What happened in tax in July

Written by TaxCounsel Pty Ltd

The following points highlight important
federal tax developments that occurred during July 2018.
Each month,
these developments are considered in more detail in the Taxing Issues column of
Taxation in Australia, the
Institute's member journal.
R&D tax incentive

Draft legislation (and explanatory material) to give effect
to the 2018-19 Budget proposal in relation to the research and development tax
incentive has been released.
Stapled structures
The government has released a paper for public consultation
in relation to the reform of the tax treatment of stapled structures and
similar arrangements.
Company residence
The Commissioner has issued a final ruling which sets out
his view on how the central management and control test of company residency in
s 6(1) ITAA36 operates following the decision of the High Court in the Bywater
Investments Ltd
case (TR  2018/5).
Part IVA
A draft practical compliance guideline sets out the ATO’s
compliance approach with respect to the general anti-avoidance provisions and
certain restructures that have the effect of preserving Australian tax benefits
that would otherwise be disallowed under the proposed hybrid mismatch rules.
CGT improvement threshold
For the 2018-19 income year, the indexed CGT improvement
threshold is $150,386
(TD 2018/8).

Interest deductibility
A recent final taxation determination considers the
question of whether a beneficiary of a discretionary trust who borrows money,
and on-lends all or part of that money to the trustee of the discretionary
trust interest-free, can be entitled to a general deduction for any interest
incurred (TD 2018/9).
GST withholding rules
The Commissioner has issued a law companion ruling that
deals with the recently enacted GST notification and withholding requirements
for vendors and purchasers of residential premises and potential residential land
(LCR 2018/4).

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

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

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

Onus not discharged

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

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