Tax Facts

Tax Facts contains news and alerts relating to tax practice, for the benefit of accountants and other professionals in public practice. Please click on the links below for recent issues. You may also like to peruse Tax Facts by topic category - topics are listed below to the right.

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  • No tax cut for 'passive' companies

    In brief:    The reduced 27.5% corporate tax rate has applied since 1 July 2016 to companies that carry on business and have an aggregated turnover of less than $10M ($25M for the 2018 year of income). Exposure draft legislation has now been released to reduce the confusion about which companies would be taken to be carrying on business. However, rather than address that question, the draft legislation will apply the lower tax rate to companies that have aggregated turnover less than the specified threshold for the year and whose total assessable income comprises less than 80% of ‘passive income’.

    More:    Passive income for this purpose is to be defined as:

    •     dividends (but not those from holdings with voting rights of 10% or more); 
    •     non-share dividends by companies; 
    •     interest income, royalties and rent; 
    •     gains on qualifying securities; 
    •     capital gains; and 
    •     to the extent attributable to any of the above, amounts included in assessable income from a partnership or trust.

    The 80% passive income test is an annual one so must be determined each year. The threshold is arbitrary so some odd results are possible. For example, a corporate beneficiary may be eligible for the reduced rate on trust distributions attributable mainly to business income in the trust, provided that it carries on business itself and satisfies the 80% test overall. But a company carrying on business managing the rental of its commercial or residential properties would not. What constitutes carrying on business is still not defined. (Exposure Draft: Treasury Laws Amendment (Enterprise Tax Plan Base Rate Entities) Bill 2017)

    ... Read More




    21 Sep 2017

    Topic: Income Tax

  • 'Lucky' error in trust distribution resolutions avoids tax on $13M

    In brief:    In addition to distribution resolutions by 2 trusts in this case, variation resolutions for each provided for additional distributions ‘should the Commissioner of Taxation disallow any amount as a deduction or include any amount in the assessable income of the trust …’ Assuming each variation provision was authorised by the relevant trust deed, the Full Federal Court held that it made the trust distribution contingent (on whether the Commissioner disallowed a trust deduction or included an additional amount in assessable income). Consequently, the beneficiary taxpayer who had been assessed on adjustments to the net (taxable) trust income was not presently entitled to a share of trust income by the end of the relevant income year and was not liable for tax on amended assessments following audit by the ATO.

    More:    There were a number of issues in this complex case, which arose from ATO amendments made a number of years after the relevant income years. But the big takeaway is the impact of variation clauses relating to trust distributions. They typically serve no real purpose but create very significant potential problems. It was beneficial in this case that the beneficiary assessed had no present entitlement to the trust income, but ordinarily the result of that is a liability on the trustee for tax at the maximum individual rate. Variation clauses should consequently be avoided. (Lewski v Commissioner of Taxation [2017] FCAFC 145)

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    21 Sep 2017

    Topic: Trusts/Income Tax

  • More tax problems from wide trust beneficiary classes

    In brief:    A recent NSW payroll tax case shows again the potential problems of widely drawn beneficiary classes in discretionary trusts. A company owned and controlled by Michael Gerace had been issued with payroll tax assessments of nearly $2M and was put into liquidation. The Chief Commissioner of State Revenue (NSW) was successful in an appeal to group that insolvent company with a trust controlled by Michael’s brother and one established originally for their parents, despite an apparent lack of commercial connections. Grouping was achieved because Michael was a discretionary beneficiary of both those other trusts, so he was effectively taken to have a controlling interest in each of those trusts (as well as the insolvent company that he owned). And members of a payroll tax group are jointly and severally liable for the tax payable by every group member.

    More:    Having wide trust beneficiary classes is an outdated practice that potentially creates substantial tax disadvantages, yet serves no real purpose – Tax Strategies’ trusts have for several years been created on a different basis without wide beneficiary classes, substantially minimising the risk of such tax disadvantages. There was no doubt about the grouping in this case, but Michael disclaimed his interests under his brother’s and parents’ trusts in an attempt to retrospectively sever his connection with them. However, the Court held that that did not affect payroll tax liabilities that had already arisen, irrespective of its impact as between Michael and the respective trustees. It is traditional drafting practice to have wide beneficiary classes in a discretionary trust, including many family members who are not intended and will never benefit under the trust. But that can give the payroll tax Commissioners a very easy grouping mechanism. It has also caused significant problems in relation to the recently introduced duty and land tax surcharges for foreign purchasers of residential real estate in a number of States. (Chief Commissioner of State Revenue (NSW) v Smeaton Grange Holdings Pty Ltd [2017] NSWCA 184)

