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RECENT DEVELOPMENTS BULLETIN, JANUARY 2008

 

 

 

SUPERANNUATION

 

Self Managed Superannuation Funds Determination SMSFD 2007/1 released on 19 December 2007 specifies when a dividend or trust distribution is “received” by a self-managed superannuation (SMSF) fund for the purpose of the in-house asset rules.   Under transitional arrangements, if a SMSF made investments in a related company or trust on or prior to 11 August 1999 , the SIS Act excludes further re-investments in that entity made by 30 June 2009 from being in-house assets.   Generally, a dividend or trust distribution is ‘received” when it is paid, but is not “received” when the SMSF is only entitled.   Thomson Weekly Tax Bulletin (WTB) 20/12/07

 

 

LAND TAX

 

The Victorian State Revenue Office has released a number of 2008 land tax brochures .   They cover such subjects as grouping of corporations, joint ownership of land, primary production land, hardship relief, land held on trust, and the principal place of residence exemption.   WTB 11/1

 

 

PAY-ROLL TAX

 

The Victorian State Revenue Office has issued a number of Pay-Roll Tax Revenue Rulings (PTA015 to PTA022) dealing with subjects like workers’ compensation payments, profit distributions and loan accounts, grouping of professional practices and service entities, and contractors.   WTB 4/1

 

 

FRINGE BENEFITS TAX (FBT)

 

Taxation Ruling TR 2007/12 released on 19 December 2007 sets out the Commissioner’s views on the application of the minor benefits exemption.   It clarifies that a minor benefit that satisfies the “less than $300” threshold criterion is not necessarily an exempt benefit.   In all cases, it must be concluded that it would be reasonable having regard to the criteria specified in s.8P(i)(f) of the Fringe Benefits Tax legislation, to treat the minor benefits as a fringe benefit.   The Ruling also states that the threshold test applies to each benefit .   The threshold test is not an upper limit on the total value of minor benefits that any individual employee may receive.   WTB 20/12/07

 

INCOME TAX

 

1.   The full Federal Court has held that a Customs Officer was entitled to a deduction for legal expenses incurred in defending two charges against him under the now-repealed Public Service Act 1922. The Court stated that the legal expenses incurred either to defend the performance of one’s duty or the observance of duties, which equally contribute to the taxpayer’s continued employment, are an allowable deduction.   WTB 4/1

 

2.   The Tax Office said it can help farmers affected by drought, floods, bushfires and storms by allowing more time for lodging BASs or paying debts, allowing payment by instalments, remitting penalties or fast tracking refunds.   WTB 18/1

 

3.   On 14 January, the Tax Office released Taxpayer Alert TA 2008/1 – Certain Stapled Securities Involving Notes and Preference Shares which describes arrangements where an Australian resident public company issues a stapled security consisting of a note and a preference share to resident investors.   The purpose of the Alert is to inform investors that the Tax Office is considering whether they will be entitled to a deduction under s 70B of ITAA 1936 when they sell the security on the ASX at a loss, or on the occurrence of a so-called “assignment Event”.   The Alert is discussed in par 53 of WTB 18/1

 

4.   Taxation Determination TD 2008/1 covers the question whether trade credit extended to a shareholder (or shareholder’s associate) on normal commercial terms and a subsequent failure to pay the debt will create a deemed dividend under Div 7A.   If the debt is repaid by the company’s tax lodgement day, the potential problem of the “deemed dividend” will generally not arise.   WTB 18/1

 

5.   Draft Tax Ruling TR 2008/D1 deals with the tax consequences for companies of issuing shares for assets .   It covers questions such as whether there might be a loss or outgoing in acquiring the assets; the price if the assets are trading stock; and what is the cost base for capital gains tax.   TaxVine 23/1

 

 

NOTE – The above summaries of information received in publications or other material by WHK Day Neilson should not be relied upon without reference to the firm, as often the context in which the item appears needs to be understood, and the process of summarising may cause unintended connotations or distorted implications.