12000 worth of goods or services
Tax Administration
Credit and debit card online selling ride-sourcing data-matching
copy Chartered Accountants Australia + New Zealand 2017
Incorrect PAYG instalment variations and GIC
bull ATO says some taxpayers incorrectly varying PAYG instalment rate or
amount
bull Liable to penalty GIC if variation significantly incorrect
bull ATO may contact tax agents to discuss clientsrsquo variations
Tax Administration
14022017
28
copy Chartered Accountants Australia + New Zealand 2017
ATO explains what caused system outage
bull Cause of ATOrsquos Dec 2016 system outage major malfunction of data storage
infrastructure in central computing system
bull ATO insists taxpayer data not lost or compromised
bull PwC to independently review system outage (has expertise with ICT storage
at heart of incident)
bull ATO also conducting internal review focus on key stakeholders
Tax Administration
Announces independent review
copy Chartered Accountants Australia + New Zealand 2017
No grounds to set aside DPO
bull Dubai resident served with amended assessments departure prohibition
order (DPO) while going through customs
bull Federal Court dismissed application to set aside DPO
ndash DPO not issued for improper purpose given taxpayerrsquos significant tax liability ($45m) amp poor compliance record
ndash Australian tax debt not enforceable in UAE
Tax Administration
Bakri v DCT [2017] FCA 20
14022017
29
copy Chartered Accountants Australia + New Zealand 2017
Exemptions from registering with ATO re foreign ownership of water or agricultural land
bull Draft rules to support Register of Foreign Ownership of Water or Agricultural
Land Act 2015 released
bull Water Register from 1 July 2017
bull Draft rules provide reporting exemptions for
ndash Harvestable rights
ndash Irrigation infrastructure operators
ndash Foreign persons re security held under money lending agreement
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Guide to Reportable Tax Positions 2017
bull ATO guide to help companies complete
bull Reportable tax position schedule 2017 (NAT 74066)
bull Reportable tax position early disclosure form 2017 (NAT 74067)
bull RTP Category C (reportable transactions or events) expanded to cover issues
of concern to ATO (eg those in recent taxpayer alerts)
bull Category C questions must be answered if companyrsquos income year ends on
or after 30 June 2017
Tax Administration
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
17
copy Chartered Accountants Australia + New Zealand 2017
SMSFs LRBAs and non-arms length income
bull ATO says two-step process to determine if non-armrsquos length income rules
apply to SMSF limited recourse borrowing arrangement
‒ Are terms of LRBA consistent with safe harbours in PCG 20165
‒ Can SMSF trustee otherwise show that LRBA on armrsquos length terms
bull If yes donrsquot consider TD 201616 (non-armrsquos length LRBAs)
Taxation of Superannuation
ATO info re interaction and application of PCG 20165 and TD 201616
copy Chartered Accountants Australia + New Zealand 2017
Superannuation objective - draft reg released
bull Draft reg sets out subsidiary objectives of super system eg
‒ Managing risks in retirement
‒ Being invested in best interests of fund members
‒ Alleviating fiscal pressures on government
Taxation of Superannuation
Draft Superannuation (Objective) Regulation
14022017
18
copy Chartered Accountants Australia + New Zealand 2017
Superannuation reform total superannuation balance
bull Explains how individuals total superannuation balance is calculated from 30
June 2017
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D12
copy Chartered Accountants Australia + New Zealand 2017
Super reforms $16m pension cap commutations actuarial certificates
bull Draft regs to complement super reforms amp $16m transfer balance cap
released
bull Allow commutation of certain super income streams to reduce excess transfer
balance
bull Actuarial certificate exemption re income stream benefits in retirement phase
bull Broader range of death benefits to be treated as roll-over benefits
Taxation of Superannuation
Draft Treasury Laws Amendment (Fair and Sustainable Super) Regulation
14022017
19
copy Chartered Accountants Australia + New Zealand 2017
Super trustee rollover obligations amid ATO website outage
bull APRA advised RSE licensees in December 2016
‒ It wonrsquot take action for breaches directly related to ATO website outage
‒ RSE licensees not required to give APRA formal notice of such breaches
Taxation of Superannuation
copy Chartered Accountants Australia + New Zealand 2017
Super reforms Defined benefit income streams life expectancy and market-linked pensions
bull Draft Guideline on defined benefit income cap rules and income stream
pensionsannuities paid from non-commutable life expectancy and market-
linked products
bull From 1 July 2017 capped defined benefit income streams
‒ Will count towards $16 million transfer balance cap
‒ Wonrsquot of themselves lead to excess transfer balance
Taxation of Superannuation
Draft Law Companion Guideline LCG 2017D1
14022017
20
copy Chartered Accountants Australia + New Zealand 2017
ATO SuperSeeker
bull SuperSeeker online service for individuals now decommissioned
bull Individuals can findmanage super via myGov
Taxation of Superannuation
Service decommissioned
copy Chartered Accountants Australia + New Zealand 2017
ATO corporate tax transparency report for 2014-15
bull Second annual report on corporate tax transparency released
bull Data from 2015 tax returns of large corporates operating in Australia
bull Once third of listed taxpayers reported no tax payable ndash FCT said donrsquot
assume tax avoidance
bull Of top 100 public or foreign companies six in highest risk quadrant
Tax Administration
2014-15 Report of Entity Tax Information
14022017
21
copy Chartered Accountants Australia + New Zealand 2017
Backpackers tax registration deadline extended for employers
bull From 1 Jan 2017 working holiday maker WHT rate of 15
bull Employers can withhold 15 even if unregistered
bull Unregistered employers wonrsquot be penalised if they register by 31 Jan 2017
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
SMSF trustees (and LRBA trustees) garnishee notices invalid for group payroll tax
bull Custodian company amp SMSFLRBA trustees had payroll tax liability under
grouping rules
bull Custodian sold property held on trust for SMSF trustees
bull Garnishee notices issued to purchasers invalid
bull Garnishee notice canrsquot be used to recover tax from trust property to satisfy
trusteersquos tax debt if debt incurred in another capacity
Tax Administration
Comr of State Revenue v Can Barz Pty Ltd amp Anor [2016] QCA 323
14022017
22
copy Chartered Accountants Australia + New Zealand 2017
Court gives judgment for full tax debt of $11m
bull Taxpayer with $11m tax debt
bull During recovery proceedings taxpayer produced $600000 bank cheque
reducing tax debt to $500000
bull Court gave judgment against taxpayer for $11m ndash said cheque is conditional
payment could be dishonoured
Tax Administration
DCT v Dukes [2016] NSWSC 1759
copy Chartered Accountants Australia + New Zealand 2017
Taxpayersrsquo rights and obligations
bull IGT recommends ATO implement measures to ensure
‒ Taxpayersrsquo Charter at forefront of ATOrsquos interactions with community
‒ ATOrsquos performance against Charter principles measured and publicly reported
bull If stakeholder concerns persist IGT may undertake follow-up review and
make recommendations to government
Tax Administration
IGT Review into the Taxpayers Charter and Taxpayer Protections released
14022017
23
copy Chartered Accountants Australia + New Zealand 2017
Default assessments upheld - burden of proof not satisfied
bull Unexplained deposits to bank accounts controlled by taxpayer
bull Significant gambling at casinos
bull AAT affirmed default assessments
bull Taxpayerrsquos claims that money came from family gifts loans from friends
gambling wins rejected
Tax Administration
Re Nguyen and FCT [2016] AATA 1041
copy Chartered Accountants Australia + New Zealand 2017
No summary judgment for DPN liability - unresolved facts re whether director took reasonable steps
bull Summary judgment in respect of $167000 director penalty notice not granted
bull Unresolved question of fact ndash whether director took reasonable steps to
ensure company complied with ATO payment arrangement
Tax Administration
DCT v Pedley [2016] WADC 166
14022017
24
copy Chartered Accountants Australia + New Zealand 2017
Reminder of easier GST reporting for new small businesses from 19 Jan 2017
bull Newly registered SMEs can lodge simpler BAS from 19 January 2017
‒ Quarterly reporters select Option 2 Calculate GST quarterly and report annually
‒ Monthly reports insert 0 at labels G2 G3 G10 and G11
‒ Annual reporters leave labels G2 G3 G10 and G11 blank
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Review of tax and corporate whistleblower provisions in Australia
bull 2016-17 Federal Budget plan to better protect tax whistleblowers
bull Government now seeks public comments on proposed tax whistleblower
protection
Tax Administration
Consultation paper released
14022017
25
copy Chartered Accountants Australia + New Zealand 2017
Ride sourcing providers
bull ATO to identify ride sourcing drivers who donrsquot meet tax obligations
(registration reporting lodgment payment)
bull Data from financial institutions for 2016-17 and 2017-18
bull ATO wants details of payments from ride sourcing facilitator to ride sourcing
provider
bull Records relating to up to 60000 individuals to be collected
Tax Administration
ATO data matching
copy Chartered Accountants Australia + New Zealand 2017
Simplifying income recognition for NFPs
bull New standards to apply from 1 January 2019
‒ AASB 1058 Income of Not-for-Profit Entities
‒ AASB 2016-7 Amendments to Australian Accounting Standards ndash Deferral of
AASB 15 for Not-for-Profit Entities
‒ AASB 2016-8 Amendments to Australian Accounting Standards ndash Australian Implementation Guidance for Not-for-Profit Entities
Tax Administration
New standards coming
14022017
26
copy Chartered Accountants Australia + New Zealand 2017
Summary judgment against taxpayers for $305m upheld ndashtaxpayers lose appeal re ATO use of Cayman Islands info
bull $305m summary judgment against Vanda Gould and company he controlled
bull Assessments based on info from Cayman Islands tax authority
bull Taxpayers alleged ATO obtained info unlawfully
bull Held assessments valid
Tax Administration
Gould amp Anor v DCT [2017] FCAFC 1
copy Chartered Accountants Australia + New Zealand 2017
TPB Information sheet on payroll service providers
bull Information Sheet gives examples to help payroll service providers determine
if they must register with TPB
Tax Administration
TPB(I) 312016 - Payroll service providers
14022017
27
copy Chartered Accountants Australia + New Zealand 2017
Current ATO data-matching activities
bull ATO collecting data from banks on
‒ Credit and debit card payments received by businesses
‒ Payments to ride-sourcing drivers
bull Also collecting data from on-selling sites about sellers who sold at least
$12000 worth of goods or services
Tax Administration
Credit and debit card online selling ride-sourcing data-matching
copy Chartered Accountants Australia + New Zealand 2017
Incorrect PAYG instalment variations and GIC
bull ATO says some taxpayers incorrectly varying PAYG instalment rate or
amount
bull Liable to penalty GIC if variation significantly incorrect
bull ATO may contact tax agents to discuss clientsrsquo variations
Tax Administration
14022017
28
copy Chartered Accountants Australia + New Zealand 2017
ATO explains what caused system outage
bull Cause of ATOrsquos Dec 2016 system outage major malfunction of data storage
infrastructure in central computing system
bull ATO insists taxpayer data not lost or compromised
bull PwC to independently review system outage (has expertise with ICT storage
at heart of incident)
bull ATO also conducting internal review focus on key stakeholders
Tax Administration
Announces independent review
copy Chartered Accountants Australia + New Zealand 2017
No grounds to set aside DPO
