TaxTalk

TaxTalk Alerts 2012-13: Goods and Services Tax
Outstanding GST reform measures – 16 December
On 14 December 2013, the Government announced its intentions in relation to the 64 outstanding tax and superannuation measures, signalling an end to the process outlined in the Government’s earlier announcement on 6 November 2013.

As part of the announcement, the Government finalised its intentions in relation to all outstanding GST measures, confirming that the majority will not proceed as announced.

To find out more read our latest GST Alert on this topic.

NEW: Energy & Mining Tax Updates

NEW: Energy & Mining Tax Updates – 13 December
PwC's new Energy & Mining Tax Update helps you to stay informed and up-to-date on the most pressing tax developments, issues and opportunities facing companies operating in Australia's energy and mining sector. Published twice a year, our Energy & Mining Tax Update series offers expert insights in the areas of transfer pricing, state taxes, research and development incentives, income tax, resource rent taxes, indirect taxes, tax controversy and sustainability and climate change.

NEW: Energy & Mining Tax Update - December 2013, Edition 1.

GST and Overseas Banks – What's New?

Proposed measures to restrict GST refunds will proceed

Proposed measures to restrict GST refunds will proceed – 6 November 2013
As part of a broader announcement today on its plans in relation to all 96 tax and superannuation announcements which are currently outstanding, the Government has announced its intentions in relation to the outstanding GST measures.

To find out more read our latest GST Alert on this topic.

GST and the property life cycle

The GST Adjustment Provisions - Back to the Drawing Board?

The GST Adjustment Provisions - Back to the Drawing Board? – 24 October 2013
GST Adjustments and Real Property
In MBI Properties Pty Ltd v Commissioner of Taxation [2013] FCAFC 112, the Full Federal Court allowed the Taxpayer’s appeal against the Federal Court decision in MBI Properties Pty Ltd v Commissioner of Taxation [2013] FCA 56. The Full Federal Court decided that the taxpayer (MBI) was not required to make increasing adjustments under Division 135 in the GST legislation in relation to the acquisition of residential units as part of a GST-free going concern. The decision raises a series of questions regarding the GST implications of the sale or acquisition of property subject to lease(s).

To find out more read our latest GST Alert on this topic.

Full Federal Court Decision on AP Group Limited

Full Federal Court Decision on AP Group Limited -"Incentive or disincentive payments?" – 25 September 2013
GST on Motor Vehicle Incentive Payments
The Full Federal Court’s decision in AP Group Limited v Commissioner of Taxation [2013] FCAFC 105 was handed down last week. The decision concerned the GST treatment of certain payments (incentive payments) made by motor vehicle manufacturers and distributors (Manufacturers) to the taxpayer (a motor vehicle dealer). The Full Federal Court (Edmonds, Jagot and Bromberg JJ) upheld the AAT’s decision in finding that two of the incentive payments represented third party consideration for sales of vehicles by the dealer to end-users, while two other incentives were not consideration for any supply by the dealer.

To find out more read our latest GST Alert on this topic.

GST and retail

Draft GST Ruling on Single RE Fees

Draft GST Ruling on Single RE Fees – 8 May 2013
The Commissioner has released a Draft GST determination (GSTD 2013/D1) setting out his view on the treatment of ‘single RE fees’. The Draft determination also sets out a suggested means of apportioning a single fee between 55% and 75% RITC rated elements.

On 8 May 2013, the Commissioner released GSTD 2013/D1, dealing with the application of item 32 of subregulation 70-5.02(2) of the GST Regulations to a single fee charged to a managed investment scheme (MIS) that is a recognised trust scheme from a Responsible Entity (RE). Comments are required by 5 June 2013, and the GSTD is proposed to apply from 1 July 2012, when item 32 came into operation.

Read our full Alert on the paper.

High Court decision on GST anti-avoidance

High Court decision on GST anti-avoidance – 2 May 2013
In the first GST general anti-avoidance matter to be considered by the High Court of Australia, the Court has unanimously allowed an appeal by the Commissioner of Taxation (Commissioner) in relation to the application of the GST general anti-avoidance rules (GAAR). In finding for the Commissioner, the High Court held that despite the taxpayer’s arrangement involving a series of choices or an agreement each of which were expressly provided for under the GST law (choices), the GST benefit obtained was “not attributable” to these choices, but to the wider arrangement.

Read our full Alert on the paper.

Failings in GST systems and processes present a clear and immediate cost to business

Failings in GST systems and processes present a clear and immediate cost to business – 1 April 2013.
The systems and processes that underpin GST compliance are a growing area of focus for the Australian Tax Office (ATO). Read more...

GST Refunds - new Exposure Draft

GST Refunds - new Exposure Draft – 27 February 2013
The government has released a new exposure draft on the proposed changes to the GST refund rules which are still intended to take effect from 17 August 2012 (the date of the original announcement). While the new draft purports to address concerns with the initial version, it still leaves a number of questions for taxpayers.

Read our full Alert on the paper.

GST Adjustments – Buyer Beware!

GST Adjustments – Buyer Beware! – 8 February 2013
A recent decision of the Federal Court involving the GST adjustment provisions has the potential to significantly impact property investors who have purchased residential premises as a GST-free going concern.

On 6 February 2013, the Federal Court handed down a decision which may affect investors acquiring residential premises which are subject to lease. The case, MBI Properties Pty Ltd v Commissioner of Taxation [2013] FCA 56, follows the earlier decision of South Steyne Hotel Pty Ltd v Commissioner of Taxation [2009] FCAFC 155, in which the Full Federal Court held, among other things, that the sale to MBI of certain units in a serviced apartment complex subject to leases to a management company, were GST-free supplies of going concerns.

