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Thin capitalisation, worldwide gearing and related party debt
Budget 2013 was closely followed by a flurry of proposals and issues papers, notably the one dealing with thin cap rules: “Addressing profit shifting through the artificial loading of debt in Australia”. Across the Tasman too the New Zealand government has announced moves to amend thin cap rules, particularly the rules relating to worldwide gearing of inbound investments. See “Review of the thin capitalisation rules” Unlike in Australia, New Zealand already has a worldwide gearing test applicable to inbound investment. It … Continue reading
Posted in Thin capitalisation
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Budget 2013 – Stemming the tide of runaway tax
The Budget delivered on 14 May 2-013 contains several measures the government intends to take to close the loopholes and prevent profit shifting. Thin cap rules are to be amended with the safe harbour limited tightened. The worldwide gearing test will be extended to apply to inbound investors. The de minimis threshold will be increased from $ 250,000 to $ 2 m of debt deductions. All this in the wake of amendments on transfer pricing and anti-avoidance rules about to … Continue reading
Posted in Accounting standards
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Unit Trend – Application of Division 165 general-anti avoidance provisions
Contributed by Michael Patane, Consultant, Clayton Utz On 1 May 2013, the High Court (at 2013 ATC ¶20-389) unanimously granted the Commissioner’s special eave application and allowed his appeal from the decision of the Full Federal Court in Unit Trend Services Pty Ltd v FC of T 2012 ATC ¶20-342 concerning the application of the anti-avoidance provisions in Div 165 of the GST Act. The court held that the GST benefit obtained by the taxpayer was not attributable to the … Continue reading
Shares in mining company not “indirect Australian real property interest”
The Federal Court delivered some good news to non-resident investors in Australian mining stock in Commissioner of Taxation v Resource Capital Fund [2013] FCA 363. It was held that: A limited partnership (established in Caymans Islands) cannot be considered as a company for tax purposes under Div 855 of Pt 4-5 of ITAA cialis for sale 1997 and Shares in the Australian mining company cannot be taken as “indirect Australian real property interest” and therefore subject to CGT, because the … Continue reading
FBT consolidates its position as nuisance tax for Australian business
Emotive phrases like “salary packaging” and “living away from home allowance” have occupied the psyche of employers and employees in Australia for well over a decade and any whiff of change in the law generates more heat than a meteorite shower. Recent changes to fringe benefits tax (FBT) resulting in some crucial employee benefits losing tax advantages have been at the centre stage in business circles. Undeniably, fringe benefits impact strongly on employee recruitment and retention and therefore the tax on them … Continue reading
Division 7A comes under scrutiny
Since its introduction into the Income Tax Assessment Act 1936 in 1998 , Div 7A has been sanctioned, censured and reviled by shareholders, trustees and beneficiaries alike. The impact of Div 7A on companies and trusts used in business structuring has been the main cause of such reaction. During the past decade and more, several issues surrounding Div 7A have female viagra risen requiring a concerted effort by the government. Now the Board of Taxation has been commissioned to undertake a post-implementation … Continue reading
Removal of the CGT discount for non-residents
Contributed by Andrew O’Bryan, Partner, Anthony Bradica, Partner and Andrew Carter, Senior Associate, Hall and Wilcox The Assistant Treasurer released exposure draft legislation and explanatory material to remove the capital gains tax (CGT) discount for temporary and non-residents on 8 March 2013. The proposed amendments to Subdiv 115-B of ITAA 1997 will implement an announcement contained in the 2012/13 Federal Budget on 8 May 2012. While the policy is targeted towards capital gains made from taxable Australian property (the Assistant … Continue reading
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Proposed transfer pricing laws: adding clarity or uncertainty?
Contributed by Keir Cornish and Amita Pradhan, Transfer Pricing, Ernst & Young An overhaul of the long-standing transfer pricing laws is well underway, beginning with the introduction of the first phase of reforms in 2012. The second phase of transfer pricing reforms (to be introduced as Subdiv 815-B of the Income Tax Assessment Act 1997), was introduced into parliament on 13 February 2013. The proposed legislation, if passed, will replace the existing transfer pricing rules and is expected to apply … Continue reading
Posted in Accounting standards
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Government releases draft legislation in relation to the “full” IMR
Contributed by Richard Snowden, Partner, King & Wood Mallesons The government has released the draft legislation for the final “third” element in the Investment Manager Regime (IMR) (being, “IMR 3” or the “full” IMR). The release of draft legislation in relation to IMR 3 is particularly welcome. It has been long awaited by managers of, and investors in, foreign funds. The implementation of this “full” IMR was one of the key recommendations from the report by the Australian Financial Centre … Continue reading
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Go tell it on Twitter: Social media matures and matters more than ever
If matters spiritual can flutter in on Twitter, temporal matters and especially corporate info can certainly do. We have heard of the Pontiff pounding the keyboard and tweeting to his flock. Now the Securities and Exchange Commission in the US has decided that financial information of companies can be on social media, such as Twitter and Facebook. SEC Says Social Media OK for Company Announcements if Investors Are Alerted It all started with the Netflix CEO stating that the company’s … Continue reading
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