CPA Tax Update

ATO 2010 tax time update

The ATO has received 4.46 million income tax returns for 2010 as at Wednesday 25 August.

The ATO is now receiving approximately 120,000 returns daily and is expecting individual tax return lodgments to considerably rise throughout October as the final lodgment date of Sunday 31 October approaches.

CPA Australia is regularly consulting with the ATO in regards to the timely processing of returns. Members are encouraged to contact us if they are continuing to experience significant delays in receiving refunds. You can send your feedback to tax@cpaaustralia.com.au

The ATO has also confirmed that there has been no change to the issues surrounding:

• HELP / SFSS amendments
• payment slips for companies and superannuation funds
• newly registered companies and lodgment due dates
• portal issues
• some client update lists

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Tax News

ATO alert: overdue lodgment obligations

The ATO has advised that on Tuesday 7 September it will send out letters to more than 19,500 tax agents about their clients (other than large businesses and super funds) who have overdue lodgment obligations.

The letter will include a list of company, trust, partnership and individual taxpayers with overdue income tax returns for any period between 1 July 2005 and 30 June 2009, and overdue activity statements for any period between 1 July 2005 and 31 December 2009.

ATO technical discussion papers: draft practice statement

The ATO has released for comment draft ATO Practice Statement Law Administration PS LA 3326.

It provides an explanation on when technical discussion papers should be published, and the processes for development and finalisation of technical discussion papers. Comments are due by Friday 24 September and can be emailed to joanna.wilson@ato.gov.au

ATO IDs: four new; five withdrawn

The ATO has released the following ATO IDs:

• ATO ID 2010/149: primary production: assessable primary production income — dividends

• ATO ID 2010/150: R&D: clawback (s 73C) for grants and recouped expenditure where the grant or recoupment may be subject to a repayment obligation

• ATO ID 2010/151: property fringe benefit: money — tangible or intangible property

• ATO ID 2010/152: WET: effect of principle of mutuality on sales by clubs and associations

The ATO has withdrawn the following ATO IDs:

• ATO ID 2002/211: dependent spouse tax offset — same sex partner

• ATO ID 2009/46: fuel tax: apportionment of fuel and calculating the quantity of fuel for use in carrying on an enterprise based on average hourly fuel consumption

• ATO ID 2009/90: fuel tax: apportionment of fuel and statistical sampling

• ATO ID 2010/123: United Kingdom limited partnership and managed investment trusts

• ATO ID 2010/33: German Kommanditgesellschaft and managed investment trusts

ATO website updates

From the ATO website:

• Large business advisory group — minutes of meeting held on Wedensday 19 May — issues discussed included ATO risk profiling for the large market and taxation of finance arrangements (TOFA) critical dates

• Tax file number (TFN) withholding for closely held trusts — guide for trustees or beneficiaries of closely held trusts about the operation of the TFN withholding rules which apply from the first income year starting on or after 1July 2010

• Guide to the TOFA rules — covers the stages of TOFA reform, who is subject to the TOFA rules, tax treatment of gains and losses from financial arrangements

• GST and the integrity of your business systems — contains 10 reasons for business taxpayers to review the integrity of their business systems

• ATO Access and information gathering manual updates — updates to Chapter 4 (conduct of formal interviews) and Chapter 5 (access to electronically stored information)

• Progress report 5 — income tax returns processed since Thursday 1 July — tax return processing figures from the ATO as at Friday 27 August

• Pre-filling 2010 — information and guide about using the 2010 pre-filling report. Updated as at Thursday 26 August

• Getting started — ATO online services — an introduction to ATO online services and how taxpayers can access practical assistance and advice

• Login to the portals — information on the ATO's business portal, tax agent portal and BAS Agent portal

• Retiring, or selling or restructuring a practice — information for registered tax agents thinking of retiring, or selling or restructuring a practice

• Non-profit news service no 0295 — recent case: Wentworth District Capital Ltd — the ATO has advised that it is considering the implications of the Federal Court's decision in Wentworth District Capital Ltd v FCT [2010] FCA 862

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Superannuation

ATO website updates on superannuation

From the ATO website:

• Overview of the self-managed super funds (SMSF) statistical report — statistical reports for the period to June 2010

• Claiming a deduction for personal super contributions — the ATO has reminded SMSF members that if they intend to claim a tax deduction for their personal super contributions, they must complete a 'notice of intent to claim or vary a deduction for personal super contributions form'

• Notice of intention to claim a deduction for personal super contributions — the ATO said it has found that some Australian Prudential Regulation Authority regulated super funds are issuing their own 'notice of intention to claim a deduction for personal super contributions form' to their members which do not include the mandatory ATO information

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Tax rulings

The following rulings were released by the ATO on Wednesday 1 September:

• PR 2010/18: capital gains tax (CGT) consequences for a Beneficiary of an Insurance Trust Deed

• PR 2010/19: tax consequences of investing in Westpac Deferred Purchase Agreements — Westpac Maximiser Series 2

• CR 2010/46: CGT: conversion of Abalone Fishermen's Co operative Limited to a company registered under the Corporations Act 2001

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Cases

Imported Hummer subject to luxury car tax

In Dreamtech International Pty Ltd v FCT, the Full Federal Court dismissed the taxpayer's appeal and upheld a finding by the Australian Federal Court, and before that, the Administrative Appeals Tribunal (AAT) that luxury car tax was payable on a Hummer vehicle imported from the United States.

