EDITION 40 | 19 October 2015 ARCHIVE

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Headlines
> Tax and transfer group to examine barriers to
work

Chartered Accountants News

> Senate Inquiry into Tax Laws Amendment
(Combating Multinational Tax Avoidance) Bill
2015

Tax reform
> Meeting of Council on Federal Financial
Relations
> Ireland to introduce innovation tax incentive
Tax Team Chat | 'Tax the bads, not the goods' -
> Call to remove the low-value goods GST
environmental taxes as mainstream future tax
threshold immediately
bases?: By Donna Bagnall (Senior Tax Adviser, CA
ANZ) - Last month, I had the pleasure of attending the
Cases 16th Global Conference on Environmental Taxation
> Decision Impact Statement (GCET16) hosted by the University of Technology
Sydney. READ ARTICLE >
Legislation Update

ATO Rulings Other Tax News

ATO Publications Library resources

Tax-related Technology Training & Development Highlight

Member Services

HEADLINES

> Tax and transfer group to examine barriers to work

On 15 October 2015, the Treasurer, Scott Morrison, and Minister for Social Services, Christian Porter,
jointly announced that the government will establish an inter-departmental working group to analyse
impediments within our tax and transfer systems that act as disincentives for Australians who want to work,
save and invest.

The inter-departmental working group will be led by Treasury and the Department of Social Services and
will provide advice to government on the interaction between Australia's tax and welfare systems and
suggest policy solutions that will encourage economic growth. The working groups findings will feed into
the governments Tax White Paper process, in particular the impact of effective marginal tax rates and how
the interaction between tax rates and welfare payments can better encourage Australians to work save
and invest.

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CHARTERED ACCOUNTANTS NEWS

> Senate Inquiry into Tax Laws Amendment (Combating Multinational Tax Avoidance) Bill 2015

Chartered Accountants ANZ has lodged a submission with the Senate Economics Legislation Committee
in regard to its inquiry into the provisions of the Tax Laws Amendment (Combating Multinational Tax
Avoidance) Bill 2015 . Our comments relate to the proposed amendments to Part IVA of the Income Tax
Assessment Act 1936 to negate certain tax avoidance schemes used by certain large multinational entities
to artificially avoid the attribution of profits to a permanent establishment in Australia (Schedule 2). We also
comment on the new standards for transfer pricing documentation and Country-by-Country reporting by
significant global entities (Schedule 4). In regard to Schedule 2, we highlight the need for timely published
ATO guidance, given that the proposed measure is to apply from 1 January 2016, and recommend that a
commitment is made to review the law in say three years. On CbC reporting, our comments include the
need for ATO guidance and also the need for confidentiality of sensitive business information.

Submissions will be published on the Senate Committees website in due course. The committee is due to
report by 9 November 2015.

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TAX REFORM

> Meeting of Council on Federal Financial Relations

On Friday 16 October, the Council on Federal Financial Relations met in Sydney. In an interview after the
meeting, Commonwealth Treasurer Scott Morrison spoke on some of the key tax-related themes of the
meeting. Key points made by the Treasurer included:

The state, territory and Commonwealth treasurers are working collaboratively to develop a federal
financial relations agenda. The shared primary goal is to grow the economy and to grow jobs.
State and territory Treasurers acknowledged the importance of innovation and policies that
support innovation to grow the economy.
Discussions continued on how the Treasurers can work the tax system at a federal and state level
so it can support Australians in their aspirations to work, save and invest.
There was no proposals put forward by the Commonwealth. This meeting was a request for
information on options and it is part of the discovery process.
It was noted that, at the next meeting, they would continue that discovery process by looking at all
the various options that exist at a state and territory level.
The Treasurers are looking for the best mix of options that are going to encourage jobs growth
and economic growth in this country.
Changing the tax system isn't about one or two taxes. You have to look at the overall mix of
taxes. You have to look at how that integrates with the payments system also at a federal level.
Commonwealth Treasury will continue to lead, and work with the state and territory Treasurers to
develop an itemised list of options that exist.

The next Council meeting is scheduled for early in 2016.

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> Ireland to introduce innovation tax incentive, which is innovative in itself

Speaking of tax reform and the importance of policies that support innovation Ireland is to introduce a
new corporate tax incentive for innovation the knowledge development box (KDB).
In Irelands Budget 2016, on 13 October 2015, it was announced that the KDB will be legislated in the
forthcoming Finance Bill.

