What happened in tax in November

Written by TaxCounsel Pty Ltd
The following points highlight important federal tax developments that
occurred during November 2018.
Each month, these developments are considered in more detail in the 'Taxing Issues' column of Taxation in Australia,
the Institute's member journal.

Division 7A consultation

A consultation paper in relation to the amendments that are proposed to improve the integrity and operation of Div 7A ITAA36 has been released.

Small business rates 

An amending Act that became law on 25 October 2018 contains amendments which will give effect to the government’s decision to accelerate the reduction of the corporate tax rate for corporate tax entities that are base rate entities.

Deductions for vacant land

Exposure draft legislation has been released relating to the proposal to deny deductions for losses or outgoings incurred to the extent they relate to a taxpayer holding vacant land.

Partnership integrity measure

Exposure draft legislation has been released relating to the proposal to prevent the CGT small business concessions from being available for assignments of the income of a partner and other rights or interests in the income or capital of a partnership that are not a membership interest in the partnership.

Circular trust distributions 

Exposure draft legislation has been released relating to the proposal to extend to family trusts the anti-avoidance rule that applies to other closely held trusts that undertake circular trust distributions.

Travel expenditure

The Commissioner has issued a final law companion ruling that considers the operation of the new provision which, in broad terms, denies deductions for travel expenditure incurred in gaining or producing assessable income from certain uses of residential premises as residential accommodation.

Employee remuneration trusts 

The Commissioner has released a final ruling on how the taxation laws apply to an employee remuneration trust arrangement that operates outside of the employee share scheme rules.

Courier and cleaning services

A recent law companion ruling sets out the ATO view of the amendments that expanded the taxable payments reporting system to entities that provide courier or cleaning services.

Transfer pricing 

A recently released draft determination states that the debt and equity rules (in Div 974 ITAA97) cannot limit the operation of the transfer pricing rules (in Subdiv 815-B ITAA97).

The Commissioner has issued a practical compliance guideline which sets out the ATO’s compliance approach to transfer pricing issues related to the location and relocation of certain business activities and operating risks into a centralised operating model.

Personal services income 

The AAT has upheld the Commissioner’s objection decisions that a partnership comprising the taxpayer (an engineer) and his spouse was not carrying on a personal services business.  

Expenditure: capital or revenue?

The Full Federal Court has affirmed a decision of the AAT that expenditure incurred by a taxpayer in acquiring gaming machine entitlements under statutory provisions was properly to be regarded as on revenue, not capital, account.

Written by practitioners for practitioners,  Taxation in Australia is continually ranked as Australia's leading tax journal.
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