bull Dubai resident served with amended assessments departure prohibition
order (DPO) while going through customs
bull Federal Court dismissed application to set aside DPO
ndash DPO not issued for improper purpose given taxpayerrsquos significant tax liability ($45m) amp poor compliance record
ndash Australian tax debt not enforceable in UAE
Tax Administration
Bakri v DCT [2017] FCA 20
14022017
29
copy Chartered Accountants Australia + New Zealand 2017
Exemptions from registering with ATO re foreign ownership of water or agricultural land
bull Draft rules to support Register of Foreign Ownership of Water or Agricultural
Land Act 2015 released
bull Water Register from 1 July 2017
bull Draft rules provide reporting exemptions for
ndash Harvestable rights
ndash Irrigation infrastructure operators
ndash Foreign persons re security held under money lending agreement
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Guide to Reportable Tax Positions 2017
bull ATO guide to help companies complete
bull Reportable tax position schedule 2017 (NAT 74066)
bull Reportable tax position early disclosure form 2017 (NAT 74067)
bull RTP Category C (reportable transactions or events) expanded to cover issues
of concern to ATO (eg those in recent taxpayer alerts)
bull Category C questions must be answered if companyrsquos income year ends on
or after 30 June 2017
Tax Administration
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
18
copy Chartered Accountants Australia + New Zealand 2017
Superannuation reform total superannuation balance
bull Explains how individuals total superannuation balance is calculated from 30
June 2017
Taxation of Superannuation
Draft Law Companion Guideline LCG 2016D12
copy Chartered Accountants Australia + New Zealand 2017
Super reforms $16m pension cap commutations actuarial certificates
bull Draft regs to complement super reforms amp $16m transfer balance cap
released
bull Allow commutation of certain super income streams to reduce excess transfer
balance
bull Actuarial certificate exemption re income stream benefits in retirement phase
bull Broader range of death benefits to be treated as roll-over benefits
Taxation of Superannuation
Draft Treasury Laws Amendment (Fair and Sustainable Super) Regulation
14022017
19
copy Chartered Accountants Australia + New Zealand 2017
Super trustee rollover obligations amid ATO website outage
bull APRA advised RSE licensees in December 2016
‒ It wonrsquot take action for breaches directly related to ATO website outage
‒ RSE licensees not required to give APRA formal notice of such breaches
Taxation of Superannuation
copy Chartered Accountants Australia + New Zealand 2017
Super reforms Defined benefit income streams life expectancy and market-linked pensions
bull Draft Guideline on defined benefit income cap rules and income stream
pensionsannuities paid from non-commutable life expectancy and market-
linked products
bull From 1 July 2017 capped defined benefit income streams
‒ Will count towards $16 million transfer balance cap
‒ Wonrsquot of themselves lead to excess transfer balance
Taxation of Superannuation
Draft Law Companion Guideline LCG 2017D1
14022017
20
copy Chartered Accountants Australia + New Zealand 2017
ATO SuperSeeker
bull SuperSeeker online service for individuals now decommissioned
bull Individuals can findmanage super via myGov
Taxation of Superannuation
Service decommissioned
copy Chartered Accountants Australia + New Zealand 2017
ATO corporate tax transparency report for 2014-15
bull Second annual report on corporate tax transparency released
bull Data from 2015 tax returns of large corporates operating in Australia
bull Once third of listed taxpayers reported no tax payable ndash FCT said donrsquot
assume tax avoidance
bull Of top 100 public or foreign companies six in highest risk quadrant
Tax Administration
2014-15 Report of Entity Tax Information
14022017
21
copy Chartered Accountants Australia + New Zealand 2017
Backpackers tax registration deadline extended for employers
bull From 1 Jan 2017 working holiday maker WHT rate of 15
bull Employers can withhold 15 even if unregistered
bull Unregistered employers wonrsquot be penalised if they register by 31 Jan 2017
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
SMSF trustees (and LRBA trustees) garnishee notices invalid for group payroll tax
bull Custodian company amp SMSFLRBA trustees had payroll tax liability under
grouping rules
bull Custodian sold property held on trust for SMSF trustees
bull Garnishee notices issued to purchasers invalid
bull Garnishee notice canrsquot be used to recover tax from trust property to satisfy
trusteersquos tax debt if debt incurred in another capacity
Tax Administration
Comr of State Revenue v Can Barz Pty Ltd amp Anor [2016] QCA 323
14022017
22
copy Chartered Accountants Australia + New Zealand 2017
Court gives judgment for full tax debt of $11m
bull Taxpayer with $11m tax debt
bull During recovery proceedings taxpayer produced $600000 bank cheque
reducing tax debt to $500000
bull Court gave judgment against taxpayer for $11m ndash said cheque is conditional
payment could be dishonoured
Tax Administration
DCT v Dukes [2016] NSWSC 1759
copy Chartered Accountants Australia + New Zealand 2017
Taxpayersrsquo rights and obligations
bull IGT recommends ATO implement measures to ensure
‒ Taxpayersrsquo Charter at forefront of ATOrsquos interactions with community
‒ ATOrsquos performance against Charter principles measured and publicly reported
bull If stakeholder concerns persist IGT may undertake follow-up review and
make recommendations to government
Tax Administration
IGT Review into the Taxpayers Charter and Taxpayer Protections released
14022017
23
copy Chartered Accountants Australia + New Zealand 2017
Default assessments upheld - burden of proof not satisfied
bull Unexplained deposits to bank accounts controlled by taxpayer
bull Significant gambling at casinos
bull AAT affirmed default assessments
bull Taxpayerrsquos claims that money came from family gifts loans from friends
gambling wins rejected
Tax Administration
Re Nguyen and FCT [2016] AATA 1041
copy Chartered Accountants Australia + New Zealand 2017
No summary judgment for DPN liability - unresolved facts re whether director took reasonable steps
bull Summary judgment in respect of $167000 director penalty notice not granted
bull Unresolved question of fact ndash whether director took reasonable steps to
ensure company complied with ATO payment arrangement
Tax Administration
DCT v Pedley [2016] WADC 166
14022017
24
copy Chartered Accountants Australia + New Zealand 2017
Reminder of easier GST reporting for new small businesses from 19 Jan 2017
bull Newly registered SMEs can lodge simpler BAS from 19 January 2017
‒ Quarterly reporters select Option 2 Calculate GST quarterly and report annually
‒ Monthly reports insert 0 at labels G2 G3 G10 and G11
‒ Annual reporters leave labels G2 G3 G10 and G11 blank
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Review of tax and corporate whistleblower provisions in Australia
bull 2016-17 Federal Budget plan to better protect tax whistleblowers
bull Government now seeks public comments on proposed tax whistleblower
protection
Tax Administration
Consultation paper released
14022017
25
copy Chartered Accountants Australia + New Zealand 2017
Ride sourcing providers
bull ATO to identify ride sourcing drivers who donrsquot meet tax obligations
(registration reporting lodgment payment)
bull Data from financial institutions for 2016-17 and 2017-18
bull ATO wants details of payments from ride sourcing facilitator to ride sourcing
provider
bull Records relating to up to 60000 individuals to be collected
Tax Administration
ATO data matching
copy Chartered Accountants Australia + New Zealand 2017
Simplifying income recognition for NFPs
bull New standards to apply from 1 January 2019
‒ AASB 1058 Income of Not-for-Profit Entities
‒ AASB 2016-7 Amendments to Australian Accounting Standards ndash Deferral of
AASB 15 for Not-for-Profit Entities
‒ AASB 2016-8 Amendments to Australian Accounting Standards ndash Australian Implementation Guidance for Not-for-Profit Entities
Tax Administration
New standards coming
14022017
26
copy Chartered Accountants Australia + New Zealand 2017
Summary judgment against taxpayers for $305m upheld ndashtaxpayers lose appeal re ATO use of Cayman Islands info
bull $305m summary judgment against Vanda Gould and company he controlled
bull Assessments based on info from Cayman Islands tax authority
bull Taxpayers alleged ATO obtained info unlawfully
bull Held assessments valid
Tax Administration
Gould amp Anor v DCT [2017] FCAFC 1
copy Chartered Accountants Australia + New Zealand 2017
TPB Information sheet on payroll service providers
bull Information Sheet gives examples to help payroll service providers determine
if they must register with TPB
Tax Administration
TPB(I) 312016 - Payroll service providers
14022017
27
copy Chartered Accountants Australia + New Zealand 2017
Current ATO data-matching activities
bull ATO collecting data from banks on
‒ Credit and debit card payments received by businesses
‒ Payments to ride-sourcing drivers
bull Also collecting data from on-selling sites about sellers who sold at least
$12000 worth of goods or services
Tax Administration
Credit and debit card online selling ride-sourcing data-matching
copy Chartered Accountants Australia + New Zealand 2017
Incorrect PAYG instalment variations and GIC
bull ATO says some taxpayers incorrectly varying PAYG instalment rate or
amount
bull Liable to penalty GIC if variation significantly incorrect
bull ATO may contact tax agents to discuss clientsrsquo variations
Tax Administration
14022017
28
copy Chartered Accountants Australia + New Zealand 2017
ATO explains what caused system outage
bull Cause of ATOrsquos Dec 2016 system outage major malfunction of data storage
infrastructure in central computing system
bull ATO insists taxpayer data not lost or compromised
bull PwC to independently review system outage (has expertise with ICT storage
at heart of incident)
bull ATO also conducting internal review focus on key stakeholders
Tax Administration
Announces independent review
copy Chartered Accountants Australia + New Zealand 2017
No grounds to set aside DPO
bull Dubai resident served with amended assessments departure prohibition
order (DPO) while going through customs
bull Federal Court dismissed application to set aside DPO
ndash DPO not issued for improper purpose given taxpayerrsquos significant tax liability ($45m) amp poor compliance record
ndash Australian tax debt not enforceable in UAE
Tax Administration
Bakri v DCT [2017] FCA 20
14022017
29
copy Chartered Accountants Australia + New Zealand 2017
Exemptions from registering with ATO re foreign ownership of water or agricultural land
bull Draft rules to support Register of Foreign Ownership of Water or Agricultural
Land Act 2015 released
bull Water Register from 1 July 2017
bull Draft rules provide reporting exemptions for
ndash Harvestable rights
ndash Irrigation infrastructure operators
ndash Foreign persons re security held under money lending agreement
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Guide to Reportable Tax Positions 2017
bull ATO guide to help companies complete
bull Reportable tax position schedule 2017 (NAT 74066)
bull Reportable tax position early disclosure form 2017 (NAT 74067)
bull RTP Category C (reportable transactions or events) expanded to cover issues
of concern to ATO (eg those in recent taxpayer alerts)
bull Category C questions must be answered if companyrsquos income year ends on
or after 30 June 2017
Tax Administration
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
19
copy Chartered Accountants Australia + New Zealand 2017
Super trustee rollover obligations amid ATO website outage
bull APRA advised RSE licensees in December 2016
‒ It wonrsquot take action for breaches directly related to ATO website outage
‒ RSE licensees not required to give APRA formal notice of such breaches
Taxation of Superannuation
copy Chartered Accountants Australia + New Zealand 2017
Super reforms Defined benefit income streams life expectancy and market-linked pensions