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    24 Aug 2017

    Topic: Trusts/State taxes

  • Developing rules for super event-based reporting

    In brief:    The ATO has released a Position Paper on its views for the application of the event-based reporting regime to SMSFs from 1 July 2018. This follows a recent draft legislative instrument to lay down the timing framework for the reporting regime. The basic rule proposed is that reporting must be done within 10 business days after the end of the month in which the reporting event occurred, although that will be subject to further concessions (at least for a transitional period).

    More:    The purpose of the event-base reporting regime is to enable the ATO to track and administer the application of super fund members’ $1.6M (initially) transfer balance account cap. The ATO is seeking feedback about the options outlined in its Position Paper. The first option is the basic rule of 10 business days after the end of the month, but 28 days after the end of the quarter in which the reporting event occurs for reporting of the commencement of a retirement phase income stream and relevant repayment events relating to limited recourse borrowing arrangements. Also, extensions will generally not apply in relation to commutations of income streams. The second option proposed by the ATO is 28 days after the end of the relevant quarter in which the reporting event occurs for an initial 2 year period, reverting to the basic rule of 10 business days after the end of the month for all relevant events (again, except in relation to commutations). (ATO Position Paper; Transfer Balance Cap & SMSF ‘Event-Based’ Reporting Framework, 18 August 2017)

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    24 Aug 2017

    Topic: SMSFs

  • More important super changes

    In brief:    The Government has announced significant changes amongst amendments to the super reforms commencing on 1 July 2017. In relation to limited recourse borrowing arrangements (LRBAs), it is proposed that the outstanding LRBA balance at the end of each year will count towards a member’s Total Superannuation Balance cap of $1.6M. And also that repayments of a LRBA (both principal and interest) will need to be credited to a member’s Transfer Balance Cap. For Transition to Retirement pension (TRIS) accounts, fund earnings are to automatically become exempt when a member turns 65 or satisfies any other nil condition of release. It is intended to enact the amendments before 1 July 2017.

    More:    The proposed changes in relation to LRBAs are to counter perceived distortions to the operation of the reforms. There is a concern, for instance, that the payment of pension liabilities may effectively be made from accumulation phase income using a LRBA, giving an effective transfer of accumulation growth to the retirement phase. And that a member’s Total Superannuation Balance may be artificially kept below the $1.6M cap by lump sum withdrawals that are then lent back to the SMSF under a LRBA. These measures will add further complexity, including the need for apportionments where there is more than one member of a fund. The automatic exemption for TRIS pensions is a welcome one, designed to avoid a compliance need to commute a TRIS on satisfaction of a nil condition of release and recommence an account based pension.

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    06 Apr 2017

    Topic: SMSFs

  • Successful CGT rollover on divorce

    In brief:    In a complex case, contested both by the Commissioner of Taxation and the wife of the taxpayer who controlled the transferor trust, the taxpayer has successfully obtained a declaration in the Federal Court that CGT rollover relief under Subdivision 126-A applied. The Family Court order was for the transfer of shares in a listed public company to the wife, although they were actually transferred to the trustee of a trust at the wife’s direction. It was held that rollover relief applied to the change in beneficial ownership in favour of the wife at the time the Court orders were made. In any case, the Court would have held that a rollover under s 126-15 applied for a trust to trust transfer given that the wife was sufficiently ‘involved’.

    More:    The Court’s comments about CGT rollover on divorce applying on a trust to trust transfer is controversial – it has been commonly understood that the rollover only applied for spouse to spouse transfers or those from companies and trusts to a spouse. Also, the Court was prepared to hold that a change of beneficial ownership (without transfer of the legal title) constituted a CGT event A1. In any case, an appeal by the Commissioner (and presumably the wife) seems likely. The company shares which were the subject of the Family Court’s order appear to have had a value of approximately $20M so presumably a substantial tax liability is at stake. This case (which also included complex trusts law and other legal points) illustrates the need for deep analysis and consideration of the tax issues involved in divorce and other relationship breakdowns – whatever the ultimate outcome of an appeal, one or other of the husband and wife in this case will no doubt be bitterly disappointed. (Sandini Pty Ltd v FC of T [2017] FCA 287)

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    06 Apr 2017

    Topic: CGT/Trusts

  • Disclaimer by a discretionary trust beneficiary retrospectively avoided payroll tax grouping

    In brief:    The New South Wales Supreme Court has held that a disclaimer of his interest as a discretionary trust object was valid to retrospectively end a person’s rights to benefit from the time those rights were created. This was sufficient to break the payroll tax grouping between several entities controlled by 2 brothers, the group determined by the Chief Commissioner having included a company in liquidation with substantial outstanding payroll tax assessments.

