General tax news
1998 Year end tax planning - Crucial year end action items of which you should be aware include:
Private Companies and loans to shareholders - In order to prevent a loan made to a shareholder (or their associate) on or after 4 December 1997 from being deemed to be an unfrankable and unrebateable dividend (and to ensure that the company's franking account is not reduced by such a deemed dividend), it is essential that the loan be repaid before 30 June 1998, or alternatively, if reliance is to be placed on the written agreement exclusion in new Div 7A (s109N) that the written agreement be prepared by 30 June 1998.
Changes to the remittance of PAYE, PPS and RPS deductions are due to take effect from 1 July 1998. In many cases, these deductions will need to be made much earlier than is currently the case and for those whose annual remittances exceed $1 million, remittances need to be made electronically.
Review foreign debt: foreign equity position for companies which have interest bearing debt due to (or guaranteed by) foreign controllers or associates for thin capitalisation purposes. Note that the requisite ratio is 2:1 (for non-financial institutions).
First time claimants of the Export Market Development Grant must pre-register their intention to lodge a claim for the 1997/98 year with Austrade by 30 June 1998.
December balancing companies must lodge their applications for registration for R&D tax concessions by 30 June 1998.
30 June 1998 is the last day for individuals permanently departing Australia who wish to take advantage of the transitional rules for the early release of superannuation benefits to lodge a written request with the fund trustee and leave Australia in order to have their preserved superannuation benefits released.
Novated leases - ATO view - The ATO is expected to release a draft determination in the coming week setting out the Commissioner's views on the taxation consequences of "partial" novations of motor vehicle leases.
Taxpayer loses appeal in Bellinz - The Full Federal Court has dismissed the taxpayer's appeal in the Bellinz case, holding the lessees of plant used in a power station were not entitled to depreciation deductions. The Court also commented on the difficulty of issuing a private ruling on the application of Pt IVA to an arrangement that has not been carried out (Bellinz Pty Ltd & Ors v FC of T).
Orica - no CGT changes needed - At a meeting of the National Tax Liaison Group the ATO's Second Commissioner and Chief Tax Counsel said that the debt defeasance transaction dealt with in the Orica case involved no underlying asset, and could be distinguished from other transactions where obligations are performed under a contract for the disposal of an underlying asset. The ATO would stick to its "look-through to the underlying asset" approach to determine the CGT exposure arising on such issues as compensation receipts.
Appeal News -
Date for High Court special leave applications - The following applications for special leave to appeal to the High Court will be heard on 19 June:
- Steele v DFC of T
- Wilkinson & Ors v Clerical Administrative and Related Employees
- Superannuation Pty Ltd & Ors
An appeal has been lodged to the Full Federal Court against the decision in Schokker v FC of T 98 ATC 4108.
New "Product Rulings" announced - The Tax Office will introduce a new form of rulings to be known as "product rulings", which will publicly rule on the availability of claimed tax benefits from tax-effective investments.
ATO cracks down on certain investment schemes - Tax Commissioner Michael Carmody indicated in a speech details of a crack-down on certain "tax-effective investment" schemes, in particular the financial arrangements associated with such investments.
ATO's revenue performance strategy - The minutes of the Corporate Consultative Committee meeting held on 3 December 1997 provides information about the ATO's "real-time" revenue information gathering product - the "Revenue Performance Strategy". Details are on the database.
Heritage conservation rebate for 1998/99 - The closing date for applications for provisional certificates for the heritage conservation rebate for the 1998/99 year is 5 August 1998.
Legislation/regulation round-up
Technical Amendments Bill receives assent - The Taxation Laws (Technical Amendments) Bill 1998 received Royal Assent on 4 June 1998.
Income tax regulations: PAYE instalments and car expenses - The Income Tax Regulations were amended to ensure the Medicare levy low income thresholds for 1998/99 are reflected in the level of PAYE deductions to be made by employers from their employees' salary and wages from 1 July 1998; and insert a note which directs taxpayers to reg 28-25.01 for the rates to be used to calculate car expenses on a cents per kilometre basis.
ATO rulings/determinations/addendums
The following issued during last week -
- SCD98/4 addendum - which corrects para 5 of that Determination to read "1998/99".
- TR97/2 addendum - which deals with the income tax concessions for members of the Australian Defence Force serving overseas.
- SST 10 which deals with the meanings of "authority" and "public authority" for the purposes of the sales tax legislation.
- TD93/D130 was withdrawn
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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