bull Draft Guideline on defined benefit income cap rules and income stream
pensionsannuities paid from non-commutable life expectancy and market-
linked products
bull From 1 July 2017 capped defined benefit income streams
‒ Will count towards $16 million transfer balance cap
‒ Wonrsquot of themselves lead to excess transfer balance
Taxation of Superannuation
Draft Law Companion Guideline LCG 2017D1
14022017
20
copy Chartered Accountants Australia + New Zealand 2017
ATO SuperSeeker
bull SuperSeeker online service for individuals now decommissioned
bull Individuals can findmanage super via myGov
Taxation of Superannuation
Service decommissioned
copy Chartered Accountants Australia + New Zealand 2017
ATO corporate tax transparency report for 2014-15
bull Second annual report on corporate tax transparency released
bull Data from 2015 tax returns of large corporates operating in Australia
bull Once third of listed taxpayers reported no tax payable ndash FCT said donrsquot
assume tax avoidance
bull Of top 100 public or foreign companies six in highest risk quadrant
Tax Administration
2014-15 Report of Entity Tax Information
14022017
21
copy Chartered Accountants Australia + New Zealand 2017
Backpackers tax registration deadline extended for employers
bull From 1 Jan 2017 working holiday maker WHT rate of 15
bull Employers can withhold 15 even if unregistered
bull Unregistered employers wonrsquot be penalised if they register by 31 Jan 2017
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
SMSF trustees (and LRBA trustees) garnishee notices invalid for group payroll tax
bull Custodian company amp SMSFLRBA trustees had payroll tax liability under
grouping rules
bull Custodian sold property held on trust for SMSF trustees
bull Garnishee notices issued to purchasers invalid
bull Garnishee notice canrsquot be used to recover tax from trust property to satisfy
trusteersquos tax debt if debt incurred in another capacity
Tax Administration
Comr of State Revenue v Can Barz Pty Ltd amp Anor [2016] QCA 323
14022017
22
copy Chartered Accountants Australia + New Zealand 2017
Court gives judgment for full tax debt of $11m
bull Taxpayer with $11m tax debt
bull During recovery proceedings taxpayer produced $600000 bank cheque
reducing tax debt to $500000
bull Court gave judgment against taxpayer for $11m ndash said cheque is conditional
payment could be dishonoured
Tax Administration
DCT v Dukes [2016] NSWSC 1759
copy Chartered Accountants Australia + New Zealand 2017
Taxpayersrsquo rights and obligations
bull IGT recommends ATO implement measures to ensure
‒ Taxpayersrsquo Charter at forefront of ATOrsquos interactions with community
‒ ATOrsquos performance against Charter principles measured and publicly reported
bull If stakeholder concerns persist IGT may undertake follow-up review and
make recommendations to government
Tax Administration
IGT Review into the Taxpayers Charter and Taxpayer Protections released
14022017
23
copy Chartered Accountants Australia + New Zealand 2017
Default assessments upheld - burden of proof not satisfied
bull Unexplained deposits to bank accounts controlled by taxpayer
bull Significant gambling at casinos
bull AAT affirmed default assessments
bull Taxpayerrsquos claims that money came from family gifts loans from friends
gambling wins rejected
Tax Administration
Re Nguyen and FCT [2016] AATA 1041
copy Chartered Accountants Australia + New Zealand 2017
No summary judgment for DPN liability - unresolved facts re whether director took reasonable steps
bull Summary judgment in respect of $167000 director penalty notice not granted
bull Unresolved question of fact ndash whether director took reasonable steps to
ensure company complied with ATO payment arrangement
Tax Administration
DCT v Pedley [2016] WADC 166
14022017
24
copy Chartered Accountants Australia + New Zealand 2017
Reminder of easier GST reporting for new small businesses from 19 Jan 2017
bull Newly registered SMEs can lodge simpler BAS from 19 January 2017
‒ Quarterly reporters select Option 2 Calculate GST quarterly and report annually
‒ Monthly reports insert 0 at labels G2 G3 G10 and G11
‒ Annual reporters leave labels G2 G3 G10 and G11 blank
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Review of tax and corporate whistleblower provisions in Australia
bull 2016-17 Federal Budget plan to better protect tax whistleblowers
bull Government now seeks public comments on proposed tax whistleblower
protection
Tax Administration
Consultation paper released
14022017
25
copy Chartered Accountants Australia + New Zealand 2017
Ride sourcing providers
bull ATO to identify ride sourcing drivers who donrsquot meet tax obligations
(registration reporting lodgment payment)
bull Data from financial institutions for 2016-17 and 2017-18
bull ATO wants details of payments from ride sourcing facilitator to ride sourcing
provider
bull Records relating to up to 60000 individuals to be collected
Tax Administration
ATO data matching
copy Chartered Accountants Australia + New Zealand 2017
Simplifying income recognition for NFPs
bull New standards to apply from 1 January 2019
‒ AASB 1058 Income of Not-for-Profit Entities
‒ AASB 2016-7 Amendments to Australian Accounting Standards ndash Deferral of
AASB 15 for Not-for-Profit Entities
‒ AASB 2016-8 Amendments to Australian Accounting Standards ndash Australian Implementation Guidance for Not-for-Profit Entities
Tax Administration
New standards coming
14022017
26
copy Chartered Accountants Australia + New Zealand 2017
Summary judgment against taxpayers for $305m upheld ndashtaxpayers lose appeal re ATO use of Cayman Islands info
bull $305m summary judgment against Vanda Gould and company he controlled
bull Assessments based on info from Cayman Islands tax authority
bull Taxpayers alleged ATO obtained info unlawfully
bull Held assessments valid
Tax Administration
Gould amp Anor v DCT [2017] FCAFC 1
copy Chartered Accountants Australia + New Zealand 2017
TPB Information sheet on payroll service providers
bull Information Sheet gives examples to help payroll service providers determine
if they must register with TPB
Tax Administration
TPB(I) 312016 - Payroll service providers
14022017
27
copy Chartered Accountants Australia + New Zealand 2017
Current ATO data-matching activities
bull ATO collecting data from banks on
‒ Credit and debit card payments received by businesses
‒ Payments to ride-sourcing drivers
bull Also collecting data from on-selling sites about sellers who sold at least
$12000 worth of goods or services
Tax Administration
Credit and debit card online selling ride-sourcing data-matching
copy Chartered Accountants Australia + New Zealand 2017
Incorrect PAYG instalment variations and GIC
bull ATO says some taxpayers incorrectly varying PAYG instalment rate or
amount
bull Liable to penalty GIC if variation significantly incorrect
bull ATO may contact tax agents to discuss clientsrsquo variations
Tax Administration
14022017
28
copy Chartered Accountants Australia + New Zealand 2017
ATO explains what caused system outage
bull Cause of ATOrsquos Dec 2016 system outage major malfunction of data storage
infrastructure in central computing system
bull ATO insists taxpayer data not lost or compromised
bull PwC to independently review system outage (has expertise with ICT storage
at heart of incident)
bull ATO also conducting internal review focus on key stakeholders
Tax Administration
Announces independent review
copy Chartered Accountants Australia + New Zealand 2017
No grounds to set aside DPO
bull Dubai resident served with amended assessments departure prohibition
order (DPO) while going through customs
bull Federal Court dismissed application to set aside DPO
ndash DPO not issued for improper purpose given taxpayerrsquos significant tax liability ($45m) amp poor compliance record
ndash Australian tax debt not enforceable in UAE
Tax Administration
Bakri v DCT [2017] FCA 20
14022017
29
copy Chartered Accountants Australia + New Zealand 2017
Exemptions from registering with ATO re foreign ownership of water or agricultural land
bull Draft rules to support Register of Foreign Ownership of Water or Agricultural
Land Act 2015 released
bull Water Register from 1 July 2017
bull Draft rules provide reporting exemptions for
ndash Harvestable rights
ndash Irrigation infrastructure operators
ndash Foreign persons re security held under money lending agreement
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Guide to Reportable Tax Positions 2017
bull ATO guide to help companies complete
bull Reportable tax position schedule 2017 (NAT 74066)
bull Reportable tax position early disclosure form 2017 (NAT 74067)
bull RTP Category C (reportable transactions or events) expanded to cover issues
of concern to ATO (eg those in recent taxpayer alerts)
bull Category C questions must be answered if companyrsquos income year ends on
or after 30 June 2017
Tax Administration
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
20
copy Chartered Accountants Australia + New Zealand 2017
ATO SuperSeeker
bull SuperSeeker online service for individuals now decommissioned
bull Individuals can findmanage super via myGov
Taxation of Superannuation
Service decommissioned
copy Chartered Accountants Australia + New Zealand 2017
ATO corporate tax transparency report for 2014-15
bull Second annual report on corporate tax transparency released
bull Data from 2015 tax returns of large corporates operating in Australia
bull Once third of listed taxpayers reported no tax payable ndash FCT said donrsquot
assume tax avoidance
bull Of top 100 public or foreign companies six in highest risk quadrant
Tax Administration
2014-15 Report of Entity Tax Information
14022017
21
copy Chartered Accountants Australia + New Zealand 2017
Backpackers tax registration deadline extended for employers
bull From 1 Jan 2017 working holiday maker WHT rate of 15
bull Employers can withhold 15 even if unregistered
bull Unregistered employers wonrsquot be penalised if they register by 31 Jan 2017
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
SMSF trustees (and LRBA trustees) garnishee notices invalid for group payroll tax
bull Custodian company amp SMSFLRBA trustees had payroll tax liability under
grouping rules
bull Custodian sold property held on trust for SMSF trustees
bull Garnishee notices issued to purchasers invalid
bull Garnishee notice canrsquot be used to recover tax from trust property to satisfy
trusteersquos tax debt if debt incurred in another capacity
Tax Administration
Comr of State Revenue v Can Barz Pty Ltd amp Anor [2016] QCA 323
14022017
22
copy Chartered Accountants Australia + New Zealand 2017
Court gives judgment for full tax debt of $11m
bull Taxpayer with $11m tax debt
bull During recovery proceedings taxpayer produced $600000 bank cheque
reducing tax debt to $500000
bull Court gave judgment against taxpayer for $11m ndash said cheque is conditional
payment could be dishonoured
Tax Administration
DCT v Dukes [2016] NSWSC 1759
copy Chartered Accountants Australia + New Zealand 2017
Taxpayersrsquo rights and obligations
bull IGT recommends ATO implement measures to ensure
‒ Taxpayersrsquo Charter at forefront of ATOrsquos interactions with community
‒ ATOrsquos performance against Charter principles measured and publicly reported
bull If stakeholder concerns persist IGT may undertake follow-up review and
make recommendations to government
Tax Administration
IGT Review into the Taxpayers Charter and Taxpayer Protections released
14022017
23
copy Chartered Accountants Australia + New Zealand 2017
Default assessments upheld - burden of proof not satisfied
bull Unexplained deposits to bank accounts controlled by taxpayer
bull Significant gambling at casinos
bull AAT affirmed default assessments
bull Taxpayerrsquos claims that money came from family gifts loans from friends
gambling wins rejected
Tax Administration
Re Nguyen and FCT [2016] AATA 1041
copy Chartered Accountants Australia + New Zealand 2017
No summary judgment for DPN liability - unresolved facts re whether director took reasonable steps
bull Summary judgment in respect of $167000 director penalty notice not granted
bull Unresolved question of fact ndash whether director took reasonable steps to