    More:    This case is another that confirms the enthusiasm by State payroll tax authorities for the grouping of entities. Grouping is a very useful mechanism for those authorities since each member of a group is jointly and severally liable for the payroll tax liabilities of all group members. And discretionary trust objects are typically deemed to have more than a 50% interest, readily enabling grouping through broad beneficiary classes in discretionary trusts. That is the real issue – having extraordinarily wide beneficiary classes is an outdated practice that creates problems, rather than serving any useful purpose. And that is why Tax Strategies’ trusts are created quite differently and will not facilitate payroll tax grouping through such tenuous connections. (Smeaton Grange Holdings Pty Ltd v Chief Commissioner of State Revenue (NSW) [2016] NSWSC 1594)

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    15 Dec 2016

    Topic: State Taxes/Trusts

  • No small business CGT concessions because of fuel reimbursements

    In brief:    The Full Federal Court has held that there was no error by the AAT in concluding that the $2M turnover test had not been satisfied and that, consequently, no small business CGT concessions applied on the sale of mining tenements. The case turned on whether disbursements totalling $55,106 for fuel costs under 2 contracts constituted ‘*ordinary income that the entity *derives in the income year in the ordinary course of carrying on a *business.’ (s 328-120(1)). The AAT had held that receipts from fuel disbursements were ordinary income, despite the normal practice that customers of the drilling contractor provided fuel and the initial contracts for the 2 relevant drilling jobs required the customers to provide fuel.

    More:    The taxpayer’s drilling company was a ‘connected entity’ and had undertaken drilling exploration on the mining tenements from which the taxpayer derived the capital gain. And the Commissioner had accepted that the basic conditions for the small business CGT concessions would have been satisfied if the drilling company’s annual turnover had been less than $2M for the previous year of income. This case continues the steady stream relating to the small business CGT concessions and illustrates how important it is to step through each of the relevant tests for the concessions in fine detail. (Doutch v Commissioner of Taxation [2016] FCAFC 166)

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    15 Dec 2016

    Topic: CGT/Income Tax

  • Breaches of directors' duties used for tax collection

    In brief:    Company liquidators have successfully argued that the participation by directors (including a de facto director) in a tax evasion scheme breached various directors’ duties. The scheme involved back-to-back loans into Australia with untaxed offshore funds accumulated by the brothers who built the Nudie juice business. Tax debts owing by the companies were held to be part of the losses caused by such breaches and were consequently recoverable from the directors by the liquidators.

    More:    This case is the latest in a number involving the Binetter family, arising from Project Wickenby. It illustrates a relatively novel approach to the collection of tax debts owing by presumably insolvent companies, establishing a pathway for liquidators direct to the directors. The case is also a good reminder that it is a mistake to focus solely on tax laws, including in relation to legitimate tax planning arrangements – many arrangements are undone not by failings necessarily related to tax, but instead related to aspects of the general law. (BCI Finances Pty Ltd (in liq) v Binetter (No 4) [2016] FCA 1351)

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    15 Dec 2016

    Topic: Income Tax

  • Draft LCGs issued for new super reforms

    In brief:    The Commissioner has issued several draft Law Companion Guidelines in relation to the super reforms commencing on 1 July 2017. Two relate to defined benefit interests but the other 2 are particularly relevant to SMSFs. LCG 2016/D8 covers the transitional CGT relief for assets supporting exempt income streams and which are affected by the $1.6M transfer balance cap or loss of exemption relating to TRIS pensions. LCG 2016/D9 provides guidance about how the $1.6M transfer balance cap operates for account based income streams.

    More:    These LCGs will be useful in helping practitioners digest the new reforms and their implications for clients in various circumstances. That will include potential impacts on estate planning, particularly where reversionary pensions will cause the $1.6M cap to be exceeded after the death of a primary pensioner (although there will be a 12 month window to adjust benefits for the reversionary pensioner in that case). In addition to decisions about potential rearrangements relating to existing income streams and adopting the transitional CGT relief, planning prior to 1 July 2017 should also include maximising both concessional and non-concessional contributions where appropriate.

