Birchstone Brief for the week ended 18 November 2022

News and Events

Recognition as Leading Tax Law Firm

Birchstone Tax Law has been included in the 2022 Doyle’s Guide List of Leading Western Australian Tax Law Firms. Daniel Taborsky, Managing Director and Shivani Jethwa, Associate Director, have also been included in the list of Leading Western Australian Tax Lawyers.

One of our lawyers, Nathan White, has also been recognised as a 2022 Australian Tax Law Rising Star.

These lists detail firms and lawyers who have been identified by clients and peers for their expertise in the area of taxation law.

ATO Updates

Draft excise ruling – “legally and economically independent” 

The ATO has issued ER 2022/D1, which explains the Commissioner’s view on the meaning of the phrase ‘legally and economically independent’ for the purposes of the excise remission scheme and the former excise refund scheme. 

Draft legislative instrument regarding RCTIs

LI 2022/D15, a draft legislative instrument which allows a recipient created tax invoice (RCTI) to be issued by recipients of taxable supplies that meet the requirements listed in section 7, has been released by the ATO for public consultation. If finalised, the instrument will replace a number of existing instruments that allow the use of RCTIs in relation to specific industry transactions. As stated in its Explanatory Statement, the requirements in section 7 of the draft instrument were designed to strike a balance between facilitating the practical use of RCTIs and maintaining the integrity of the GST system. 

PCG 2017/2 updated

The ATO has updated PCG 2017/2 (which contains its guidance on taxpayers using simplified transfer pricing record-keeping options) to provide that the maximum interest rate for low-level inbound loans and the minimum interest rate for low-level outbound loans is 5.65% for the 2023 income year. 

Class rulings and addendum issued

The ATO has issued the following:

• CR 2022/103 – Telstra Corporation Ltd – Restructure – Employee share schemes – Treatment of shares or rights;
• CR 2022/104 – Telstra Corporation Ltd – Top hat restructure; 
• CR 2022/105 – Thorn Group Ltd – Return of capital and share consolidation; and
• CR 2021/90A1 – Addendum to CR 2021/90 – Victorian Department of Transport – Early retirement scheme 2021-2022.

Other News

ACNC revokes hundreds of charity registrations

The ACNC has announced that it has revoked the registration of over 550 charities due to repeated failures to comply with their annual reporting obligations. The revocations came after the ACNC notified over 700 charities last month that their registrations could be revoked if they failed to submit two or more Annual Information Statements. Charities that have been deregistered may reapply for registration once they have provided the ACNC with all outstanding reports. 

Cases

Commissioner of State Taxation (SA) v Perpetual Corporate Trust Ltd [2022] SASCA 117 – SA Court of Appeal confirms student accommodation building not subject to stamp duty

The  Court of Appeal of the Supreme Court of South Australia has rejected the Commissioner of State Taxation’s appeal against the Supreme Court’s earlier decision in Perpetual Corporate Trust Ltd v Commissioner of State Taxation (SA) [2022] SASC 7 (covered in the Birchstone Brief for the week ended 4 February 2022), holding that the taxpayer trustee company’s acquisition of a purpose-built student accommodation complex was not subject to stamp duty because it was not predominantly used for residential purposes. 

Moreton Resources Ltd v Industry Innovation and Science Australia [2022] AATA 3804 – AAT confirms site remediation activities are supporting R&D activities

Following the Full Federal Court’s decision concerning the construction of the term “core R&D activities” in Moreton Resources Ltd v Innovation and Science Australia [2019] FCAFC 120 and the remission of the matter for redetermination in accordance with the law, the AAT has ruled that certain site remediation activities in respect of a failed underground coal gasification project constituted supporting R&D activities as they were directly related to the applicant’s registered core R&D activities in an earlier year. 

Legislation

Land Tax Assessment Amendment Bill 2022 (WA) – Bill awaits assent

The Bill (first covered in the Birchstone Brief for the week ended 23 September 2022) has passed through the Legislative Council and now awaits the royal assent. 

Exposure draft legislation released: Aligning the tax treatment of on and off-market share buy-backs

Treasury has released exposure draft legislation and associated explanatory material regarding an integrity measure announced by the government as part of the 2022-23 Federal Budget to align the tax treatment of off-market share buy-backs undertaken by listed public companies with the tax treatment of on-market share buy-backs. The draft legislation also includes commensurate amendments to the tax treatment of selective share cancellations for listed public companies. 

If enacted, the draft legislation will ensure that:

• no part of the purchase price paid in relation to an off-market share buy-back of a share or non-share equity interest undertaken by a listed public company will be taken to be a dividend; and 
• distributions by listed public companies that are considered to be consideration for the cancellation of a membership interest as part of a selective reduction of capital will be unfrankable.