ensure company complied with ATO payment arrangement
Tax Administration
DCT v Pedley [2016] WADC 166
14022017
24
copy Chartered Accountants Australia + New Zealand 2017
Reminder of easier GST reporting for new small businesses from 19 Jan 2017
bull Newly registered SMEs can lodge simpler BAS from 19 January 2017
‒ Quarterly reporters select Option 2 Calculate GST quarterly and report annually
‒ Monthly reports insert 0 at labels G2 G3 G10 and G11
‒ Annual reporters leave labels G2 G3 G10 and G11 blank
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Review of tax and corporate whistleblower provisions in Australia
bull 2016-17 Federal Budget plan to better protect tax whistleblowers
bull Government now seeks public comments on proposed tax whistleblower
protection
Tax Administration
Consultation paper released
14022017
25
copy Chartered Accountants Australia + New Zealand 2017
Ride sourcing providers
bull ATO to identify ride sourcing drivers who donrsquot meet tax obligations
(registration reporting lodgment payment)
bull Data from financial institutions for 2016-17 and 2017-18
bull ATO wants details of payments from ride sourcing facilitator to ride sourcing
provider
bull Records relating to up to 60000 individuals to be collected
Tax Administration
ATO data matching
copy Chartered Accountants Australia + New Zealand 2017
Simplifying income recognition for NFPs
bull New standards to apply from 1 January 2019
‒ AASB 1058 Income of Not-for-Profit Entities
‒ AASB 2016-7 Amendments to Australian Accounting Standards ndash Deferral of
AASB 15 for Not-for-Profit Entities
‒ AASB 2016-8 Amendments to Australian Accounting Standards ndash Australian Implementation Guidance for Not-for-Profit Entities
Tax Administration
New standards coming
14022017
26
copy Chartered Accountants Australia + New Zealand 2017
Summary judgment against taxpayers for $305m upheld ndashtaxpayers lose appeal re ATO use of Cayman Islands info
bull $305m summary judgment against Vanda Gould and company he controlled
bull Assessments based on info from Cayman Islands tax authority
bull Taxpayers alleged ATO obtained info unlawfully
bull Held assessments valid
Tax Administration
Gould amp Anor v DCT [2017] FCAFC 1
copy Chartered Accountants Australia + New Zealand 2017
TPB Information sheet on payroll service providers
bull Information Sheet gives examples to help payroll service providers determine
if they must register with TPB
Tax Administration
TPB(I) 312016 - Payroll service providers
14022017
27
copy Chartered Accountants Australia + New Zealand 2017
Current ATO data-matching activities
bull ATO collecting data from banks on
‒ Credit and debit card payments received by businesses
‒ Payments to ride-sourcing drivers
bull Also collecting data from on-selling sites about sellers who sold at least
$12000 worth of goods or services
Tax Administration
Credit and debit card online selling ride-sourcing data-matching
copy Chartered Accountants Australia + New Zealand 2017
Incorrect PAYG instalment variations and GIC
bull ATO says some taxpayers incorrectly varying PAYG instalment rate or
amount
bull Liable to penalty GIC if variation significantly incorrect
bull ATO may contact tax agents to discuss clientsrsquo variations
Tax Administration
14022017
28
copy Chartered Accountants Australia + New Zealand 2017
ATO explains what caused system outage
bull Cause of ATOrsquos Dec 2016 system outage major malfunction of data storage
infrastructure in central computing system
bull ATO insists taxpayer data not lost or compromised
bull PwC to independently review system outage (has expertise with ICT storage
at heart of incident)
bull ATO also conducting internal review focus on key stakeholders
Tax Administration
Announces independent review
copy Chartered Accountants Australia + New Zealand 2017
No grounds to set aside DPO
bull Dubai resident served with amended assessments departure prohibition
order (DPO) while going through customs
bull Federal Court dismissed application to set aside DPO
ndash DPO not issued for improper purpose given taxpayerrsquos significant tax liability ($45m) amp poor compliance record
ndash Australian tax debt not enforceable in UAE
Tax Administration
Bakri v DCT [2017] FCA 20
14022017
29
copy Chartered Accountants Australia + New Zealand 2017
Exemptions from registering with ATO re foreign ownership of water or agricultural land
bull Draft rules to support Register of Foreign Ownership of Water or Agricultural
Land Act 2015 released
bull Water Register from 1 July 2017
bull Draft rules provide reporting exemptions for
ndash Harvestable rights
ndash Irrigation infrastructure operators
ndash Foreign persons re security held under money lending agreement
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Guide to Reportable Tax Positions 2017
bull ATO guide to help companies complete
bull Reportable tax position schedule 2017 (NAT 74066)
bull Reportable tax position early disclosure form 2017 (NAT 74067)
bull RTP Category C (reportable transactions or events) expanded to cover issues
of concern to ATO (eg those in recent taxpayer alerts)
bull Category C questions must be answered if companyrsquos income year ends on
or after 30 June 2017
Tax Administration
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
21
copy Chartered Accountants Australia + New Zealand 2017
Backpackers tax registration deadline extended for employers
bull From 1 Jan 2017 working holiday maker WHT rate of 15
bull Employers can withhold 15 even if unregistered
bull Unregistered employers wonrsquot be penalised if they register by 31 Jan 2017
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
SMSF trustees (and LRBA trustees) garnishee notices invalid for group payroll tax
bull Custodian company amp SMSFLRBA trustees had payroll tax liability under
grouping rules
bull Custodian sold property held on trust for SMSF trustees
bull Garnishee notices issued to purchasers invalid
bull Garnishee notice canrsquot be used to recover tax from trust property to satisfy
trusteersquos tax debt if debt incurred in another capacity
Tax Administration
Comr of State Revenue v Can Barz Pty Ltd amp Anor [2016] QCA 323
14022017
22
copy Chartered Accountants Australia + New Zealand 2017
Court gives judgment for full tax debt of $11m
bull Taxpayer with $11m tax debt
bull During recovery proceedings taxpayer produced $600000 bank cheque
reducing tax debt to $500000
bull Court gave judgment against taxpayer for $11m ndash said cheque is conditional
payment could be dishonoured
Tax Administration
DCT v Dukes [2016] NSWSC 1759
copy Chartered Accountants Australia + New Zealand 2017
Taxpayersrsquo rights and obligations
bull IGT recommends ATO implement measures to ensure
‒ Taxpayersrsquo Charter at forefront of ATOrsquos interactions with community
‒ ATOrsquos performance against Charter principles measured and publicly reported
bull If stakeholder concerns persist IGT may undertake follow-up review and
make recommendations to government
Tax Administration
IGT Review into the Taxpayers Charter and Taxpayer Protections released
14022017
23
copy Chartered Accountants Australia + New Zealand 2017
Default assessments upheld - burden of proof not satisfied
bull Unexplained deposits to bank accounts controlled by taxpayer
bull Significant gambling at casinos
bull AAT affirmed default assessments
bull Taxpayerrsquos claims that money came from family gifts loans from friends
gambling wins rejected
Tax Administration
Re Nguyen and FCT [2016] AATA 1041
copy Chartered Accountants Australia + New Zealand 2017
No summary judgment for DPN liability - unresolved facts re whether director took reasonable steps
bull Summary judgment in respect of $167000 director penalty notice not granted
bull Unresolved question of fact ndash whether director took reasonable steps to
ensure company complied with ATO payment arrangement
Tax Administration
DCT v Pedley [2016] WADC 166
14022017
24
copy Chartered Accountants Australia + New Zealand 2017
Reminder of easier GST reporting for new small businesses from 19 Jan 2017
bull Newly registered SMEs can lodge simpler BAS from 19 January 2017
‒ Quarterly reporters select Option 2 Calculate GST quarterly and report annually
‒ Monthly reports insert 0 at labels G2 G3 G10 and G11
‒ Annual reporters leave labels G2 G3 G10 and G11 blank
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Review of tax and corporate whistleblower provisions in Australia
bull 2016-17 Federal Budget plan to better protect tax whistleblowers
bull Government now seeks public comments on proposed tax whistleblower
protection
Tax Administration
Consultation paper released
14022017
25
copy Chartered Accountants Australia + New Zealand 2017
Ride sourcing providers
bull ATO to identify ride sourcing drivers who donrsquot meet tax obligations
(registration reporting lodgment payment)
bull Data from financial institutions for 2016-17 and 2017-18
bull ATO wants details of payments from ride sourcing facilitator to ride sourcing
provider
bull Records relating to up to 60000 individuals to be collected
Tax Administration
ATO data matching
copy Chartered Accountants Australia + New Zealand 2017
Simplifying income recognition for NFPs
bull New standards to apply from 1 January 2019
‒ AASB 1058 Income of Not-for-Profit Entities
‒ AASB 2016-7 Amendments to Australian Accounting Standards ndash Deferral of
AASB 15 for Not-for-Profit Entities
‒ AASB 2016-8 Amendments to Australian Accounting Standards ndash Australian Implementation Guidance for Not-for-Profit Entities
Tax Administration
New standards coming
14022017
26
copy Chartered Accountants Australia + New Zealand 2017
Summary judgment against taxpayers for $305m upheld ndashtaxpayers lose appeal re ATO use of Cayman Islands info
bull $305m summary judgment against Vanda Gould and company he controlled
bull Assessments based on info from Cayman Islands tax authority
bull Taxpayers alleged ATO obtained info unlawfully
bull Held assessments valid
Tax Administration
Gould amp Anor v DCT [2017] FCAFC 1
copy Chartered Accountants Australia + New Zealand 2017
TPB Information sheet on payroll service providers
bull Information Sheet gives examples to help payroll service providers determine
if they must register with TPB
Tax Administration
TPB(I) 312016 - Payroll service providers
14022017
27
copy Chartered Accountants Australia + New Zealand 2017
Current ATO data-matching activities
bull ATO collecting data from banks on
‒ Credit and debit card payments received by businesses
‒ Payments to ride-sourcing drivers
bull Also collecting data from on-selling sites about sellers who sold at least
$12000 worth of goods or services
Tax Administration
Credit and debit card online selling ride-sourcing data-matching
copy Chartered Accountants Australia + New Zealand 2017
Incorrect PAYG instalment variations and GIC
bull ATO says some taxpayers incorrectly varying PAYG instalment rate or
amount
bull Liable to penalty GIC if variation significantly incorrect
bull ATO may contact tax agents to discuss clientsrsquo variations
Tax Administration
14022017
28
copy Chartered Accountants Australia + New Zealand 2017
ATO explains what caused system outage
bull Cause of ATOrsquos Dec 2016 system outage major malfunction of data storage
infrastructure in central computing system
bull ATO insists taxpayer data not lost or compromised
bull PwC to independently review system outage (has expertise with ICT storage
at heart of incident)
bull ATO also conducting internal review focus on key stakeholders
Tax Administration
Announces independent review
copy Chartered Accountants Australia + New Zealand 2017
No grounds to set aside DPO
bull Dubai resident served with amended assessments departure prohibition
order (DPO) while going through customs
bull Federal Court dismissed application to set aside DPO
ndash DPO not issued for improper purpose given taxpayerrsquos significant tax liability ($45m) amp poor compliance record
ndash Australian tax debt not enforceable in UAE
Tax Administration
Bakri v DCT [2017] FCA 20
14022017
29
copy Chartered Accountants Australia + New Zealand 2017
Exemptions from registering with ATO re foreign ownership of water or agricultural land