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    15 Dec 2016

    Topic: SMSFs/CGT/Income Tax

  • Changed threshold intended for "small business entities" from 1 July 2016

    In brief:    A Bill has been introduced to increase the small business entity turnover threshold from $2M to $10M for most purposes (but not for the small business income tax offset, for which the turnover threshold is proposed to be $5M). The change is intended to apply from 1 July 2016 and will have a number of implications for small businesses, including imputation changes for companies that qualify as small business entities.

    More:    The proposed $10M turnover threshold is not to apply for accessing the small business CGT concessions – the existing $2M threshold will continue for that purpose. However, it is the new $10M threshold that will apply for the new small business restructure roll-over. In relation to the associated proposed reduction of the corporate tax rate to 27.5% for small business companies from 1 July 2016, it will no longer be possible to attach franking credits based on the 30% corporate rate. Instead, maximum franking is to be based on the particular company’s tax rate for the income year in which the distribution is paid, assuming that its turnover is the same as for the previous year.

    As set out in the Explanatory Memorandum to the Bill, the $10M small business entity threshold is intended to apply for a number of other small business concessions, including immediate deductibility for start-up expenses, simpler depreciation rules, simplified trading stock rules, immediate deductions for certain prepaid business expenses, accounting for GST on a cash basis, etc. [Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016]

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    05 Oct 2016

    Topic: Income Tax/CGT/GST

  • A "scary" payroll tax decision

    In brief:    In this case, the individual trustees of an SMSF (a husband and wife) and the corporate trustee of related custodian trusts were included in a payroll tax group. Since each member of a group is jointly and severally liable for the payroll tax liabilities of all group members, those trustees faced substantial payroll tax debts for assessments on several operating entities in the group. In an application for judicial review, the Qld Supreme Court held that there was no legal error by the Commissioner in refusing an application to exclude the trustees from the relevant payroll tax group.

    More:    This matter illustrates the readiness of State Revenue Offices to utilise the very broad grouping provisions that apply for payroll tax purposes, although here there were dealings between the trustees and relevant operating entities that made it more difficult to establish that the trustees operated independently of the operating entities. It is somewhat counterintuitive that trustees of an SMSF and custodian trusts should be part of a payroll tax group, since they invariably do not carry on any business or engage workers. The Commissioner emphasised the definition in s 66 of the Payroll Tax Act 1971 (Qld), under which ‘business includes …. the carrying on of a trust, including a dormant trust’. And the Judge accepted that the breadth of intention of that provision would encompass a trustee merely holding assets as a bare trustee. That same definition appears in the payroll tax legislation of other States. (Scott and Bird v Commissioner of State Revenue [2016] QSC 132)

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    05 Oct 2016

    Topic: State Taxes

  • Building & development group succeeds in having $40M gain taxed as a discount capital gain

    In brief:    A family group with substantial building, property development and investment activities has successfully argued in the AAT that its $40M profit from the sale of a property was not a revenue gain. Rather, it was held to be a capital gain with the general 50% CGT discount consequently available. This was despite the sale having occurred within months of completion of the site’s redevelopment.

    More:    This decision emphasises the importance of properly characterising the activities from which any profit has arisen. The Tribunal accepted that, separately from the group’s building and development businesses, one of its discrete activities was the acquisition of commercial properties to hold for rental as capital assets. It was held that the relevant profit was derived from this activity and consequently was capital. This was supported by evidence from family members that was accepted by the Tribunal. (FLZY v Commissioner of Taxation [2016] AATA 348)

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    05 Oct 2016

    Topic: Income Tax/CGT

  • non-resident CGT withholding commences on 1 July 2016

    In brief:    The new non-resident withholding tax regime on purchases from foreign residents commences on 1 July, for contracts entered into on or after that date. It has very substantial potential implications for both purchasers and vendors. Purchases affected are those of both direct and indirect interests in Australian real property or mining rights, as well as options or other rights to acquire such property. But no withholding is required unless at least one of the vendors is taken to be a foreign resident or, for real property interests in any case, if the purchase price is less than $2M. The tax is a non-final withholding and affected vendors will be entitled to credit the amount withheld from their actual income tax liabilities.

