Birchstone Brief for the week ended 10 September 2021

Birchstone Insights

Birchstone Insights will return next week.

For all interested parties, we note that the expected completion on the ATO’s Draft Taxation Ruling on Section 100A reimbursement agreements has been updated to ‘to be advised’.

ATO Update

ATO releases GIC and SIC rates

The ATO has released the shortfall interest charge (SIC) and general interest charge (GIC) rates for 1 October to 31 December 2021.

Rulings

The ATO has issued the following rulings:

  • CR 2021/59 – New South Wales Minerals Council Ltd – Access arrangements under the Mining Act 1992 (NSW) between holders of exploration licenses and assessment leases and landholders on whose land prospecting operations are undertaken.
  • PR 2021/10 – Income tax: Morgan Stanley Option and Loan Facility.

State Taxes

WA State Budget 2021-22: Tax and revenue measures

The Western Australian Treasurer has released the 2021-22 Budget, which included the following tax and revenue measures:

  • an extension of the Off-the-Plan Transfer Duty Rebate Scheme for a further two years; and
  • land tax exemptions for eligible landowners who had their properties destroyed by Cyclone Seroja or in the Wooroloo bushfires.

NSW: Payroll tax reconciliation

Revenue NSW has extended the due date for all businesses to lodge their 2020-21 annual payroll tax reconciliations from 7 October 2021 to 14 January 2022.

NSW: Eligibility for land tax relief

Revenue NSW has released guidance which clarifies the parameters of the $50 million turnover test for landlords seeking land tax relief for rent reductions given to commercial tenants.

Vic: Meaning of land development for transfer duty purposes

The Victorian State Revenue Office has issued Ruling DA-064 which provides clarification on the actions and activities which constitute land development as defined in section 3(1) of the Duties Act 2000 (Vic).

Cases

FCT v Bosanac [2011] FCAFC 158 – Presumption of advancement rebutted

The Full Federal Court has ruled in favour of the Commissioner, holding that a wife held 50% of her interest in a property (of which she was the sole registered owner) on trust for her husband.

In this matter, a residential property was purchased for $4.5 million in the name of the wife only. A deposit of $250,000 was paid with funds from a joint loan account of the husband and wife. The husband and wife then jointly borrowed $4.5 million from Westpac and this was used to pay the balance of the purchase price. In the first instance, the Court held that the presumption of advancement applied in favour of the wife, meaning that the husband did not have an equitable interest in the property. The Commissioner then appealed to the Full Federal Court.

The Full Federal Court allowed the Commissioner’s appeal, holding that the presumption of advancement was rebutted and that the wife held 50% of her interest in the property on trust for her husband. Amongst other factors, the Full Federal Court relied on the following factors to hold that the presumption of advancement was rebutted:

  • the husband used the property as security for further borrowings;
  • the deposit and mortgage repayments were made from joint bank accounts of the husband and wife; and
  • the presumption of advancement is less likely to apply when there is a mortgage on the property.

Ballintine v FCT [2021] AATA 3089  AAT denies CEO release from tax liability

The AAT has affirmed the Commissioner’s decision not to release a taxpayer from his tax liabilities on the grounds of serious hardship.

The taxpayer was the founding member of NewSat Ltd and its CEO. As part of his employment arrangement, the taxpayer was granted options to acquire shares in NewSat. In addition to his salary, the taxpayer was paid $1.2 million in bonuses throughout the 2013 and 2014 years, from which  PAYG income tax was not withheld (at his request). In 2015, NewSat was put into receivership, the taxpayer’s shares and options in NewSat became worthless, and the taxpayer was involved in extended litigation. In 2018, the taxpayer applied for release of his tax debt (relating to the unpaid PAYG on the bonus amounts) on grounds of serious hardship. After the Commissioner refused to grant relief and disallowed the taxpayer’s objection, the taxpayer applied to the AAT for review.

The AAT accepted that the taxpayer would suffer serious hardship if he was required to make payment of his tax liability, due to the amount of the liability and the taxpayer’s financial circumstances. However, the AAT held that  it was ultimately the taxpayer’s request  that led to the shortfall and corresponding tax liability.  and decided that it would be unjust to release the taxpayer from his tax liabilities.

Legislation

Statutes Amendment (Budget Measures 2021) Bill 2021 – Bill introduced

A Bill has been introduced into the Parliament of South Australia which makes the following proposed changes:

  • amending the Land Tax Act 1936 (SA) to reduce the taxable value of land by 50% for eligible build-to-rent projects; and
  • amending the Payroll Tax Act 2009 (SA) to remove film production exemptions.

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