bull Draft rules to support Register of Foreign Ownership of Water or Agricultural
Land Act 2015 released
bull Water Register from 1 July 2017
bull Draft rules provide reporting exemptions for
ndash Harvestable rights
ndash Irrigation infrastructure operators
ndash Foreign persons re security held under money lending agreement
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Guide to Reportable Tax Positions 2017
bull ATO guide to help companies complete
bull Reportable tax position schedule 2017 (NAT 74066)
bull Reportable tax position early disclosure form 2017 (NAT 74067)
bull RTP Category C (reportable transactions or events) expanded to cover issues
of concern to ATO (eg those in recent taxpayer alerts)
bull Category C questions must be answered if companyrsquos income year ends on
or after 30 June 2017
Tax Administration
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
22
copy Chartered Accountants Australia + New Zealand 2017
Court gives judgment for full tax debt of $11m
bull Taxpayer with $11m tax debt
bull During recovery proceedings taxpayer produced $600000 bank cheque
reducing tax debt to $500000
bull Court gave judgment against taxpayer for $11m ndash said cheque is conditional
payment could be dishonoured
Tax Administration
DCT v Dukes [2016] NSWSC 1759
copy Chartered Accountants Australia + New Zealand 2017
Taxpayersrsquo rights and obligations
bull IGT recommends ATO implement measures to ensure
‒ Taxpayersrsquo Charter at forefront of ATOrsquos interactions with community
‒ ATOrsquos performance against Charter principles measured and publicly reported
bull If stakeholder concerns persist IGT may undertake follow-up review and
make recommendations to government
Tax Administration
IGT Review into the Taxpayers Charter and Taxpayer Protections released
14022017
23
copy Chartered Accountants Australia + New Zealand 2017
Default assessments upheld - burden of proof not satisfied
bull Unexplained deposits to bank accounts controlled by taxpayer
bull Significant gambling at casinos
bull AAT affirmed default assessments
bull Taxpayerrsquos claims that money came from family gifts loans from friends
gambling wins rejected
Tax Administration
Re Nguyen and FCT [2016] AATA 1041
copy Chartered Accountants Australia + New Zealand 2017
No summary judgment for DPN liability - unresolved facts re whether director took reasonable steps
bull Summary judgment in respect of $167000 director penalty notice not granted
bull Unresolved question of fact ndash whether director took reasonable steps to
ensure company complied with ATO payment arrangement
Tax Administration
DCT v Pedley [2016] WADC 166
14022017
24
copy Chartered Accountants Australia + New Zealand 2017
Reminder of easier GST reporting for new small businesses from 19 Jan 2017
bull Newly registered SMEs can lodge simpler BAS from 19 January 2017
‒ Quarterly reporters select Option 2 Calculate GST quarterly and report annually
‒ Monthly reports insert 0 at labels G2 G3 G10 and G11
‒ Annual reporters leave labels G2 G3 G10 and G11 blank
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Review of tax and corporate whistleblower provisions in Australia
bull 2016-17 Federal Budget plan to better protect tax whistleblowers
bull Government now seeks public comments on proposed tax whistleblower
protection
Tax Administration
Consultation paper released
14022017
25
copy Chartered Accountants Australia + New Zealand 2017
Ride sourcing providers
bull ATO to identify ride sourcing drivers who donrsquot meet tax obligations
(registration reporting lodgment payment)
bull Data from financial institutions for 2016-17 and 2017-18
bull ATO wants details of payments from ride sourcing facilitator to ride sourcing
provider
bull Records relating to up to 60000 individuals to be collected
Tax Administration
ATO data matching
copy Chartered Accountants Australia + New Zealand 2017
Simplifying income recognition for NFPs
bull New standards to apply from 1 January 2019
‒ AASB 1058 Income of Not-for-Profit Entities
‒ AASB 2016-7 Amendments to Australian Accounting Standards ndash Deferral of
AASB 15 for Not-for-Profit Entities
‒ AASB 2016-8 Amendments to Australian Accounting Standards ndash Australian Implementation Guidance for Not-for-Profit Entities
Tax Administration
New standards coming
14022017
26
copy Chartered Accountants Australia + New Zealand 2017
Summary judgment against taxpayers for $305m upheld ndashtaxpayers lose appeal re ATO use of Cayman Islands info
bull $305m summary judgment against Vanda Gould and company he controlled
bull Assessments based on info from Cayman Islands tax authority
bull Taxpayers alleged ATO obtained info unlawfully
bull Held assessments valid
Tax Administration
Gould amp Anor v DCT [2017] FCAFC 1
copy Chartered Accountants Australia + New Zealand 2017
TPB Information sheet on payroll service providers
bull Information Sheet gives examples to help payroll service providers determine
if they must register with TPB
Tax Administration
TPB(I) 312016 - Payroll service providers
14022017
27
copy Chartered Accountants Australia + New Zealand 2017
Current ATO data-matching activities
bull ATO collecting data from banks on
‒ Credit and debit card payments received by businesses
‒ Payments to ride-sourcing drivers
bull Also collecting data from on-selling sites about sellers who sold at least
$12000 worth of goods or services
Tax Administration
Credit and debit card online selling ride-sourcing data-matching
copy Chartered Accountants Australia + New Zealand 2017
Incorrect PAYG instalment variations and GIC
bull ATO says some taxpayers incorrectly varying PAYG instalment rate or
amount
bull Liable to penalty GIC if variation significantly incorrect
bull ATO may contact tax agents to discuss clientsrsquo variations
Tax Administration
14022017
28
copy Chartered Accountants Australia + New Zealand 2017
ATO explains what caused system outage
bull Cause of ATOrsquos Dec 2016 system outage major malfunction of data storage
infrastructure in central computing system
bull ATO insists taxpayer data not lost or compromised
bull PwC to independently review system outage (has expertise with ICT storage
at heart of incident)
bull ATO also conducting internal review focus on key stakeholders
Tax Administration
Announces independent review
copy Chartered Accountants Australia + New Zealand 2017
No grounds to set aside DPO
bull Dubai resident served with amended assessments departure prohibition
order (DPO) while going through customs
bull Federal Court dismissed application to set aside DPO
ndash DPO not issued for improper purpose given taxpayerrsquos significant tax liability ($45m) amp poor compliance record
ndash Australian tax debt not enforceable in UAE
Tax Administration
Bakri v DCT [2017] FCA 20
14022017
29
copy Chartered Accountants Australia + New Zealand 2017
Exemptions from registering with ATO re foreign ownership of water or agricultural land
bull Draft rules to support Register of Foreign Ownership of Water or Agricultural
Land Act 2015 released
bull Water Register from 1 July 2017
bull Draft rules provide reporting exemptions for
ndash Harvestable rights
ndash Irrigation infrastructure operators
ndash Foreign persons re security held under money lending agreement
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Guide to Reportable Tax Positions 2017
bull ATO guide to help companies complete
bull Reportable tax position schedule 2017 (NAT 74066)
bull Reportable tax position early disclosure form 2017 (NAT 74067)
bull RTP Category C (reportable transactions or events) expanded to cover issues
of concern to ATO (eg those in recent taxpayer alerts)
bull Category C questions must be answered if companyrsquos income year ends on
or after 30 June 2017
Tax Administration
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
23
copy Chartered Accountants Australia + New Zealand 2017
Default assessments upheld - burden of proof not satisfied
bull Unexplained deposits to bank accounts controlled by taxpayer
bull Significant gambling at casinos
bull AAT affirmed default assessments
bull Taxpayerrsquos claims that money came from family gifts loans from friends
gambling wins rejected
Tax Administration
Re Nguyen and FCT [2016] AATA 1041
copy Chartered Accountants Australia + New Zealand 2017
No summary judgment for DPN liability - unresolved facts re whether director took reasonable steps
bull Summary judgment in respect of $167000 director penalty notice not granted
bull Unresolved question of fact ndash whether director took reasonable steps to
ensure company complied with ATO payment arrangement
Tax Administration
DCT v Pedley [2016] WADC 166
14022017
24
copy Chartered Accountants Australia + New Zealand 2017
Reminder of easier GST reporting for new small businesses from 19 Jan 2017
bull Newly registered SMEs can lodge simpler BAS from 19 January 2017
‒ Quarterly reporters select Option 2 Calculate GST quarterly and report annually
‒ Monthly reports insert 0 at labels G2 G3 G10 and G11
‒ Annual reporters leave labels G2 G3 G10 and G11 blank
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Review of tax and corporate whistleblower provisions in Australia
bull 2016-17 Federal Budget plan to better protect tax whistleblowers
bull Government now seeks public comments on proposed tax whistleblower
protection
Tax Administration
Consultation paper released
14022017
25
copy Chartered Accountants Australia + New Zealand 2017
Ride sourcing providers
bull ATO to identify ride sourcing drivers who donrsquot meet tax obligations
(registration reporting lodgment payment)
bull Data from financial institutions for 2016-17 and 2017-18
bull ATO wants details of payments from ride sourcing facilitator to ride sourcing
provider
bull Records relating to up to 60000 individuals to be collected
Tax Administration
ATO data matching
copy Chartered Accountants Australia + New Zealand 2017
Simplifying income recognition for NFPs
bull New standards to apply from 1 January 2019
‒ AASB 1058 Income of Not-for-Profit Entities
‒ AASB 2016-7 Amendments to Australian Accounting Standards ndash Deferral of
AASB 15 for Not-for-Profit Entities
‒ AASB 2016-8 Amendments to Australian Accounting Standards ndash Australian Implementation Guidance for Not-for-Profit Entities
Tax Administration
New standards coming
14022017
26
copy Chartered Accountants Australia + New Zealand 2017
Summary judgment against taxpayers for $305m upheld ndashtaxpayers lose appeal re ATO use of Cayman Islands info
bull $305m summary judgment against Vanda Gould and company he controlled
bull Assessments based on info from Cayman Islands tax authority
bull Taxpayers alleged ATO obtained info unlawfully
bull Held assessments valid
Tax Administration
Gould amp Anor v DCT [2017] FCAFC 1
copy Chartered Accountants Australia + New Zealand 2017
TPB Information sheet on payroll service providers
bull Information Sheet gives examples to help payroll service providers determine
if they must register with TPB
Tax Administration
TPB(I) 312016 - Payroll service providers
14022017
27
copy Chartered Accountants Australia + New Zealand 2017
Current ATO data-matching activities
bull ATO collecting data from banks on
‒ Credit and debit card payments received by businesses
‒ Payments to ride-sourcing drivers
bull Also collecting data from on-selling sites about sellers who sold at least
$12000 worth of goods or services
Tax Administration
Credit and debit card online selling ride-sourcing data-matching
copy Chartered Accountants Australia + New Zealand 2017
Incorrect PAYG instalment variations and GIC
bull ATO says some taxpayers incorrectly varying PAYG instalment rate or
amount
bull Liable to penalty GIC if variation significantly incorrect
bull ATO may contact tax agents to discuss clientsrsquo variations
Tax Administration
14022017
28
copy Chartered Accountants Australia + New Zealand 2017
ATO explains what caused system outage
bull Cause of ATOrsquos Dec 2016 system outage major malfunction of data storage
infrastructure in central computing system
bull ATO insists taxpayer data not lost or compromised
bull PwC to independently review system outage (has expertise with ICT storage
at heart of incident)