    More:    The default position under the new withholding regime is that it is assumed to apply (even if the vendor is in fact an Australian resident), unless a particular exclusion applies. This raises issues for conveyancing lawyers, but all advisers need an awareness of the rules – a failure to withhold will not affect the purchaser's obligation to pay 10% of the price to the Commissioner and there might be difficulty recovering that amount then from the vendor. Although the withholding regime partially aligns with the assets to which CGT applies for non-residents (since the Commissioner has had difficulties in the past recovering tax from foreign residents on CGT events), it also applies to relevant assets that constitute trading stock or revenue assets – both capital and revenue assets are CGT assets. One of the exclusion mechanisms is for vendors to obtain a clearance certificate from the Commissioner – an online system for obtaining those certificates is being established by the ATO.

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    26 May 2016

    Topic: CGT/Income Tax

  • New Taxpayer Alert on the diversion of personal services income to SMSF

    In brief:    The Commissioner says in Taxpayer Alert TA 2016/6 that the ATO is reviewing certain arrangements where an individual receives little or no remuneration for services provided to an unrelated party. Instead, income is channelled through another entity to an SMSF in which the individual or their associates are members. The income may be received by the SMSF purportedly as a return on investment in the other entity or on some contractual basis. Apart from the question of whether the income remains assessable to the individual in spite the arrangements, the Commissioner believes that amounts received by the SMSF may constitute contributions to which contributions caps accordingly apply or non-arm's length income to which the highest marginal tax rate applies.

    More:    The arrangements appear somewhat naive and very unlikely to succeed, at least on the basis of the brief description provided in the Alert. Arrangements to attempt to achieve the sorts of aims involved in such circumstances will always be controversial and anyone contemplating them would be well advised to act cautiously and seek specialist advice.

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    26 May 2016

    Topic: SMSFs/Income Tax

  • "Tax Incentives for innovation" Bill has been enacted to apply from 1 July 2016

    In brief:    The new incentives to encourage innovation will commence from 1 July 2016. For ‘early stage investors’, these comprise a non-refundable, carry-forward tax offset of 20% of their investment (subject to a maximum annual offset cap of $200,000 and a total annual investment limit of $50,000 for retail investors) plus CGT concessions on sales of shares that have been held for at least one year in qualifying innovation companies. An investor may disregard a capital gain from qualifying shares held for between 1 and 10 years. For shares held longer than 10 years, the cost base and reduced cost base will be deemed to be the market value on the 10th anniversary of acquisition, so that only incremental gains or losses after that time will have effect for CGT purposes.

    More:    The trade-off for investors in early stage innovation companies is that capital losses on qualifying shares will effectively be disregarded, irrespective of how long the shares are owned. Other amendments in the amending act are aimed to improve access to capital and make existing tax regimes for venture capital limited partnerships more attractive to investors.

    ... Read More




    26 May 2016

    Topic: Income Tax/CGT

  • AAT Matter Remitted so the Commissioner could request ruling applicants to apply for another ruling

    In brief:    This case in the Administrative Appeals Tribunal concerned unfavourable decisions by the Commissioner on objections lodged against private rulings issued to each of the taxpayers. Although the Tribunal agreed with the Commissioner, no order was made and the applications were instead remitted to the Commissioner to request the applicants to make another ruling application. The reason for this unusual outcome was that, in the course of the AAT hearing, additional information provided was ‘materially different’ from the factual scheme on which the rulings were based. The Tribunal referred to the recent case of Rosgoe Pty Ltd v FC of T [2015] FCA 1231 (currently subject to the Commissioner's appeal to the Full Federal Court), in which it was held that the AAT in such a case is confined to the facts stated by the Commissioner in the private ruling.

    More:    This case emphasises the importance of the scope and accuracy of the factual information provided to the Commissioner in an application for a private ruling. The present law is that the AAT is not free to make its own findings of fact in a review relating to a private ruling – it is confined to the facts stated by the Commissioner in the ruling.

