What happened in tax in September?

Written by TaxCounsel Pty Ltd

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

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

Base rate
entity legislation

The amending Bill that redefines the base rate entity concept that
applies for the purpose of determining a company’s entitlement to the lower
(27.5%) company tax rate was passed by parliament on 23 August 2018.

DGR reform

On 22 August 2018, the then Minister for Revenue and Financial
Services released a consultation paper on the proposed design for key
components of the government’s package of deductible gift recipient reforms.

Vesting of
a trust

The Commissioner has issued a final ruling which explains his views
about the immediate income tax consequences of a trust vesting.

CGT main
residence exemption: deceased estates

The Commissioner has released a draft practical compliance guideline
dealing with the circumstances in which the discretion conferred on him to
extend the two-year period after death within which a dwelling of a deceased
estate may be disposed of and attract a CGT exemption will be exercised.

GST: real
property connected with Australia

The Commissioner has issued a final ruling which considers when a
supply of real property (as defined) is connected with the indirect tax zone
for the purposes of GST.

inbound tour operators and agency

A recently released draft practical compliance guideline describes circumstances
in which the Commissioner will not apply his compliance resources to examine whether
an inbound tour operator acts as an agent for its non-resident clients.

7A: sub-trust arrangements

The Commissioner has extended the operation of the practical
compliance guideline that deals with the Div 7A consequences of a sub-trust
arrangement to such arrangements that mature in the 2019 income year.

case: High Court decides

The High Court has unanimously allowed the Commissioner’s appeal from
a decision of the Full Federal Court that was to the effect that the
Commissioner was bound by declarations made by the Queensland Supreme Court
under s 96 of the Trusts Act 1973 (Qld) as to the operation of the imputation
provisions of the ITAA97.

losses: “business activity”

The Federal Court has considered the concept of a “business activity”
that applies for the purposes of the non-commercial loss provisions contained
in Div 35 ITAA97 and has held that a purported exercise by the Commissioner of
a discretion under those provisions adversely to the taxpayer was infected by
legal error.

in-house assets and sole purpose test

The Full Federal Court has reversed a decision of Pagone J at first
instance that a superannuation fund breached the sole purpose test but has
upheld his Honour’s conclusion that an investment by the superannuation fund
breached the in-house assets test.

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