bull ATO also conducting internal review focus on key stakeholders
Tax Administration
Announces independent review
copy Chartered Accountants Australia + New Zealand 2017
No grounds to set aside DPO
bull Dubai resident served with amended assessments departure prohibition
order (DPO) while going through customs
bull Federal Court dismissed application to set aside DPO
ndash DPO not issued for improper purpose given taxpayerrsquos significant tax liability ($45m) amp poor compliance record
ndash Australian tax debt not enforceable in UAE
Tax Administration
Bakri v DCT [2017] FCA 20
14022017
29
copy Chartered Accountants Australia + New Zealand 2017
Exemptions from registering with ATO re foreign ownership of water or agricultural land
bull Draft rules to support Register of Foreign Ownership of Water or Agricultural
Land Act 2015 released
bull Water Register from 1 July 2017
bull Draft rules provide reporting exemptions for
ndash Harvestable rights
ndash Irrigation infrastructure operators
ndash Foreign persons re security held under money lending agreement
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Guide to Reportable Tax Positions 2017
bull ATO guide to help companies complete
bull Reportable tax position schedule 2017 (NAT 74066)
bull Reportable tax position early disclosure form 2017 (NAT 74067)
bull RTP Category C (reportable transactions or events) expanded to cover issues
of concern to ATO (eg those in recent taxpayer alerts)
bull Category C questions must be answered if companyrsquos income year ends on
or after 30 June 2017
Tax Administration
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
24
copy Chartered Accountants Australia + New Zealand 2017
Reminder of easier GST reporting for new small businesses from 19 Jan 2017
bull Newly registered SMEs can lodge simpler BAS from 19 January 2017
‒ Quarterly reporters select Option 2 Calculate GST quarterly and report annually
‒ Monthly reports insert 0 at labels G2 G3 G10 and G11
‒ Annual reporters leave labels G2 G3 G10 and G11 blank
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Review of tax and corporate whistleblower provisions in Australia
bull 2016-17 Federal Budget plan to better protect tax whistleblowers
bull Government now seeks public comments on proposed tax whistleblower
protection
Tax Administration
Consultation paper released
14022017
25
copy Chartered Accountants Australia + New Zealand 2017
Ride sourcing providers
bull ATO to identify ride sourcing drivers who donrsquot meet tax obligations
(registration reporting lodgment payment)
bull Data from financial institutions for 2016-17 and 2017-18
bull ATO wants details of payments from ride sourcing facilitator to ride sourcing
provider
bull Records relating to up to 60000 individuals to be collected
Tax Administration
ATO data matching
copy Chartered Accountants Australia + New Zealand 2017
Simplifying income recognition for NFPs
bull New standards to apply from 1 January 2019
‒ AASB 1058 Income of Not-for-Profit Entities
‒ AASB 2016-7 Amendments to Australian Accounting Standards ndash Deferral of
AASB 15 for Not-for-Profit Entities
‒ AASB 2016-8 Amendments to Australian Accounting Standards ndash Australian Implementation Guidance for Not-for-Profit Entities
Tax Administration
New standards coming
14022017
26
copy Chartered Accountants Australia + New Zealand 2017
Summary judgment against taxpayers for $305m upheld ndashtaxpayers lose appeal re ATO use of Cayman Islands info
bull $305m summary judgment against Vanda Gould and company he controlled
bull Assessments based on info from Cayman Islands tax authority
bull Taxpayers alleged ATO obtained info unlawfully
bull Held assessments valid
Tax Administration
Gould amp Anor v DCT [2017] FCAFC 1
copy Chartered Accountants Australia + New Zealand 2017
TPB Information sheet on payroll service providers
bull Information Sheet gives examples to help payroll service providers determine
if they must register with TPB
Tax Administration
TPB(I) 312016 - Payroll service providers
14022017
27
copy Chartered Accountants Australia + New Zealand 2017
Current ATO data-matching activities
bull ATO collecting data from banks on
‒ Credit and debit card payments received by businesses
‒ Payments to ride-sourcing drivers
bull Also collecting data from on-selling sites about sellers who sold at least
$12000 worth of goods or services
Tax Administration
Credit and debit card online selling ride-sourcing data-matching
copy Chartered Accountants Australia + New Zealand 2017
Incorrect PAYG instalment variations and GIC
bull ATO says some taxpayers incorrectly varying PAYG instalment rate or
amount
bull Liable to penalty GIC if variation significantly incorrect
bull ATO may contact tax agents to discuss clientsrsquo variations
Tax Administration
14022017
28
copy Chartered Accountants Australia + New Zealand 2017
ATO explains what caused system outage
bull Cause of ATOrsquos Dec 2016 system outage major malfunction of data storage
infrastructure in central computing system
bull ATO insists taxpayer data not lost or compromised
bull PwC to independently review system outage (has expertise with ICT storage
at heart of incident)
bull ATO also conducting internal review focus on key stakeholders
Tax Administration
Announces independent review
copy Chartered Accountants Australia + New Zealand 2017
No grounds to set aside DPO
bull Dubai resident served with amended assessments departure prohibition
order (DPO) while going through customs
bull Federal Court dismissed application to set aside DPO
ndash DPO not issued for improper purpose given taxpayerrsquos significant tax liability ($45m) amp poor compliance record
ndash Australian tax debt not enforceable in UAE
Tax Administration
Bakri v DCT [2017] FCA 20
14022017
29
copy Chartered Accountants Australia + New Zealand 2017
Exemptions from registering with ATO re foreign ownership of water or agricultural land
bull Draft rules to support Register of Foreign Ownership of Water or Agricultural
Land Act 2015 released
bull Water Register from 1 July 2017
bull Draft rules provide reporting exemptions for
ndash Harvestable rights
ndash Irrigation infrastructure operators
ndash Foreign persons re security held under money lending agreement
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Guide to Reportable Tax Positions 2017
bull ATO guide to help companies complete
bull Reportable tax position schedule 2017 (NAT 74066)
bull Reportable tax position early disclosure form 2017 (NAT 74067)
bull RTP Category C (reportable transactions or events) expanded to cover issues
of concern to ATO (eg those in recent taxpayer alerts)
bull Category C questions must be answered if companyrsquos income year ends on
or after 30 June 2017
Tax Administration
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
25
copy Chartered Accountants Australia + New Zealand 2017
Ride sourcing providers
bull ATO to identify ride sourcing drivers who donrsquot meet tax obligations
(registration reporting lodgment payment)
bull Data from financial institutions for 2016-17 and 2017-18
bull ATO wants details of payments from ride sourcing facilitator to ride sourcing
provider
bull Records relating to up to 60000 individuals to be collected
Tax Administration
ATO data matching
copy Chartered Accountants Australia + New Zealand 2017
Simplifying income recognition for NFPs
bull New standards to apply from 1 January 2019
‒ AASB 1058 Income of Not-for-Profit Entities
‒ AASB 2016-7 Amendments to Australian Accounting Standards ndash Deferral of
AASB 15 for Not-for-Profit Entities
‒ AASB 2016-8 Amendments to Australian Accounting Standards ndash Australian Implementation Guidance for Not-for-Profit Entities
Tax Administration
New standards coming
14022017
26
copy Chartered Accountants Australia + New Zealand 2017
Summary judgment against taxpayers for $305m upheld ndashtaxpayers lose appeal re ATO use of Cayman Islands info
bull $305m summary judgment against Vanda Gould and company he controlled
bull Assessments based on info from Cayman Islands tax authority
bull Taxpayers alleged ATO obtained info unlawfully
bull Held assessments valid
Tax Administration
Gould amp Anor v DCT [2017] FCAFC 1
copy Chartered Accountants Australia + New Zealand 2017
TPB Information sheet on payroll service providers
bull Information Sheet gives examples to help payroll service providers determine
if they must register with TPB
Tax Administration
TPB(I) 312016 - Payroll service providers
14022017
27
copy Chartered Accountants Australia + New Zealand 2017
Current ATO data-matching activities
bull ATO collecting data from banks on
‒ Credit and debit card payments received by businesses
‒ Payments to ride-sourcing drivers
bull Also collecting data from on-selling sites about sellers who sold at least
$12000 worth of goods or services
Tax Administration
Credit and debit card online selling ride-sourcing data-matching
copy Chartered Accountants Australia + New Zealand 2017
Incorrect PAYG instalment variations and GIC
bull ATO says some taxpayers incorrectly varying PAYG instalment rate or
amount
bull Liable to penalty GIC if variation significantly incorrect
bull ATO may contact tax agents to discuss clientsrsquo variations
Tax Administration
14022017
28
copy Chartered Accountants Australia + New Zealand 2017
ATO explains what caused system outage
bull Cause of ATOrsquos Dec 2016 system outage major malfunction of data storage
infrastructure in central computing system
bull ATO insists taxpayer data not lost or compromised
bull PwC to independently review system outage (has expertise with ICT storage
at heart of incident)
bull ATO also conducting internal review focus on key stakeholders
Tax Administration
Announces independent review
copy Chartered Accountants Australia + New Zealand 2017
No grounds to set aside DPO
bull Dubai resident served with amended assessments departure prohibition
order (DPO) while going through customs
bull Federal Court dismissed application to set aside DPO
ndash DPO not issued for improper purpose given taxpayerrsquos significant tax liability ($45m) amp poor compliance record
ndash Australian tax debt not enforceable in UAE
Tax Administration
Bakri v DCT [2017] FCA 20
14022017
29
copy Chartered Accountants Australia + New Zealand 2017
Exemptions from registering with ATO re foreign ownership of water or agricultural land
bull Draft rules to support Register of Foreign Ownership of Water or Agricultural
Land Act 2015 released
bull Water Register from 1 July 2017
bull Draft rules provide reporting exemptions for
ndash Harvestable rights
ndash Irrigation infrastructure operators
ndash Foreign persons re security held under money lending agreement
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Guide to Reportable Tax Positions 2017
bull ATO guide to help companies complete
bull Reportable tax position schedule 2017 (NAT 74066)
bull Reportable tax position early disclosure form 2017 (NAT 74067)
bull RTP Category C (reportable transactions or events) expanded to cover issues
of concern to ATO (eg those in recent taxpayer alerts)
bull Category C questions must be answered if companyrsquos income year ends on
or after 30 June 2017
Tax Administration
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
26
copy Chartered Accountants Australia + New Zealand 2017
Summary judgment against taxpayers for $305m upheld ndashtaxpayers lose appeal re ATO use of Cayman Islands info
bull $305m summary judgment against Vanda Gould and company he controlled
bull Assessments based on info from Cayman Islands tax authority
bull Taxpayers alleged ATO obtained info unlawfully
bull Held assessments valid
Tax Administration
Gould amp Anor v DCT [2017] FCAFC 1
copy Chartered Accountants Australia + New Zealand 2017
TPB Information sheet on payroll service providers
bull Information Sheet gives examples to help payroll service providers determine
if they must register with TPB
Tax Administration
TPB(I) 312016 - Payroll service providers
14022017
27
copy Chartered Accountants Australia + New Zealand 2017
Current ATO data-matching activities
bull ATO collecting data from banks on
‒ Credit and debit card payments received by businesses
‒ Payments to ride-sourcing drivers