Appeals update

The Commissioner of Taxation, Michael D'Ascenzo, has appealed to the Full Federal Court against the decision of Middleton J in SNF (Australia) Pty Ltd v FCT [2010] FCA 635. The court had held that transfer pricing determinations made by the ATO could not stand and that the taxpayer had satisfied the burden of proving that the amounts it had paid for products from related overseas suppliers had been acquired at arm's length consideration.

The commissioner has appealed to the Full Federal Court against the decision in AAT Case [2010] AATA 455. The AAT had held that legal fees, accountancy fees and a real estate agent's commission incurred by the taxpayer company in relation to the sale of a hotel business in 2003 were 'liabilities' to be taken into account for the purposes of determining if the taxpayer satisfied the capital gains tax (CGT) maximum net asset value test 'just before the CGT event'.

State Taxes

Vic payroll tax: interest and penalty tax

The Victorian State Revenue Office (SRO) has released Revenue Ruling PTA-036v2 which explains the application of interest and penalty tax to a range of payroll tax defaults occurring on or after 1 July 2010.

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CPD

SkillsNet suite

Develop your proficiency in essential business skills and see the impact on your professional performance. Choose a customised online learning package of five or 10 courses, and be provided with complete learning pathways in your chosen area of core business skills.

Program information — learning manual

SMSF compliance audit

Make sure your self-managed super fund (SMSF) audits comply with the Superannuation Industry (Supervision) Act 1993 (SIS) and regulations. Find out the key SIS reporting requirements and documentation necessary to support your compliance audits and avoid common breaches by working through case study examples.

Program information (PDF) — workshop

SMSF financial statement audit

Learn how to complete your SMSF financial statement audits and ensure they comply with the ATO’s mandatory requirements.

Program information (PDF) — workshop

Business activity statements — advanced

Gain the latest updates in BAS reporting and GST, and cover advanced topics such as luxury car tax and the margin scheme.

Program information (PDF) —- workshop

More training and events

For information on other CPA Australia CPD activities being held throughout Australia please visit the professional development section on our website and use the search facility. To register click onto the activity you wish to attend and follow the prompts.

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CPA Library

Balancing work and life

‘What does success mean to you’ is just one of the topics covered in this e-book. You will gain practical advice, learn how to focus on true priorities and develop healthy attitudes for success.

Access e-book via CPA Library.

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Tax Press

Australian Financial Review

'Hogan claims "witch hunt" over tax saga' (Comments from a taxpayer regarding current Federal Court proceedings over claimed tax assessment re Project Wickenby) AFR [p 5], Wed 1.9.2010

'Wickenby wins freeze on $30m' (Report that the Federal Court has granted freezing orders to the ATO re alleged failure of companies to declare income from 'substantial' trading in Australian shares) AFR [p 5], Wed 1.9.2010

'Inadequate ATO records set taxpayer free' (Report that a District Court has found in favour of a taxpayer who claimed he never received a final notice to lodge his 2007 return) AFR [p 6], Wed 1.9.2010

'It takes a crowd to run a super fund' (Article on weighing the cost of outsourcing the management of SMSFs - things to consider before choosing a service provider) AFR [p 28], Wed 1.9.2010

'$1bn annual super savings "unlikely"' (Comments doubting that implementing Cooper's SuperStream recommendation would produce $1 billion claimed saving) AFR [p 53], Wed 1.9.2010

'Super boards lack independent view' (According to a survey of 40 super funds, less than half have an independent director on their trustee board) AFR [p 54], Wed 1.9.2010

'Shift from DIY' (According to ATO statistics, the number of DIY funds established last year fell to 27,340 compared to 31,618 the year before) AFR [p 3], Tue 31.8.2010

'Hogan's lawyers seek privilege' (Report that a taxpayer has argued before the Federal Court that accountants' advice used by the ATO as a basis for issuing tax bills should have remained confidential) AFR [p 4], Tue 31.8.2010

'Tax Office hits small business' (Report the ATO will be increasing its focus and audit activities on the small business CGT concessions) AFR [p 1], Mon 30.8.2010

