Resources

How Green is Green?
More and more businesses are reviewing their supply chain systems which, although economically effective, may pose environmentally detrimental.

Claiming the tax concessions for research and development
Every June, as we reach the end of another financial year, many companies find themselves almost besieged by advice on last minute opportunities to minimise or reduce their tax obligations to the Tax Office.

Destination for expatriates
There are many countries that are attractive jurisdictions for expatriates, for both executives who move temporarily within an international corporate group, and for high net wealth individuals who move to that country to retire.

Australia as an International Holding Company Location
An International Holding Company is usually owned offshore and holds the shares in foreign subsidiaries. For a country to be an international holding company location, it must have a number of favourable tax aspects.

Tax Consolidation
On 10 February 2010, Tax Laws Amendment (2010 Measures No. 1) Bill 2010 (“the Bill”) was introduced to Parliament. The Bill sets out a range of important amendments to the tax consolidation regime.

Proposed changes to R&D Laws
On 18 December 2009, the Federal Government released draft legislation seeking to replace the current R&D Tax Concession Program with the R&D Tax offset Program.

ATO Draft Ruling on Thin Capitalisation and Transfer Pricing
The Australian Taxation Office (ATO) has released Draft Taxation Ruling TR 2009/D6 which addresses the interaction between the transfer pricing provisions and the thin capitalisation provisions. The ATO has also withdrawn Draft Taxation Determination TD 2007/D20 which addressed the same issue. In a separate development, the ATO has released a draft Practice Statement (PSLA 3187) setting out a practical 'rule of thumb' for pricing the interest rate on cross-border related party loans.

DIV 7A Exposure Draft
On 4th January 2010, Treasury released exposure draft legislation and explanatory materials outlining a range of proposed amendments to the non-commercial loan rules in Division 7A of the Income Tax Assessment Act 1936.

Employee Share Scheme legislation
The Government has introduced a Bill to Parliament to implement the changes to the taxation of employee share schemes as foreshadowed in the 2009/10 Federal Budget (Tax Laws Amendment (2009) Budget Measures No. 2 Bill) 2009.

Extension to the investment allowance
Government increases the incentive to invest in new plant. As part of the new economic stimulus package the Treasurer announced an extension to the investment allowance scheme.

Technical Update - Tax Company Loss Rules
On 4 September 2009, Treasury released Exposure Draft legislation and explanatory materials outlining various proposed amendments to the company loss recoupment rules.

Government foreshadows
The Federal Government has recently foreshadowed that it will amend the guidelines for the Enhanced Project By-law Scheme (EPBS) and Tariff Concession Scheme, with the aim of strengthening the Australian industry participation requirements for private sector projects that access the EPBS.

Technical Update - Reforms to the taxation of employee share schemes -
In the latest chapter on the reform of the taxation of employee share schemes, on 1 July 2009 the Assistant Treasurer released a Policy Statement setting out the Government’s final policy framework for the taxation of shares and rights acquired under employee share schemes

Technical Update - Restriction of Foreign Service Income (Exemption)
Tax Laws Amendment (2009 Budget Measures No. 1) Act 2009 has now received Royal Assent. It amends section 23AG to limit the exemption for foreign employment income to certain types of employment.

Technical Update - Interpretative guidance on employee option arrangements released
The Australian Taxation Office (ATO) has recently released two Interpretative Decisions (ATO IDs) addressing income tax issues associated with employee option arrangements.

Technical Update - Government foreshadows changes to the Enhanced Project By-law scheme
The Federal Government has recently foreshadowed that it will amend the guidelines for the Enhanced Project By-law Scheme (EPBS) and Tariff Concession Scheme, with the aim of strengthening the Australian industry participation requirements for private sector projects that access the EPBS.

Technical Update - Tax Consolidation Amendments
Treasury has released an Exposure Draft outlining a range of proposed amendments to the tax consolidation regime. The Exposure Draft addresses some of the numerous amendments to the consolidation regime announced by the former government.

Tech Update Tax Compliance Program 7th November 2008
As discussed in recent editions of ‘Tax News’ and ‘Technical Update’, the Tax Commissioner has released the 2008-09 Compliance Program. The Program outlines the compliance priorities for the Tax Office over the coming year, details the areas of risk to compliance and how the Tax Office intends to respond to those risks.

Exposure Draft Bill - TOFA Stages 3 & 4
The Government has released another Exposure Draft Bill and related explanatory material dealing with the Taxation of Financial Arrangements (TOFA) Stages 3 & 4. The consultation process in relation to this legislation dates back to December 2005 and this is the third Exposure Draft Bill released by the Government.

Thin capitalisation
The Government has introduced legislation into Parliament in relation to the use of accounting standards for valuing and identifying assets, liabilities and equity capital for the purposes of the thin capitalisation provisions. These amendments were announced in the 2008-09 Budget and are contained in Tax Laws Amendment (2008 Measures No.5) Bill 2008 (‘the No.5 Bill’).

Public Trading Trusts
Consistent with the Government’s policy to attract international investment into Australian managed funds, the 2008-09 Budget contained some announced changes to the ‘public trading trust’ rules in the tax law and in particular the ‘eligible investment business’ rules.

Margin Schemes
The Government announced in the 2008-09 Budget that it was intending to make integrity amendments to the GST margin scheme provisions to ensure that the provisions ‘operated as intended’. The Government has now introduced these amendments into Parliament in Tax Laws Amendment (2008 Measures No. 5) Bill 2008 (‘the No. 5 Bill’).