bull Also collecting data from on-selling sites about sellers who sold at least
$12000 worth of goods or services
Tax Administration
Credit and debit card online selling ride-sourcing data-matching
copy Chartered Accountants Australia + New Zealand 2017
Incorrect PAYG instalment variations and GIC
bull ATO says some taxpayers incorrectly varying PAYG instalment rate or
amount
bull Liable to penalty GIC if variation significantly incorrect
bull ATO may contact tax agents to discuss clientsrsquo variations
Tax Administration
14022017
28
copy Chartered Accountants Australia + New Zealand 2017
ATO explains what caused system outage
bull Cause of ATOrsquos Dec 2016 system outage major malfunction of data storage
infrastructure in central computing system
bull ATO insists taxpayer data not lost or compromised
bull PwC to independently review system outage (has expertise with ICT storage
at heart of incident)
bull ATO also conducting internal review focus on key stakeholders
Tax Administration
Announces independent review
copy Chartered Accountants Australia + New Zealand 2017
No grounds to set aside DPO
bull Dubai resident served with amended assessments departure prohibition
order (DPO) while going through customs
bull Federal Court dismissed application to set aside DPO
ndash DPO not issued for improper purpose given taxpayerrsquos significant tax liability ($45m) amp poor compliance record
ndash Australian tax debt not enforceable in UAE
Tax Administration
Bakri v DCT [2017] FCA 20
14022017
29
copy Chartered Accountants Australia + New Zealand 2017
Exemptions from registering with ATO re foreign ownership of water or agricultural land
bull Draft rules to support Register of Foreign Ownership of Water or Agricultural
Land Act 2015 released
bull Water Register from 1 July 2017
bull Draft rules provide reporting exemptions for
ndash Harvestable rights
ndash Irrigation infrastructure operators
ndash Foreign persons re security held under money lending agreement
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Guide to Reportable Tax Positions 2017
bull ATO guide to help companies complete
bull Reportable tax position schedule 2017 (NAT 74066)
bull Reportable tax position early disclosure form 2017 (NAT 74067)
bull RTP Category C (reportable transactions or events) expanded to cover issues
of concern to ATO (eg those in recent taxpayer alerts)
bull Category C questions must be answered if companyrsquos income year ends on
or after 30 June 2017
Tax Administration
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
27
copy Chartered Accountants Australia + New Zealand 2017
Current ATO data-matching activities
bull ATO collecting data from banks on
‒ Credit and debit card payments received by businesses
‒ Payments to ride-sourcing drivers
bull Also collecting data from on-selling sites about sellers who sold at least
$12000 worth of goods or services
Tax Administration
Credit and debit card online selling ride-sourcing data-matching
copy Chartered Accountants Australia + New Zealand 2017
Incorrect PAYG instalment variations and GIC
bull ATO says some taxpayers incorrectly varying PAYG instalment rate or
amount
bull Liable to penalty GIC if variation significantly incorrect
bull ATO may contact tax agents to discuss clientsrsquo variations
Tax Administration
14022017
28
copy Chartered Accountants Australia + New Zealand 2017
ATO explains what caused system outage
bull Cause of ATOrsquos Dec 2016 system outage major malfunction of data storage
infrastructure in central computing system
bull ATO insists taxpayer data not lost or compromised
bull PwC to independently review system outage (has expertise with ICT storage
at heart of incident)
bull ATO also conducting internal review focus on key stakeholders
Tax Administration
Announces independent review
copy Chartered Accountants Australia + New Zealand 2017
No grounds to set aside DPO
bull Dubai resident served with amended assessments departure prohibition
order (DPO) while going through customs
bull Federal Court dismissed application to set aside DPO
ndash DPO not issued for improper purpose given taxpayerrsquos significant tax liability ($45m) amp poor compliance record
ndash Australian tax debt not enforceable in UAE
Tax Administration
Bakri v DCT [2017] FCA 20
14022017
29
copy Chartered Accountants Australia + New Zealand 2017
Exemptions from registering with ATO re foreign ownership of water or agricultural land
bull Draft rules to support Register of Foreign Ownership of Water or Agricultural
Land Act 2015 released
bull Water Register from 1 July 2017
bull Draft rules provide reporting exemptions for
ndash Harvestable rights
ndash Irrigation infrastructure operators
ndash Foreign persons re security held under money lending agreement
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Guide to Reportable Tax Positions 2017
bull ATO guide to help companies complete
bull Reportable tax position schedule 2017 (NAT 74066)
bull Reportable tax position early disclosure form 2017 (NAT 74067)
bull RTP Category C (reportable transactions or events) expanded to cover issues
of concern to ATO (eg those in recent taxpayer alerts)
bull Category C questions must be answered if companyrsquos income year ends on
or after 30 June 2017
Tax Administration
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
28
copy Chartered Accountants Australia + New Zealand 2017
ATO explains what caused system outage
bull Cause of ATOrsquos Dec 2016 system outage major malfunction of data storage
infrastructure in central computing system
bull ATO insists taxpayer data not lost or compromised
bull PwC to independently review system outage (has expertise with ICT storage
at heart of incident)
bull ATO also conducting internal review focus on key stakeholders
Tax Administration
Announces independent review
copy Chartered Accountants Australia + New Zealand 2017
No grounds to set aside DPO
bull Dubai resident served with amended assessments departure prohibition
order (DPO) while going through customs
bull Federal Court dismissed application to set aside DPO
ndash DPO not issued for improper purpose given taxpayerrsquos significant tax liability ($45m) amp poor compliance record
ndash Australian tax debt not enforceable in UAE
Tax Administration
Bakri v DCT [2017] FCA 20
14022017
29
copy Chartered Accountants Australia + New Zealand 2017
Exemptions from registering with ATO re foreign ownership of water or agricultural land
bull Draft rules to support Register of Foreign Ownership of Water or Agricultural
Land Act 2015 released
bull Water Register from 1 July 2017
bull Draft rules provide reporting exemptions for
ndash Harvestable rights
ndash Irrigation infrastructure operators
ndash Foreign persons re security held under money lending agreement
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Guide to Reportable Tax Positions 2017
bull ATO guide to help companies complete
bull Reportable tax position schedule 2017 (NAT 74066)
bull Reportable tax position early disclosure form 2017 (NAT 74067)
bull RTP Category C (reportable transactions or events) expanded to cover issues
of concern to ATO (eg those in recent taxpayer alerts)
bull Category C questions must be answered if companyrsquos income year ends on
or after 30 June 2017
Tax Administration
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
29
copy Chartered Accountants Australia + New Zealand 2017
Exemptions from registering with ATO re foreign ownership of water or agricultural land
bull Draft rules to support Register of Foreign Ownership of Water or Agricultural
Land Act 2015 released
bull Water Register from 1 July 2017
bull Draft rules provide reporting exemptions for
ndash Harvestable rights
ndash Irrigation infrastructure operators
ndash Foreign persons re security held under money lending agreement
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Guide to Reportable Tax Positions 2017
bull ATO guide to help companies complete
bull Reportable tax position schedule 2017 (NAT 74066)
bull Reportable tax position early disclosure form 2017 (NAT 74067)
bull RTP Category C (reportable transactions or events) expanded to cover issues
of concern to ATO (eg those in recent taxpayer alerts)
bull Category C questions must be answered if companyrsquos income year ends on
or after 30 June 2017
Tax Administration
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
30
copy Chartered Accountants Australia + New Zealand 2017
Tax risk management and governance review guide
bull Businesses can use ATOrsquos Tax risk management and governance review
guide to
‒ Developimprove their tax governance amp internal control framework
‒ Test their framework against ATO best practice benchmarks
‒ Show reviewers amp stakeholders effectiveness of internal controls
Tax Administration
ATO guide updated
copy Chartered Accountants Australia + New Zealand 2017
Extension of time for AAT review granted
bull Company granted extension for review of GST objection decision
bull Applied for extension nearly 1 year late However AAT satisfied that
‒ Acceptable explanation for delay (controller had ldquolack of understandingrdquo hard to get lawyer due to financial problems)
‒ No prejudice to FCT
‒ Amount of tax payable is in dispute
Tax Administration
Re New Access Investment Group Pty Ltd and FCT [2017] AATA 63
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
31
copy Chartered Accountants Australia + New Zealand 2017
Alternate assessments not tentative
bull FCT gave trustee 2 sets of assessments re same income
‒ ldquoPrimaryrdquo assessment on basis that beneficiaries (including minor) presently entitled to net income of trust
‒ ldquoAlternativerdquo assessment on basis of no present entitlement
bull Total tax shortfall ndash $235m
bull Federal Court held assessments valid ndash alternative assessments can be
issued to trustee re same income (1 amount is recoverable)
Tax Administration
Whitby Land Company Pty Ltd (Trustee) v DCT [2017] FCA 28
copy Chartered Accountants Australia + New Zealand 2017
Cloud computing amp Code of Professional Conduct
bull Code of Conduct may be breached if cloud arrangements inadequate amp client
info unprotected
bull TPB says registered agents may wish to consider
‒ Details of limitation of liability arrangements
‒ Whether provider can unilaterally change terms of agreement
‒ How data integrity is maintained
Tax Administration
Tax Practitioners Board Practice Note TPB (PN) 12017
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
32
copy Chartered Accountants Australia + New Zealand 2017
ATO warns of criminal activity targeting AUSkeys
bull ATO has detected identity theft re AUSkeys linked to businesses
bull AUSkeys used to access portals lodge BASs change account details for
refunds
bull ATO took quick preventative action ndash affected AUSkeys cancelled
bull Tax practitioners asked to check Access Manager permissions to shield
practice from identity theft
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Enhanced ATO record-keeping tool for sole traders
bull ATO announces record-keeping enhancements to myDeductions
bull Sole traders with simple tax affairs can now record business income
expenses amp vehicle trips on smart phone or device
bull Ability to upload data directly into tax return will be available in later release
Tax Administration
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
33
copy Chartered Accountants Australia + New Zealand 2017
Tax Inspector-General
bull Planned reviews
‒ GST refunds ndash taxpayers concerned about refund delays
‒ PAYGI ndash interaction with income tax system
‒ Future role of tax professionals in tax system
Tax Administration
2017 work program announced
copy Chartered Accountants Australia + New Zealand 2017
ATO advice under development
bull ATO website lists advice under development for
ndash income tax
ndash CGT
ndash international issues
ndash GST
ndash FBT
Tax Office Website updates
Tax Administration
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
34
copy Chartered Accountants Australia + New Zealand 2017
DCT v Binetter [2017] FCA 69
bull Case involved Nudie Juice entities
bull Federal Court refused application for taxpayer (Nudie co-founder and CEO)
to give evidence from USA via video link
