The KBH Report

• Higher education HELP changes announced – A package of reforms affecting the Higher Education Loan Program (HELP) is expected to take effect generally from 1 January 2018.
• Super reforms from 1 July 2017 – Superannuation changes related to the new $1.6 million transfer balance cap are now coming into effect.
• Draft legislation: LRBA integrity measures for pension cap – Exposure draft legislation has been released proposing integrity measures for limited recourse borrowing arrangements (LRBAs) as part of the super reforms.
• Senate Committee holds corporate tax avoidance hearing – A public hearing was recently held in Perth as part of the inquiry into corporate tax avoidance and minimisation.
• Higher education HELP changes: faster repayments and threshold changes – The Minister for Education and Training has announced a package of higher education reforms to be confirmed in the Federal Budget.
• Deductions for super funds: major ruling update – The ATO has issued Addendum to Taxation Ruling TR 93/17 to clarify and update the Commissioner’s views on deductions available for superannuation funds.
• Bill to reduce corporate tax rate – The Treasury Laws Amendment (Enterprise Tax Plan No 2) Bill 2017 has been introduced.
• Budget updates – Information about the announcements on introducing a charge for foreign owners of under-used residential property, restricting foreign ownership within new developments and introducing tougher residency rules for pensioners.
• Transfer pricing – The Full Federal Court has found Chevron Australia’s loan arrangement with a related US company was not at arm’s length. The ATO has also released draft information about its compliance approach to related-party financing arrangements.
• Car expenses for transporting equipment disallowed – A taxpayer been denied deductions for work-related car expenses.
• Draft legislation: financial complaints and dispute resolution – A new one-stop shop for financial disputes, the Australian Financial Complaints Authority (AFCA), will be established.

JULY 2017 REPORT

• Tax assistance for people affected by Cyclone Debbie – The ATO will fast-track refunds and provide a range of other tax-related supports for individuals and businesses within affected areas in Queensland and New South Wales.
• ATO adds value to developing financial literacy – The ATO is helping teachers add tax and super to their classes this year with dedicated educational resources.
• Does your business import or export goods and services? – A reminder to business owners about the GST obligations associated with import/export activities.
• Senate Committee holds corporate tax avoidance hearing – A public hearing was recently held in Perth as part of the inquiry into corporate tax avoidance and minimisation.
• Higher education HELP changes: faster repayments and threshold changes – The Minister for Education and Training has announced a package of higher education reforms to be confirmed in the Federal Budget.
• Super guarantee non-compliance: Senate Committee report – A report has called for the ATO to take a more proactive stance regarding employers’ super guarantee non-compliance.
• Illegal SMSF early access scheme leads to $6,000 fine – A Melbourne man has been found guilty of operating a financial services business without an AFS licence and promoting an illegal SMSF scheme.

MAY & JUNE 2017 REPORT

• Ride-sharing drivers must register for GST – the ATO has advised that Uber drivers must register for GST, regardless of how much they earn from providing ride-sharing services.
• Tax offset for spouse super contributions – the ATO has reminded taxpayers that from 1 July 2017 the assessable income threshold for claiming a tax offset for contributions made to a spouse’s superannuation fund will increase to $40,000.
• ATO to visit certain small businesses – the ATO will be visiting restaurants and cafés, hair and beauty businesses across Perth and Canberra in April with a focus on cash economy issues.
• Super reforms – Draft Law Companion Guideline LCG 2017/D3 deals with the treatment of superannuation death benefit income streams under the $1.6 million pension transfer balance cap.
• Deductions for carried-forward company losses – the AAT has found that a company was not entitled to deductions for carried-forward losses because it did not meet the relevant “continuity of ownership” and “same business” tests.
• Overseas income not exempt from income tax – the AAT has found that income a taxpayer earned from overseas was not exempt from Australian income tax under s 23AF of ITAA 1936 because the work was not on an “approved project”.
• GST on low-value imported goods – the long-awaited Bill has been introduced into Parliament to impose GST on supplies of imported goods worth less than A$1,000.

APRIL 2017 REPORT

• Re-characterisation of income from trading businesses – the ATO is reviewing arrangements that fragment integrated trading businesses to re-characterise trading income into more favourably taxed passive income.
• Research and development claims in building and construction industry – the ATO has issued a warning to taxpayers who seek to deliberately exploit the Research and Development (R&D) Tax Incentive program.
• Intangible capital improvements made to a pre-CGT asset – TD 2017/1 provides that intangible capital improvements can be a separate CGT asset from the pre-CGT asset to which those improvements are made.
• Personal services income diverted to SMSFs – the ATO has extended its related penalty remission offer until 30 April 2017.
• Depreciating assets: composite items – Draft TR 2017/D1 deals with determining whether a composite item is itself a depreciating asset or whether its component parts are separate depreciating assets.
• Tax risk management and governance review guide – the ATO has released a guide to tax risk management and governance review to help businesses develop and test their tax-related governance and internal control frameworks.
• Overtime meal expenses disallowed – a taxpayer has failed in claiming deductions for overtime meal expenses, because he was not paid an allowance under an industrial agreement.
• Time extension to review objection decisions disallowed – the Administrative Appeals Tribunal (AAT) has refused to grant a taxpayer an extension of time to apply for review of the Commissioner’s decision to disallow his objections.
• No deduction or capital loss for apparent guarantee liability – the AAT has denied two family trusts a deduction or capital loss of $4.3 million in guarantee liabilities due to a lack of credible evidence of a guarantee.
• Taxpayer denied deduction for work expenses of $60,000 – the AAT has confirmed that a mechanical engineer was not entitled to deductions for work-related expenses totalling $60,000.