    In this case, the issue was whether a $500,000 superannuation death benefit would be exempt from tax. The married taxpayers who received the death benefit had unsuccessfully sought private rulings that they each had an interdependency relationship with their 22 year old son, who was killed in a motorcycle accident. On the basis of the facts contained in the private ruling, the Tribunal agreed that there was no interdependency relationship – but materially different additional facts were provided at the AAT hearing. (Case 2/2016 [2016] AATA 264)

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    26 May 2016

    Topic: Income Tax

  • ATO's draft Law Companion Guidelines on the Small Business Restructure Roll-over

    In brief:    The new Small Business Restructure Roll-over has been enacted and will commence on 1 July 2016. It will be a very useful concession in the right circumstances but, as is typically the case, requires very careful thought as to the best way in which it should be applied. That is particularly the case in relation to the price (if any) for which assets are transferred. These 2 draft Law Companion Guidelines from the ATO about the operation of the new roll-over are helpful aids and very worthwhile reading.

    More:    It is particularly important that note be taken of the Commissioner's views in LCG 2016/D3 about what amounts to ‘a genuine restructure of an ongoing business’ for the new roll-over. That is an essential element to engage the concession and it is evident that it will be a potential attack point if the ATO views a restructure as overly aggressive. It is also noted in the LCG that the general anti-avoidance provisions in Part IVA may still apply in appropriate circumstances, even if the 3 year ‘safe harbour’ rule for a genuine restructure is satisfied. (LCG 2016/D2 & LCG 2016/D3)

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    28 Apr 2016

    Topic: CGT/Income Tax/Trusts

  • Losses allowed for luxury yacht charter business

    In brief:    The Commissioner has failed in his bid to quarantine losses (including costs of a captain and crew) incurred by two companies successively carrying on a business of chartering luxury yachts. At issue was whether each company used its vessel (only one yacht was used at any time by each company) ‘mainly for letting it on hire in the ordinary course of a business’ carried on by each respective taxpayer company (s26-47(3)(b)). Although chartered from time to time by the high wealth person who controlled both companies, it was observed that he was scrupulous in ensuring that commercial charter rates were paid for his use. Also, the yachts were available publicly for charter, charters from unrelated parties were entered into and each corporate taxpayer presented themselves publicly as carrying on a business and were administered internally in that way. Despite the substantial losses incurred from the charter operations, Logan J held that the respective operations amounted to the conduct of a business ‘with an expectation and purpose of profit’.

    More:    This case largely turned on factual considerations relating to the yachting operations. From that perspective, it is a good illustration of the need for careful documentation and execution of arrangements in order to achieve the tax outcomes anticipated. And it was particularly important that oral evidence from the controller of the companies about the background circumstances and charter activities was accepted by the judge as reliable and candid. (Lee Group Charters Pty Ltd v FC of T [2016] FCA 322)

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    28 Apr 2016

    Topic: Income Tax

  • Debit of $3.9 billion was not a debit against share capital

    In brief:    A foreign taxpayer has been unsuccessful in its argument that a debit of over $3.9 billion to a negative ‘share buy-back reserve’ account, as part of an off-market share buy-back in a listed company in which the taxpayer owned a majority of shares, constituted an amount debited ‘against amounts standing to the credit of the share capital account’. The consequence was that the amount so debited was taken to be a dividend paid to the taxpayer as a shareholder out of profits derived by the company – the foreign taxpayer was consequently not entitled to a refund of approximately $452.5 million withheld as dividend withholding tax.

    More:    The circumstances of this case arose from the takeover of Optus by the SingTel group. The tax at stake was substantial and an appeal to the Full Federal Court has already been lodged. But the principles involved apply to a company of any size and illustrate one of the significant disconnects between tax law and company law, exacerbated by legislative liberalisation of the maintenance of capital doctrine in company law. The essence of the disconnect is that there are no prescriptive rules in the Corporations Act about how a share buy-back need be funded and it is possible for the aggregate consideration payable by a company for a buy-back to exceed the company's issued capital and realised profit funds – however, for tax purposes, the general rule is that the buy-back consideration will be taken to be a dividend payable out of profits except to the extent debited against amounts standing to the credit of the company's share capital account. In the Cable & Wireless case, a substantial part of the buy-back consideration was funded by borrowings from the SingTel group as part of the takeover arrangements.

    The taxpayer relied on the High Court decision in FC of T v Consolidated Media Holdings Ltd [2012] HCA 55, where the opposite conclusion had been reached. However, that decision was distinguished because there the buy-back involved a reduction of capital. In the Cable & Wireless case, the ‘share buy-back reserve’ was a funding mechanism for funding of the takeover by loan advances from the bidder. (Cable & Wireless Australia & Pacific Holding BV (in liquidation) v FC of T [2016] FCA 78)

    ... Read More




    10 Mar 2016

    Topic: Income Tax