bull Concluded there was no impediment to taxpayer travelling to Australia to give
evidence even though liquidators could exercise their legal rights to stop him
returning to USA
Application for evidence in tax case by video link refused
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Says ATO systems will be ready for Tax Time 2017
bull FCT denies reports Tax Time 2017 under threat due to recent system
outages
bull ATO ldquoabsolutely confidentrdquo taxpayers can lodge returns and receive refunds
on time from 1 July 2017
FCT refutes media reports
Tax Administration
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
35
copy Chartered Accountants Australia + New Zealand 2017
ATO help
bull 21 December 2016 and 15 January 2017 due dates deferred
bull Tax agents can apply for additional deferrals
bull Clients not penalised 85 on-time lodgment requirement not affected if
agents lodge within deferred periods
bull ATO ldquowill not apply sanctions this yearrdquo if less than 85 lodged on time ldquoas a
consequence of the outagesrdquo
Tax agent lodgment problems following ATO systems outages
Tax Administration
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull FCT discontinues Full Federal Court appeal
bull Case arose from private ruling that profit from land sale was ordinary income
bull AAT found taxpayer ran property development business
bull Court held AAT engaged in fact-finding exercise ndash canrsquot do this in ruling
review ndash based on facts in ruling profit not ordinary income
bull Federal Court decision now stands matter remitted to AAT
Income
Rosgoe Pty Ltd v FCT [2015] FCA 1231
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
36
copy Chartered Accountants Australia + New Zealand 2017
Appeals update
bull One of the taxpayers (Tao Bai NSD 1276 of 2015) seeks special leave to
appeal to High Court
bull Full Federal Court held that taxpayer
ndash Had burden of proving absence of fraud or evasion for amended assessment issued out of time on that basis
ndash Was not denied procedural fairness in not having access to certain seized
documents
Tax Administration
Binetter amp Ors v FCT [2016] FCAFC 163
copy Chartered Accountants Australia + New Zealand 2017
Exchange of info with foreign revenue authorities on indirect taxes
bull Practice Statement guides ATO staff on exchanging information about indirect
taxes under international tax agreements
bull ATO shares publicly available information without restriction
bull Taxpayer-specific info can only be exchanged if authorised by legal
instrument
International Tax
Practice Statement PS LA 20166
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
37
copy Chartered Accountants Australia + New Zealand 2017
ATO releases Country-by-Country info
bull QampAs represent ATOrsquos transitional admin practice
bull QampAs cover
‒ General issues and eligibility
‒ CbC report
‒ Master file
‒ Local file
International Tax
QampAs on CbC reporting and transfer pricing documentation
copy Chartered Accountants Australia + New Zealand 2017
Australias adoption of BEPS Multilateral Instrument
bull Consultation paper on potential impacts of Australia becoming Party to OECD
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting released
International Tax
Consultation paper released
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
38
copy Chartered Accountants Australia + New Zealand 2017
OECD releases further BEPS guidance
bull OECD releases
‒ Key details of jurisdictions domestic legal frameworks for CbC reporting
‒ Additional interpretative guidance on CbC reporting standard
bull If notice to tax administrator required to identify reporting entity within MNE
Group notification due date can be extended (particularly relevant in
transition period)
International Tax
Country-by-Country reporting
copy Chartered Accountants Australia + New Zealand 2017
Interaction between tax treaty provisions of BEPS Action 6 report and treaty entitlement of non-CIV funds
bull Discussion draft released by OECD
bull Three draft examples on follow-up work on interaction between
‒ Treaty provisions of BEPS Action 6 report
‒ Treaty entitlement of non-CIV funds
International Tax
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
39
copy Chartered Accountants Australia + New Zealand 2017
More than 1300 bilateral relationships now in place across the globe re CRS
bull Over 1300 bilateral relationships now in place most based on CRS MCAA
bull List of automatic exchange relationships on OECDs Automatic Exchange
Portal
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Revised Australia-Germany DTA
bull Replaces 1972 DTA
bull Several BEPS recommended treaty provisions form part of new minimum
standards on treaty shopping and effective mutual agreement procedures
bull Takes effect in Australia from 1 January 2017 ndash withholding taxes 1 April
2017 ndash FBT 1 July 2017 ndash income tax
International Tax
Entry into force on 7 December 2016
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
40
copy Chartered Accountants Australia + New Zealand 2017
Loans v shams - Payments from overseas company
bull FCT wins appeal from decision that $38m in payments from foreign company
to Australian subsidiary and other related companies were genuine loans
bull Lenders owned by company controlled by Vanda Gould
bull Majority held that primary judgersquos conclusion ndash that agreements were shams
for limited purpose of convincing third parties that borrowers were at armrsquos
length from lenders ndash not open on facts
International Tax
FCT v Normandy Finance and Investments Asia Pty Ltd [2016] FCAFC 180
copy Chartered Accountants Australia + New Zealand 2017
ATO compliance approach to transfer pricing issues related to marketing and other hubs ndash Guideline released
bull Guideline to help businesses manage compliance risk associated with
offshore hubs
bull Businesses can self-assess transfer pricing outcomes using ATOs hub risk
framework
bull Date of effect 1 January 2017 ndash applicable to new and existing hubs
International Tax
Practical Compliance Guideline PCG 20171
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
41
copy Chartered Accountants Australia + New Zealand 2017
Re Wilson and FCT [2017] AATA 119
bull In 2010-11 electrician sub-contracted to US Army
bull Worked in Afghanistan for 4 months
bull Claimed earnings exempt under s 23AF ITAA 1936
bull Key issue did taxpayer work on ldquoapproved projectrdquo
bull AAT said no
ndash Although it was eligible project not approved in writing by Minister (as required
by s 23AF(11))
Overseas income not exempt
International Tax
copy Chartered Accountants Australia + New Zealand 2017
Diverting personal services income to an SMSF
bull TA 20166 (issued in April 2016) warns about arrangements to divert PSI to
SMSF to avoid paying tax at personal marginal rates
bull ATOrsquos voluntary disclosure offer (to remit penalties) extended to 30 April
2017
Tax Controversy
ATO extends voluntary disclosure offer
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
42
copy Chartered Accountants Australia + New Zealand 2017
Re-characterisation of income from trading businesses
bull ATO reviewing arrangements where trading company divided in contrived way
to re-characterise trading income as passive income
bull Income artificially diverted into trust ndash no tax or lower rate than corporate tax
rate paid on distribution
bull Arrangements typically involve stapled structures are promoted to overseas
investors
bull Pt IVA may apply
Tax Controversy
Taxpayer Alert TA 20171
copy Chartered Accountants Australia + New Zealand 2017
Taxpayer Alerts TA 20172 and TA 20173
bull ATO and AusIndustry reviewing arrangements where RampD tax offset claimed
for
ndash Building and construction activities (TA 20172)
ndash Ordinary business activities (TA 20173)
RampD claims in building and construction industry
Tax Controversy
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
43
copy Chartered Accountants Australia + New Zealand 2017
NSW duty not so happy days
bull Property bought by private company as custody trustee for SMSF
bull Bank insisted that non-trading company be custodian
bull Purchase completed when property transferred to new company
bull Late substitution of custody trustee exposed SMSF to double duty (on
contract of sale amp transfer)
bull Exemption didnrsquot apply as transferee didnrsquot exist when contract made
State Taxes
Happy Days Property Pty Ltd v CSR [2016] NSWCATAD 289
copy Chartered Accountants Australia + New Zealand 2017
Extending AMLCTF regime to accountants lawyers etc
bull A-Gs Department consulting on regulatory models for accountants lawyers
etc under Anti-Money Laundering and Counter-Terrorism Financing Act 2006
bull Five sector-specific consultation papers released for comment
Tax Reform
A-G consultation
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
44
copy Chartered Accountants Australia + New Zealand 2017
MYEFO flags changes
bull Tax announcements made
‒ ATO to give Credit Reporting Bureaus info on businesses with gt $10000 tax debts ndash 1 July 2017
‒ No franking credits if special dividend funded by capital raising activities that result in issue of new equity interests ndash 19 December 2016
‒ Penalty unit increase from $180 to $210 ndash 1 July 2017
Tax Reform
2016-17 Mid-Year Economic and Fiscal Outlook released
copy Chartered Accountants Australia + New Zealand 2017
Income products for retirement
bull Discussion paper on developing framework for ldquoMyRetirement productsrdquo
released
bull Views sought on structure of retirement income products framework for
regulating products
Tax Reform
Government releases discussion paper
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
45
copy Chartered Accountants Australia + New Zealand 2016
Donrsquot miss upcominghellip
These LiveOne sessions are also available as OnDemand Recordings
Date Topic
LIVE SESSIONS
Friday 17 February 2017 Corporate Tax Topics 2017 Tax Treaties PE amp Residency
Wednesday 22 February 2017 Preparing for the new super landscape Case Study 2
Wednesday 2 March 2017 Special Tax Topics 2017 Fringe Benefits Tax (FBT) Technical Session
Friday 3 March 2017 SMSF Strategy in Practice Series Property investments amp developments
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
More Online Training opportunities
Find more LiveOne online training opportunities at
charteredaccountantscomauliveone
Subscribe to the eLearning Update to receive updates on LiveOne
and eLearning opportunities
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand
14022017
46
Thank you
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
Disclaimer
Chartered Accountants Australia and New Zealand (ABN 50 084 642 571) Formed in Au stralia Members of the organisation are not liable for the
debts and liabilities of the organisation
No warranty is given to the correctness of the information contained in this document or its suitability for use by you Information contained in this
document may have changed since publication and may change from time to time To the fullest extent permitted by law no liability is accepted by
Chartered Accountants Australia and New Zealand for any statement or opinion or for an error or omission or for any loss or damage suffered as aresult of reliance on or use by any person of any material in thisdocument
The information in this document is provided for general guidance only and on the understanding that it does not represent and is not intended to be
advice Whilst care has been taken in its preparation it should not be used as a substitute for consultation with professional accounting tax legal or
other advisors Before making any decision or taking any action you should consult with an appropriate specialist or professional
Copyright copy Chartered Accountants Australia and New Zealand 2016 All rights reserved
This publication is copyright Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand) as
applicable it may not be copied adapted amended published communicated or otherwise made available to third parties in whole or in part in anyform or by any means without the prior written consent of Chartered Accountants Australia and New Zealand