Birchstone Brief for the week ended 5 January 2024

Merry Christmas and Happy New Year! 

This is the first edition of the Birchstone Brief for 2024, covering tax developments from the end of December through to the week ended 5 January. 

The team at Birchstone Tax Law hope you had a safe, relaxing and well-deserved break. 

And now – on to the tax news! 

ATO Updates

IGTO recommends better administration of Commissioner’s Remedial Power

In a recent report, the Inspector-General of Taxation and Taxation Ombudsman (IGTO) has recommended nine changes to enhance the use of the Commissioner’s Remedial Power pursuant to section 370-5 of Schedule 1 to the TAA 1953, which allows the Commissioner to modify the operation of a taxation law to address unintended outcomes. The ATO has largely agreed to the IGTO’s recommendations.

State Taxes

Land Tax (NSW): Boarding house and low-cost accommodation exemptions

Revenue NSW has issued 2 rulings outlining the guidelines for certain land tax exemptions for the 2024 land tax year.

• LT 115, which outlines the conditions that must be complied with by an owner to claim an exemption or reduction in taxable land value for land primarily used and occupied as a boarding house; and
• LT 116, which explains the conditions that must be complied with by an owner to claim an exemption or reduction in taxable land value for land within a 5 kilometre radius of 1  Martin Place, Sydney that is used to provide low-cost rental accommodation.

Cases

Stark v FCT [2023] FCA 1523 – Federal Court rules that settlement payment was an ETP

The Federal Court has upheld a decision of the AAT, reported at [2021] AATA 2583, that a payment made to a taxpayer in settlement of a claim for deceptive conduct and wrongful dismissal was taxable as an employment termination payment (ETP). The basis for the Court’s conclusion was that the payment was:

• made in consequence of the termination of the taxpayer’s employment;
• not a capital payment for personal injury; and
• not a genuine redundancy payment.

Australian Investment & Development Pty Ltd v Commissioner of State Revenue (Vic) [2023] VSC 741 – Victorian Supreme Court rejects claim for primary production land tax exemption

The Victorian Supreme Court has rejected a taxpayer’s bid to claim the primary production exemption from Victorian land tax, finding that the taxpayer’s claimed primary production activities on the relevant land (which included growing a significant amount of cassinia) were insufficient and clearly secondary to the taxpayer’s property development activities. 

Austral Fisheries Pty Ltd v Commissioner of Territory Revenue (NT) [2023] NTSC 103 – NT Supreme Court holds purchase of fishing quota units was subject to duty

The Northern Territory Supreme Court has held that a taxpayer was liable to pay stamp duty on the purchase of fishery quota units, finding that a quota unit fell within the meaning of a “statutory permission”, defined to be “dutiable property” under the Stamp Duty Act 1978 (NT).

Appeals – Active Sports Management

The taxpayer has filed a notice of appeal to the Federal Court against the AAT’s decision reported at [2023] AATA 4078 (covered in the Birchstone Brief for the week ended 15 December 2023). In that case, the AAT held that activities undertaken by the applicant relating to the development of a customised basketball shoe were not eligible research and development activities under the Industry Research and Development Act 1986 (Cth), and therefore not core or supporting activities within the meaning of the ITAA 1997.