The KDB will be a 6.25% corporate tax rate on earnings originating from R&D projects carried out in
Ireland. That is half the standard corporate tax rate of 12.5%.

According to Irelands Finance Minister, the KDB will be best in class and at a low competitive and
sustainable tax rate. It will be the first OECD-compliant preferential tax regime in the world, as it follows
the modified nexus approach endorsed by the OECD, which links the relief under the KDB to the
proportion of qualifying R&D expenditure being carried on by the company in Ireland on that innovation.

This measure, which aims to incentivise innovative activities, underscores the extent of competition by
countries globally to attract the development of knowledge, and to capture its economic and other
spillover benefits.

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> Call to remove the low-value goods GST threshold immediately

The Swan Chamber of Commerce, in Midland Western Australia has launched a campaign calling on the
Federal Government to scrap the $1,000 GST threshold immediately, arguing that they cant wait until
2017.

The Chamber will call on all Business Associations across Australia and more than 2,000,000 business
owners in the country to join them in their campaign to urge the Federal Government to scrap the threshold
on overseas imports as a matter of urgency.

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CASES

> Decision Impact Statement

Rio Tinto Services Limited v. Commissioner of Taxation - VID 104 OF 2015

The ATOs view is that the decision of the Full Federal Court is consistent with the Commissioner's view
set out in Goods and Services Tax Ruling GSTR 2008/1, that an acquisition will relate to a taxpayer
making supplies that would be input taxed for the purposes of paragraph 11-15(2)(a) of the GST Act
where, on an objective assessment of the surrounding facts and circumstances, the acquisition is used, or
intended to be used, solely or to some extent for the making of supplies that would be input taxed. The
Commissioner accepts that if an objective assessment of the facts and circumstances shows that the
acquisition has a direct relationship with the making of both input taxed supplies and other taxable or GST-
free supplies made in the course of carrying on an enterprise, the acquisition is a partly creditable
acquisition.

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LEGISLATION UPDATE

> Royal Assent

Tax and Superannuation Laws Amendment (2015 Measures No 4) Act 2015 - received Royal Assent on
13 October 2015 as Act No 135 of 2015. The Bill had been passed without amendment. The measures
concern: integrity of the CGT scrip-for-scrip roll-over; income tax exemption removal re Government
employees delivering overseas assistance; and increase of small lost superannuation account threshold.

> Draft legislative programme for the Spring sittings of Parliament 19 22 October 2015
Here is the draft legislative programme for the House of Representatives.

Only the House of Reps sits during the week 19-22 October 2015, as the Senate in involved with Budget
Estimates hearings

> House of Representatives

Tax and Superannuation Laws Amendment (2015 Measures No 5) Bill was introduced into
Parliament on 15 October 2015. This Bill contains amendments to modernise the methods for
calculating work-related car expense deductions; ensure the Zone Tax Offset is appropriately
targeted to people genuinely living in the designated geographical Zones by limiting it to those
people whose usual place of residence is with a Zone; limit the fringe benefits tax concessions on
salary packaged entertainment benefits; and to improve taxpayer compliance by increasing the
information reported to the Commissioner by a range of third parties.

The following Bills have passed the House of Representatives and now move to the Senate:

Education Legislation Amendment (Overseas Debt Recovery) Bill 2015 and Student Loans
(Overseas Debtors Repayment Levy) Bill 2015 Both passed without amendment. The Bills
propose amendments to implement a 2015-16 Budget proposal to ensure that the same debt
repayment obligations that apply to debtors who live in Australia apply to those who live overseas.
The Overseas Debt Recovery Bill will create an obligation to make repayments on their HELP and
TSL debts based on their total Australian and foreign-sourced income, known as their worldwide
income. This will be imposed as a levy (to be known as the "overseas debtors repayment levy")
through the other Bill.
Omnibus Repeal Day (Autumn 2015) Bill 2015

> Senate

The following Bills were passed by the Senate and now await Royal Assent:

Tax and Superannuation Laws Amendment (Better Targeting the Income Tax Transparency
Laws) Bill 2015 - Passed without amendment. It will exempt private companies from the public
disclosure of information by the Commissioner under the income tax transparency laws in s 3C of
the TAA. Those disclosure laws apply to corporate tax entities that report $100 million or more in
total income. The exemption will be available to companies that satisfy all of the following
conditions:
o The company must be a resident private company.
o The company must not be the wholly-owned subsidiary of a foreign corporate group.
o The company must not have a level of foreign shareholding greater than 50%.
Social Services Legislation Amendment (Low Income Supplement) Bill 2015 - Passed without
amendment. The Bill amends the Social Security Act 1991 and Social Security (Administration)
Act 1999 to cease the low income supplement from 1 July 2017. Also amends the ITAA 1936 and
Taxation Administration Act 1953 to make consequential amendments. (2015 Budget measure)
Customs Amendment (Fees and Charges) Bill 2015, Customs Depot Licensing Charges
Amendment Bill 2015 and Import Processing Charges Amendment Bill 2015 All passed without
amendment.
Amending Acts 1980 to 1989 Repeal Bill 2015
Statute Law Revision Bill (No. 2) 2015

Debate resumed for the following bills:

Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015

Foreign Acquisitions and Takeovers Fees Imposition Bill 2015
Register of Foreign Ownership of Agricultural Land Bill 2015

> Senate report into the Tax Transparency Amendment Bill

On 12 October 2015, the Senate Standing Committees on Economics tabled its report on the Tax and
Superannuation Laws Amendment (Better Targeting the Income Tax Transparency Laws) Bill 2015.

The Committee recommended that the Senate pass the Bill, citing a number of strong reasons to support
the bill including:

Section 3C has the potential to offend the fundamental principle that a taxpayers affairs must
remain private between the taxpayer and the ATO.
The publication of tax information of privately-owned companies could be misused, misinterpreted
or mislead due to poor understanding of relationship between gross accounting turnover and net
taxable income.
The main driver for the introduction of 3C was concern over base erosion and profit shifting by
multinational corporations and not necessarily Australian-owned private companies. These
companies are typically owned by families and, without the proposed exemption, the privacy of
these families and in some cases their personal security may be jeopardised. Importantly, these
companies already provide very detailed information to the ATO and, as clearly stated by the
ATO, the proposed exemption would not inhibit its work.

The Labor Senators and the Australian Greens provided a Dissenting Report stating that the governments
reasons to amend the tax transparency laws are based on unfounded logic as corporations do not enjoy
the rights and privileges of natural people and regarding privacy violations, they noted that personal details
of any current or past company directors are already available from ASIC. The Senators also criticised the
invoking of section 17 of the International Covenant on Civil and Political Rights.

Note - this Bill has now been passed by the Senate (see above).

> Draft regulations released to implement Foreign Investment Reforms

On 13 October 2015, Treasury released for public consultation, the exposure draft regulations and
explanatory statement associated with the Foreign Acquisitions and Takeovers Legislation Amendment Bill
2015, the Register of Foreign Ownership of Agricultural Land Bill 2015 and the Foreign Acquisitions and
Takeovers Fees Imposition Bill 2015, which are before Parliament. These Bills related to the package of
reforms to strengthen the foreign investment framework announced by the government on 2 May 2015.

Submissions are due to Treasury by 30 October 2015.

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ATO RULINGS

> View all ATO Tax Rulings, Taxpayer Alerts and related items for the week to 19 October 2015, which
include:

MT 2012/3A3 - Addendum - Administrative penalties: voluntary disclosures. Clarifies the

treatment of disclosures and statements in ACAs and APAs. Also clarifies that where a taxpayer
makes a disclosure after the end of a risk review, but before being notified of a resulting audit or
other examination, the disclosure will be treated as having been made before the notification of a
relevant examination.
PS LA 2002/10 (Withdrawn) - Signing and executing documents in the ATO To instruct authorised
ATO personnel on the proper method of signing and executing documents that evidence the
exercise of a statutory power
TA 2015/3 - Accessing the R&D Tax Incentive for ineligible broadacre farming activities. This
Taxpayer Alert warns farmers in the broadacre farming sector against claiming the R&D Tax
Incentive for the cost of fertilisers and soil improvers which do not relate to R&D activities, but
rather relate to business-as-usual farming activities.
CR 2015/79ER1 - Erratum - Income tax: SKILLED Group Limited Scheme of Arrangement and
payment of Final Dividend and Special Dividend
View rulings scheduled to issue on 21 October 2015.