Changes proposed to EMDG
The Export Market Development Grant (EMDG) scheme is the Government’s principal financial assistance program for developing exporters. Administered by Austrade, it aims to encourage businesses to promote their products and services overseas and to become established exporters on a long term basis.

LCT 33per Revised & Reintroduced
The original Tax Law Amendment Bill 2008 to increase the Luxury Car Tax (“LCT”) from 25% to 33% defeated by the Senate has since been revised, with a number of amendments. The reintroduced Bill includes concessions on the LCT to farmers and tourism operators.

ATO Compliance Program
The Tax Commissioner recently released the ATO’s 2008-09 Compliance Program. The publication of the Compliance Program is part of the ATO’s policy of providing a more open and transparent approach to the administration of tax collection.

Climate ready program
Applications have recently opened on 28 July 2008 for the Client Ready Program which is a $75 million initiative of the Government, providing support for small to medium businesses involved in innovative projects addressing climate change. The Government is offering grants ranging from $50,000 to $5 million on a matching funding basis for successful applicants. This may include the development of an innovative product, process or service including research and development, proof-of-concept and early-stage commercialisation.

Tax Margin Scheme - Decision Impact Statement
The ATO has released its Decision Impact Statement on the Full Federal Court decision in Brady King Pty Ltd v Commissioner of Taxation (2008) FCAFC 118. Readers who have previously used the margin scheme for property acquired under a contract spanning 1 July 2000 should contact their BDO adviser to discuss the likelihood of a refund as a result of this decision.

Taxation of trust income
This technical update discusses three of the more important developments that have occurred recently in relation to the taxation of trust income. ‘Proportionate view’ confirmed as correct In two recent decisions in the Administrative Appeals Tribunal (AAT), it has been held that the ‘proportionate view’ is the correct method to use in determining who is liable to pay tax on the excess of the taxable income of a trust over its ‘trust law’ income (Bamford v Commissioner of Taxation (2008) AATA 322, Ryan v Commissioner of Taxation (2008) AATA 383).

Tax Margin Scheme
The Full Federal Court has overturned a decision of the Federal Court and held that a taxpayer could use the valuation method under the margin scheme on the disposal of strata units, even though the taxpayer only had a contractual interest in the undeveloped property as at 1 July 2000 (Brady King Pty Ltd v Commissioner of Taxation (2008) FCAFC 118). Readers who have previously used the margin scheme for property acquired under a contract spanning 1 July 2000, and those entering into future property contracts, should contact their BDO adviser to discuss the implications of this decision.

Temporary Residents
The Minister for Immigration and Citizenship has recently announced an increase in the Minimum Salary Level (MSL) for temporary skilled overseas workers on 457 visas. The increase is the first in 2 years and will apply to all temporary skilled overseas workers, both existing 457 visa holders and new employees. The increase is expected to be effective from 1 August 2008 pending the issue of a Gazette Notice.

Court Rules on Tax Consolidation
A recent Federal Court decision has highlighted the difficulties in interpreting and applying tax provisions dealing with income tax consolidation. The decision in Envestra Limited v Commissioner of Taxation (2008) FCA 249 is particularly important because it is the first case to consider the operation of the tax consolidation rules. The tax consolidation rules provide that certain groups of entities (generally companies) can be treated as a single taxpayer for income tax purposes. This means that the head company of the group is the taxpayer for the group and the subsidiary members of the group are effectively treated as divisions of the parent company, instead of maintaining separate income tax identities.

Tax Office gets Carpeted on Deposits
The High Court agrees with the Australian Tax Office’s (“ATO”) view that forfeited deposits are subject to GST. This decision was the result of an appeal to the High Court against the decision by the Full Federal Court which contradicted the ATO’s published views.

Tax Payroll
Payroll tax is a tax levied by the States and Territories on businesses whose total annual Australian wages exceed a specified exemption threshold. The threshold varies between States and Territories, as does the rate of payroll tax payable on the relevant wages.

Changes to the EMDG scheme from 1 July 2008
The Federal Government announced in the 2008 Budget an increase in funding of $50 million in 2009-10. The Export Market Development Grant (EMDG) scheme provides assistance to Australian exporters by repaying part of their promotional expenses. The EMDG scheme aims to support a wide range of industry sectors, including inbound tourism and the export of intellectual property and know how outside Australia.

Federal Court doesn't holdback Motor Dealers
This morning, the Federal Court released its judgment on GST and holdback, declaring that the Commissioner of Taxation must refund GST amounts overpaid by KAP Motors and GAP Motors in respect of ‘holdback’ payments. Justice Emmett found that motor dealerships were entitled to a refund of GST amounts incorrectly remitted, even if the dealerships have not and do not intend to pass these on.

Research and development tax concession
Changes to the R&D tax concession will enable Australian subsidiaries of foreign multinationals to access the R&D tax concession, therefore encouraging further R&D investment in Australia.

Corporate Tax Master
Corporate Tax Master provides the corporate sector with a sophisticated software product that prepares high quality tax returns efficiently and cost effectively, on-line.

Tax briefing - GST update
David Wilson discusses the current GST climate including the ATO GST compliance program, common traps that occur, GST litigation and other hot topics.

Federal budget news 07
The 2007-08 Budget reflects on Australia’s strong economic position - continued budget surpluses, strong growth, low unemployment and low inflation.

Tax briefing - Financing arrangement
Brian Richards discusses financing arrangements and the specific matters involved including relationships, risk matters and tax matters.