MARCH 2017 REPORT

• ATO priority on settling cases – The ATO places a high priority on resolving tax disputes early, including through reaching settlements where appropriate.
• ATO develops work-related expenses risk profiles – The ATO has developed work-related expenses risk profiles to help it identify how work-related expense deduction amounts compare for similar taxpayers.
• Onus on taxpayers to show no fraud or evasion – The Full Federal Court has confirmed that a taxpayer bears the onus of proving the absence of fraud or evasion where the Commissioner has issued an assessment “out of time” on the basis of “fraud or evasion”.
• No disclaimer of trust interest – The AAT has ruled that a taxpayer could not argue she had disclaimed her interest in trust income because the disclaimer had not been raised in her original objection to the relevant amended assessments.
• Admin penalties of 75% for failing to lodge FBT returns – The AAT has confirmed that 75% administrative penalties were rightfully imposed on several companies that failed to lodge FBT returns over a four-year period.
• New ATO data-matching program: ride sourcing – The ATO has advised of a new data-matching program to identify individuals who may be engaged in providing ride-sourcing services.
• Taxation ruling on commercial website deductibility – In TR 2016/3, the ATO sets out the tax deductibility of expenditure to set up and maintain a business website.
• Taxation determination on deductions for bad debts – The ATO has issued TD 2016/19 stating that a trust beneficiary is not entitled to a deduction for an unpaid present entitlement that they purport to write off as a bad debt.
• Taxpayers failed to prove that payments were “loans” – The Full Federal Court has found that several Australian companies had not proven the payments they received from overseas companies should not be considered income.

VIEW REPORT

• Contrived trust arrangements in ATO sights – The ATO has cautioned taxpayers against arrangements that seek to minimise tax by creating artificial differences between the taxable net income and distributable income of closely held trusts.
• GST and countertrade transactions – The ATO has issued a Practical Compliance Guideline which sets out its compliance approach, in the context of GST, to entities that enter into countertrade transactions as part of carrying on their enterprise.
• Companies held to be resident and liable to tax in Australia – In a long-running saga, the High Court has unanimously dismissed the appeals of four corporate taxpayers.
• Payment was assessable as “deferred compensation” – The High Court has held that payments made to a taxpayer pursuant to an incentive “profit participation plan” after termination of his employment were income according to ordinary concepts.
• ATO data-matching programs continue – The ATO has advised that it will continue with data-matching programs relating to share transactions, debit and credit card transactions and online selling.
• Tax debt release applications refused – The Administrative Appeals Tribunal has recently refused the applications of two individuals who sought to be released from their tax debts.

VIEW REPORT

• Budget superannuation changes on the way – The Federal Government has been consulting on draft legislation to give effect to most of its 2016–2017 budget superannuation proposals.
• Primary producer income tax averaging – Primary producers will be able to access income tax averaging 10 income years after choosing to opt out.
• R&D tax incentive rates change – The Federal Government has reduced the R&D tax incentive rates for the first $100 million of eligible expenditure by 1.5 percentage points.
• SMSF related-party borrowing arrangements – The ATO has issued a tax determination concerning non-arm’s length income and limited recourse borrowing arrangements.
• Travel expense and transport of bulky tools claim denied – An individual has been unsuccessful before the AAT in a matter concerning certain deduction claims for work-related travel expenses.

VIEW REPORT

• Personal middle income tax rate cut on the way – The Government is increasing the third personal income tax threshold that applies to personal income taxpayers.
• Small business tax breaks in the pipeline – A Bill has been introduced which proposes, among other things, to lower the company tax rate to 25% by 2026–2027.
• Single touch payroll reporting legislative changes – A Bill to establish a new reporting framework, Single Touch Payroll (STP), has been introduced in Parliament.
• Take care with work-related deduction claims, says ATO – The ATO has reminded individuals to make sure they get their deductions right this tax time.
• ATO eye on SMSFs and income arrangements – The ATO is aware of arrangements where individuals divert personal services income to an SMSF to minimise their income tax obligations.
• Social welfare recipients data-matching program – The Department of Human Services is matching income data it collects from social welfare recipients with tax return-related data reported to the ATO

VIEW REPORT

• Share economy participants reminded of tax obligations – The ATO reminds people who earn income in the share economy that they have tax obligations.
• Itinerant worker claim denied, so travel deductions refused – The AAT has held that a taxpayer was not an itinerant worker and therefore was not entitled to travel expense tax claims of some $38,000.
• ATO flags retirement planning schemes of concern – The ATO has launched the Super Scheme Smart initiative to warn people about problematic retirement planning schemes.
• Deductibility for gifts to clients and airport lounge membership fees – The ATO has clarified its views concerning businesses’ gifts to clients and employers’ payment of airport lounge membership fees for employees.
• Changes to $500,000 lifetime super cap confirmed – The Federal Treasurer says there will be some changes to the proposed $500,000 lifetime cap on non-concessional super contributions.
• Home exempt from land tax for “world-traveller – A world-travelling taxpayer has been successful in seeking a land tax exemption for his home located in Victoria.

VIEW REPORT

• ATO small business benchmarks updated
• SMSF early voluntary disclosure service for contraventions
• New tax governance guide for SMSFs .
• Property developer entitled to capital gain tax concession

VIEW REPORT