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ATO PUBLICATIONS

> ATO website update notification issues

Notifications of new or updated content on the ATO website have been unavailable since Friday 9 October.
Specifically, subscription emails, RSS feeds and the Whats new area are not providing updates. The
ATO apologises for any inconvenience while the problem is fixed.

> How the ATO is continuing to improve your experience

Since the April 2015 release of the Reinventing the ATO Program blueprint, the ATO has:

given certainty to over 30,000 low risk privately owned and wealthy groups with reassurance their
income tax affairs for previous years will not be subject to further reviews
provided transparency with over 2,100 income tax risk reports where specific income tax issues
have attracted their attention
engaged early with 44 of the largest private groups and market leaders to build more real time
relationships as issues emerge, and
received 40 early advice requests involving complex transactions or arrangements.

To see what practical changes you can expect to see over the next six months visit Every year counts for
Privately owned and wealthy groups or to discover recent developments and get guidance on what attracts
the ATO's attention go to the ATO webpage, Privately owned and wealthy groups.

> ATO Foreign Investment Review Working Group September meeting

The ATO has released the minutes for the September meeting of the ATO Foreign Investment Review
Working Group.

> ATO website updates

Findings from the ECAP Pilot The ATO has published its key findings from the external compliance
assurance process (ECAP) pilot. The ECAP pilot tested the use of agreed-upon procedures by registered
company auditors to reconcile and agree factual data in the financial and tax accounts of large businesses.

ATO Webinars:

Ride-sourcing and tax webinar - The ATO is hosting a second webinar on the tax implications for
ride-sourcing drivers. The Ride-sourcing and tax webinar is on Wednesday 21 October 2015,
11:00am 12:00pm. Register now.
Early engagement services and approaches for your high wealth individual clients Specifically
tailored for tax agents who have high wealth individual clients, ATO Assistant Commissioner Greg
Dick will present an exclusive one hour webinar session to talk about the new early engagement
services and approaches being offered. The webinar is on Thursday 29 October 2015, 9:00am.
Register now - places limited

> CAs urged to register for ATO Open Forums to hear how ATO Reinvention Plans will impact
public practices

The ATO has published its Open Forums schedule for October to December 2015.

State/Territory Location Date

Ipswich 27 October 2015
QLD
Townsville 5 November 2015
 Bundaberg 10 November 2015
Mount Gravatt 19 November 2015
Dandenong 13 October 2015
VIC Box Hill 15 October 2015
Brighton 1 December 2015
Penrith 29 October 2015
Gosford 12 November 2015
NSW
Burwood 17 November 2015
Albury 24 November 2015
ACT Canberra 3 December 2015

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TAX-RELATED TECHNOLOGY

> ATO releases new system showing portal availability

The ATO recently released the Tax Agent Portal Dashboard . The dashboard will give you real-time
updates on the availability of the Tax Agent Portal. If the portal is unavailable or experiencing issues, you
will know by the dashboard traffic light system. The ATO recommends you visit the dashboard before
trying to login to the portal to ensure you know if the functions youre trying to access are operating
efficiently. The dashboard is in its first phase of release and will be progressively improved, including
additional functions. More information is available on the ATO website.

> ATOs list of current systems issues for tax practitioners, businesses and individuals

The ATO regularly updates a list of system issues currently being experienced by tax practitioners,
businesses and individuals on its System Maintenance webpage. Or to go to a particular site directly, refer
to:

Troubleshooting for businesses and tax practitioners

Troubleshooting for individuals.

> Digital Transformation Office (DTO) Weekly Blogs

On 14 October 2015, Paul Shetler, the DTO CEO announced their work programme to improve online
government service delivery.

Minister for Industry, Innovation and Science Christopher Pyne welcomed the DTOs announcement that
his department will lead the effort to streamline the bureaucratic process of establishing a business. Mr
Pyne said the AusIndustry arm of his department was perfectly positioned to work with DTO and the ATO
to streamline registrations, license applications and other red tape for those setting up a business, through
the business.gov.au website.