'Call grows for genuine tax reform' (Leading business figures and groups have expressed the need for a comprehensive tax review, which should include the Government's response to the Henry tax review and GST) AFR [p 9], Mon 30.8.2010

'Reform without too many tears' (Opinion that revisiting tax reforms is a viable option for the Government) AFR [p 23], Mon 30.8.2010

'This is a catch: Tax Office gets tough' (Tax experts sharing their views on the serving of a departure prohibition order on a taxpayer who is the subject of a Project Wickenby investigation by the ATO) AFR [p 5], 28-29 August 2010

'How special reserves can combat limit' (Article on special reserve accounts and how they may be used to manage superannuation contributions) AFR [p 44], 28-29 August 2010

'New politics could lead to genuine tax reform' (Opinion that the forming of a minority government in Australia might lead to substantial and genuine tax reform) AFR [p 62], 28-29 August 2010

'Hogan a 'prisoner' in tax case' (Various responses regarding a taxpayer receiving a departure prohibition order amid ongoing ATO investigations re Project Wickenby) AFR [p 4], Fri 27.8.2010

'Royalties safe: WA' (Report that the WA Government believes it will not be affected by recent High Court decision for the NSW Government to refund NSW royalties re copper paid by a taxpayer) AFR [p 4], Fri 27.8.2010

'Bomb threat at ATO' (Report that the ATO office in Northbridge Perth recently received a bomb threat) AFR [p 6], Fri 27.8.2010

'$8m refund threat to royalties' (Report that the High Court has held that copper is a privately owned mineral and that the taxpayer involved in the case is entitled to a royalty refund) AFR [p 5], Thur 26.8.2010

'Tax Office stops Hogan leaving' (Report that the ATO has issued a taxpayer a departure prohibition order amid ongoing court proceedings regarding access to documents relating to the taxpayer's tax affairs re Project Wickenby) AFR [p 6], Thur 26.8.2010

'Hummer word play reaches a road block' (The Full Federal Court has affirmed that a Hummer vehicle imported from the US was a limousine and therefore subject to luxury car tax) AFR [p 7], Thur 26.8.2010

'Schemes in rural MPs' firing line' (Report that some independent MPs have criticised managed investment schemes and their associated tax breaks for 'skewing' agriculture) AFR [p 13], Thur 26.8.2010

The Australian

'What happened to a fair go, asks Hogan' (An interview by The Australian of a taxpayer who is being investigated by the ATO as part of Project Wickenby) AUSTRALIAN [p 1], Wed 1.9.2010

'Tax inquiry may face probe' (Report the Inspector-General of Taxation is considering a review into the ATO's conduct re Project Wickenby following an increase in complaints by taxpayers) AUSTRALIAN [p 7], Tue 31.8.2010

'Stakes are high in big tax rulings' (Report of pending High Court and the Federal Court decisions in relation to two unrelated tax matters) AUSTRALIAN [p 19], Tue 31.8.2010

'Variable pay not a popular option' (A summary of some of the submissions to the Corporations and Markets Advisory Committee's review of executive pay, including the tax treatment of employee share schemes) AUSTRALIAN [p 21], Tue 31.8.2010

'Bankers eyeing early bonus before tax rise' (Report that banks based in the US and UK are looking at different ways to pay their bankers' bonuses in order to minimise the impact of any tax rises) AUSTRALIAN [p 23], Tue 31.8.2010

'Hoges a victim of tax witch-hunt, says developer' (Article on a taxpayer sharing his experience in his dealings with the ATO) AUSTRALIAN [p 1], Mon 30.8.2010

'Minnows use taxman as a bank' (Report that the amount of tax debts owed by small businesses to the ATO has increased significantly in the last 12-18 months) AUSTRALIAN [p 26], Mon 30.8.2010

'Tax lawyers gave Hogan 'all clear' for offshore fund' (Report that a taxpayer who is currently being investigated by the ATO as part of Project Wickenby received advice from his tax lawyers that the structure of his offshore fund was legal) AUSTRALIAN [p 1], 28-29 August 2010

'Hoges hit with $150 million tax bill but Aussie actor says it's a croc' (Article on the ATO charging a taxpayer $150 million in penalties and interest charges) AUSTRALIAN [p 1], Fri 27.8.2010

'"Stunned" Hogan grounded as taxman chases star for millions' (Article on the ATO serving a departure prohibition order to stop a taxpayer from leaving Australia involved in a Wickenby investigation) AUSTRALIAN [p 1], Thur 26.8.2010

'MySuper tipped to cut into workers' nest eggs' (Speculation that MySuper would result in workers receiving lower super payouts than expected) AUSTRALIAN [p 9], Thur 26.8.2010

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