Tax Updates

These regular publications are designed to assist RSM Bird Cameron's clients and contacts keep up to date with the changes in tax laws.

Current Issues

Removal of FBT concessions for foreign executives - November 2011

Government’s latest revenue raising measures again target international businesses. “Living away from home” and related benefits to be denied concessional tax treatment for international employees and increased substantiation requirements for all others.

Tax Loss Incentives for Designated Infrastructure Projects - November 2011

Treasury has released a discussion paper on the Government's proposed tax loss incentives to promote investment in infrastructure projects designated of national significance. The discussion paper forms the basis for consultation on the proposed design of the new incentive and the way the proposal may be implemented.

Transfer Pricing: Two ATO court losses lead to tax law changes - November 2011

Assistant treasurer Bill Shorten has released a Treasury consultation paper and unveiled a brief one month consultation period leading to a rewrite of Australia's domestic transfer pricing rules. At the heart of the rewrite will be a reconsideration of the application of the internationally accepted arm's length principle, consistency of interpretation with Australia's double tax agreements, and the relevance of the OECD's Transfer Pricing Guidelines in the context of Australian domestic tax law.

Tax Forum: Treasurer flags business losses priority at Tax Forum - October 2011

The tax forum was held at Parliament House in Canberra on October 4 & 5. It would be fair to say that it was the tax summit we had to have - at least the Gillard Government had to have as part of its post-election deal wtih independent MP Rob Oakeshott.

Prior to the Forum, many groups were critical of the Government's decision to leave GST off the agenda, and its failure to act on the Henry Tax Review recommendations. So, apart from paying a political debt, what was achieved?

Research and Development Tax Update - September 2011

The Tax Laws Amendment (Research & Development) Bill 2010 received Royal Assent on 8 September 2011. Overall the benefits have been extended and the scope narrowed. Read a summary of the main changes.

Petroleum Resource Rent Tax Extension - September 2011

On 2 July 2010, the Government announced new resource taxation arrangements to apply from 1 July 2012, encompassing a new Minerals Resource Rent Tax (MRRT) regime on the mining of iron ore and coal in Australia, and an extension of the existing Petroleum Resource Rent Tax (PRRT) regime to all Australian onshore and offshore oil and gas projects, including the North West Shelf (NWS) of WA. Presently, the PRRT only applies to offshore oil and gas projects, and does not include projects in the NWS and the Joint Petroleum Development Area between Australia and East Timor. On 26 August 2011, Exposure Draft legislation for the PRRT extension was released. The following is an overview of the proposed PRRT extension.

Tax reform, or talk fest? - August 2011

On 28 July 2011 the Federal Government restarted its tax forum agenda with the release of a discussion paper to inform public debate on priorities and directions for continuing tax reform in the lead up to the tax forum to be held on 4-5 October 2011.The tax forum will involve 156 participants and 46 observers. The discussion paper outlines a range of ideas that were raised in the Henry Tax System Review that are likely to be discussed at the tax forum.

Carbon Tax - the science is (apparently) in... a carbon tax is the way to green - July 2011

The ATO has released an annual compliance program that highlights its risk assessment and audit focus for the 2011/12 financial year. This includes GST, FBT, R&D, TOFA and international tax for small to medium sized enterprises and large businesses. Taxpayers should self-assess whether they have any exposures to these areas.

ATO Compliance Program 2011/2012 - July 2011

The ATO has released an annual compliance program that highlights its risk assessment and audit focus for the 2011/12 financial year. This includes GST, FBT, R&D, TOFA and international tax for small to medium sized enterprises and large businesses. Taxpayers should self-assess whether they have any exposures to these areas.

The SNF Case - a fundamental rejection of the ATO's approach to Transfer Pricing - June 2011

In the first substantive transfer pricing case to be heard by the full Federal Court, FCT v SNF (Australia) Pty Ltd [2011] FCAFC 74, the ATO's present approach towards transfer pricing matters has been fundamentally rejected.

Employee Share Scheme changes - the new era - June 2011

A properly implemented Employee Share Schemes (“ESS”) can assist in incentivising and retaining key employees as well as aligning employee interests with those of shareholders. They are also an opportunity for employers to provide benefi ts to employees without requiring a cash outflow.

Not-for-profit sector reform initiatives - May 2011

The 2011-12 Federal Budget contains a reform package for the not-for-profit sector which has the potential to visit upon the sector a similar level of confusion, administrative uncertainty, and compliance cost as was experienced with the tax concessions endorsement process in the early 2000’s.

Expatriate Tax Update - March 2011

Expatriate taxation is becoming significantly more complex since the changes to the Australian tax treatment of foreign employment income came into effect on 1 July 2009.

The critical question is - does the employee remain a resident of Australia for tax purposes? If so, employers whether Australian resident or non resident, need to ensure they understand their Australian employment tax obligations. This can have a material adverse effect on the actual tax cost of the foreign assignment!

FBT and R&D deadlines looming - March 2011

The Fringe Benefits Tax (FBT) year ends on 31 March 2011 and employers have a small window of opportunity to ensure planning opportunities are taken up in time. In addition, the lodgement deadline for 2009/2010 Research & Development (R&D) tax concession claims is fast approaching for companies with a 30 June year end.

ATO crackdown on tax losses - March 2011

As the Australian and global economies emerge from the Global Financial Crisis (GFC), the Australian Taxation Office (ATO) has sought to ensure that losses incurred during the GFC are appropriately accounted for by taxpayers. 

The ATO has recently contacted Tax Agents to advise that they will be targeting businesses in the small to medium enterprise (SME) sector who reported carry forward tax losses in their 2009 year returns.  This action follows the ATO cancelling $400 million of current year and carry forward losses in the SME sector as a result of audit activity under its 2009-2010 Compliance Program.

The purpose of the ATO's current review is to ensure that businesses in the SME sector are complying with the integrity measures that apply to the carry forward losses of these entities.

Trust tax reform update - March 2011

Assistant Treasurer Bill Shorten released a Treasury consultation paper on Friday 4 March 2011 which outlines proposed changes to two aspects of the trust tax laws. These two join the 16 December 2010 announcement of a law change to ensure farmers operating through trusts will continue to have access to the primary production averaging provisions, and farm management deposits in a loss year.

These three announced changes will operate for the whole of the 2010 – 2011 income year, even though it is unlikely draft legislation will be available much before 30 June 2011. The 4 March release of the Treasury consultation paper is consistent with the Government’s reform timetable. 

Click here to view the timeline of the reform and proposed implementation schedule.

Should you have any questions or feedback, please email us directly at trusttaxreform@rsmi.com.au

Trust tax reform: exposure draft legislation released - April 2011

The Federal Government has taken the next step in the process of trust tax reform; on Wednesday 13 April 2011, Assistant Treasurer Bill Shorten released for public consultation two packages of exposure draft legislation. Together, the two packages address the most urgent trust tax issues, and will operate for the 2010/11 income year.

The first package addresses the streaming of capital gains and franked distributions through trusts; the second provides for the reinstatement of primary production averaging, and access to farm management deposits through trusts. Together, the proposed changes will have the consequence of reversing controversial positions adopted by the Australian Taxation Office (ATO) following the High Court decision in Bamford.

The Government is to be applauded for the priority given to these matters; the early release of the draft legislation, together with the further consultation period, should result in superior legislation, but more importantly taxpayers can now anticipate an orderly approach to year end planning for all trust structures.