Mr Pyne said his department had already begun working with the ATO and ASIC on a simplified business
registration process hosted on business.gov.au.

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OTHER NEWS

> House of Reps Committee inquiry into the Tax Expenditures Statement public hearing

On 14 October 2015, the House of Representatives Standing Committee on Tax and Revenue held
another public hearing for its inquiry into the Tax Expenditures Statement. The Parliamentary Budget
Office (PBO) gave evidence at the hearing. The transcript of the public hearing will be available on the
Parliament of Australia website.
> OECD launches web portal on automatic exchange of information

The OECD has launched a new portal on Automatic Exchange of Information (AEOI). It provides an
overview of the work of the OECD and the Global Forum on Transparency and Exchange of Information
for Tax Purposes, in particular with respect to the Standard for Automatic Exchange of Financial Account
Information in Tax Matters (also referred to as the Common Reporting Standard or CRS).

> Common Reporting Standard for the Automatic Exchange of Financial Account Information

The ATO has issued a reminder to taxpayers on the Government's implementation of the OECD Common
Reporting Standard for the automatic exchange of financial account information from 1 January 2017. The
first exchange of information will occur in 2018. The ATO says that the exchange of financial account
information with foreign tax authorities will help ensure that Australian residents with financial accounts in
other countries are complying with Australian tax law and act as a deterrent to tax evasion.

> UK crackdown on tax cheats nets 109M in just 6 months

Between April and October 2015, HM Revenue & Customs (HMRC) launched 27 new taskforces targeting
sectors that are at the highest risk of tax fraud, including Income Tax Self Assessment (ITSA)
Repayments, Retail, Hidden Wealth and Grocery sectors, with one taskforce alone generating 22 arrests.

Taskforces were first launched in spring 2011 as part of HMRCs compliance strategy to tackle tax evasion
and fraud. Over 100 taskforces have been launched since then yielding more than 404 million, protecting
this money for public services.

> Report on Alcohol taxation in Australia

On 14 October 2015, the Parliamentary Budget Office released a report, Alcohol taxation in Australia
which examines the structure of alcohol taxation in Australia.

> This weeks tax scam report

Esther Lauaki from the Star Weekly reports tax scammers have been calling Moorabool residents by
claiming they have an outstanding tax debt or that they fraudulently or incorrectly filled out their tax returns.
In each case, the caller threatened the victim with legal action if they did not pay immediately.

> ACNC puts thousands of charities on notice

On 14 October 2015, the Australian Charities and Not-for-profits Commission (ACNC) announced that it
has issued a notice of intention to revoke the registration of close to two hundred charities. Despite
multiple attempts, the ACNC has not been able to reach these charities during its nearly three years of
operation. According to the ACNC Commissioner, Susan Pascoe AM, revocation was necessary in order
to maintain the integrity of the Charity Register - Australia's first searchable, online database of Australia's
registered charities.

> Ireland Budget 2016

The Chartered Accountants Ireland has released a summary of Ireland 2016 Budget.

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LIBRARY RESOURCES

You might have noticed the Knowledge Centre is now called the Library. While offering the same services
you have enjoyed in the past, please keep an eye out for new exciting developments.

> Recent Journal Articles on Taxation

Pension or lump sum... why not have both?

by Mark Ellem, SMSF Adviser, September 2015, p 9
 Explains why electing to have the payment from an account-based pension treated as a lump sum for
income tax purposes can be an effective strategy.
Download a copy of this article (CA ANZ members)

Six degrees of segregation

by Dale Judd and Jessica Hall, Superfunds, September 2015, p 22-24
Examines whether segregated investments are right for people approaching retirement in Australia and
looks at the tax issues involved.
Download a copy of this article (CA ANZ members)

To view these articles:

Click on the download link above

Log in with your member ID number and the password you use to log in to the Chartered
Accountants ANZ website
Click the green link under Online Resources to download the article.

Trouble downloading from Dropbox?

Some companies block access to Dropbox. If you are unable to download, let us know and well
email the article to you. Email the library team.

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TRAINING & DEVELOPMENT

Training & Development Highlight
> Regional Tax Training
The half day workshop has been specially formulated
to keep you up to date with the latest tax changes
and topical issues, providing the essential knowledge
required to ensure your clients affairs are current and
up to speed.
SEE ALL TRAINING >

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