Read our full Alert on the paper.

Qantas High Court Decision - The meaning of 'supply' for GST purposes

Qantas High Court Decision - The meaning of 'supply' for GST purposes – 2 October 2012
In a majority decision, the High Court has found that GST is payable by Qantas when a customer books and pays for domestic air travel, but subsequently cancels the booking or does not turn up for the flight, and does not receive a refund of the unused fare.

This case concerns the fundamental issue of whether in these circumstances, Qantas makes a supply to the passenger for consideration and therefore, whether the supply is a taxable supply pursuant to s9-5 of the A New Tax System (Goods and Services Tax) Act 1999.

Read our full Alert on the paper.

GST Margin Scheme Calculations - One chance to get it right

GST Margin Scheme Calculations - One chance to get it right
– 3 September 2012
The Commonwealth Government has released exposure draft legislation which proposes to amend the goods and services tax (GST) law to ensure that overpayments of GST are only refunded in limited circumstances.

Background

On 17 August 2012, the Treasury released exposure draft legislation and explanatory material on changes to the rules concerning refunds of overpaid GST. These changes seek to address the implications of the Full Federal Court’s decision in All Sports v Commissioner of Taxation [2011] FCA 824 ('Sportsbet'). The Sportsbet decision meant that a taxpayer could obtain a refund for overpaid GST, without the need to repay this amount to the customer, where the excess arose due to a miscalculation of the GST payable.

Read our full Alert on the paper.

Proposed changes to GST refund rules

New self-assessment regime for indirect taxes

Changes to the GST rules for managed investment schemes and superannuation funds

Changes to the GST rules for managed investment schemes and superannuation funds – 5 June 2012
On 29 May 2012, amendments to the GST financial services regulations were released, including wide ranging new regulations relating to the reduced input tax credit treatment of supplies acquired by managed investment schemes and superannuation funds. The new rules apply from 1 July 2012.

The amendment regulations introduce a new item 32 of GST regulation 70-5.02(2) under which supplies acquired by a 'recognised trust scheme' on or after 1 July 2012 will be eligible for a 55 per cent reduced input tax credit (RITC). Certain specified services will remain eligible for the 75 per cent RITC.

The amendment regulations contain various changes to the exposure draft regulations issued by Treasury in January this year.

Read our full Alert on the paper.

GST ruling on grants of financial assistance

GST ruling on grants of financial assistance – 31 May 2012
On 30 May 2012, the Australian Taxation Office issued GST Ruling GSTR 2012/2: Financial assistance payments outlining the Commissioner's view on when a payment of financial assistance is consideration for a supply. The new ruling replaces GSTR 2000/11: Grants of financial assistance, which is withdrawn effective 30 May 2012.

Payers of financial assistance are typically, but not limited to, Governments, Government agencies, non-profit bodies and charities.

GSTR 2012/2 replaces a ruling which was relied on by many entities granting financial assistance in the Government and not-for-profit sector, where that financial assistance did not satisfy the requirements of a Government appropriation. While the core themes of GSTR 2000/11 remain the same in the new ruling, many of the examples have been updated and refined and the obligations arising as a result of grant payments explored in more detail to determine whether or not an obligation to remit GST falls on the recipient of a grant of financial assistance. Unlike the draft, GSTR 2012/2 does not consider the implications of financial assistance payments made under tripartite arrangements which is disappointing, given that so many Government grant arrangements involve a third party. Taxpayers will have to rely on the ATO's guidance in GSTR 2006/9 in that regard.

Unlike the old ruling, GSTR 2012/2 confirms that in relation to repayment clauses, these are no longer viewed by the ATO as determinative of a supply being made by the recipient of the grant payment. The new ruling contains an example of a situation where a repayment clause does not give rise to a taxable supply by the recipient of the grant funding payment.

The new ruling addresses situations where there is an insufficient nexus between the payment made by the grantor and a supply, such as where the thing supplied by the payee is merely incidental. It also provides a more comprehensive analysis of the creation of expectations between the parties and whether or not this gives rise to a supply (the original ruling stated that the creation of mere expectations was insufficient to create a supply).

Read our full Alert on the paper.

GST – taxes, fees and charges

GST – taxes, fees and charges – 4 May 2012
After a lengthy and at times frustrating consultation process with the States, Federal Treasury has finally released its draft regulations for Division 81 for broader consultation. While cutting it fine in terms of the looming deadline of 1 July 2012, the proposed draft is most welcome.

Since the new principle based approach was announced in the 2010-11 Federal Budget, agencies were assured that the application of the new approach to its fees and charges would be a seamless one and that the treatment of fees and charges should be the same as in the old regime.

However, it became very clear very early on that this wasn't going to be the case. Since the legislation took effect from 1 July 2011 it was obvious that very serious surgery would be required to expand and clarify the application of Division 81 using the regulation making power if it was to work as intended.

Faced with the pending deadline of 1 July 2012 when the "grandfathering" period is currently due to expire, agencies (and the Australia Taxation Office (ATO), which has been inundated with ruling requests) have attempted to determine the likely GST treatment of fees and charges knowing full well that any initial determination made was likely to be affected - even overturned- by the pending regulations.

The proposed draft addresses the main concerns government agencies have had with the new Div 81 legislation. And even better, the Draft Regulations extend the "grandfathering" period by an additional 12 months to 1 July 2013, providing a much needed breathing space for agencies to accurately identify any changes required and seek certainty from the ATO where needed.

A more detailed analysis of the changes is set out below. The Draft Regulations and related documentation can be accessed on the Treasury website.

Read our full Alert on the paper.

Indirect Tax updates