Australia: Recent court case roundup; Structural reform delayed

Matthew Cridland

Australia was focussed on state and federal politics in early February, including an upset election result in Queensland. Notwithstanding these distractions, tax developments still continued apace.

The Federal Court provided a detailed judgment regarding the tax promoter penalty provisions in FCT v Arnold (No 2). The court imposed penalties of $1.5 million in respect of a pharmaceuticals donations scheme.

In the case of Tara Nominees Pty Ltd as Trustee for the Burnley Street Trust v FCT, the Full Federal Court held that the transfer of land from the taxpayer to a joint venture trust was a "resettlement" that triggered CGT [capital gains tax] event E1. There is a CGT exemption that may apply where there has been no change in beneficial ownership. However, the court also held that particular exemption did not apply.

The Queensland Supreme Court handed down an important stamp duty decision in the case of Sojitz Coal Resources Pty Ltd v Commissoner of State Revenue. The court held that interests in mining leases did not need to be taken into account as a part of a corporation's land holdings for the purposes of land rich duty.

In relation to rulings, the Australian Taxation Office (ATO) finalised its GST Determination on supplies of brokerage services for overseas purchases – GSTD 2015/1. The determination confirms such brokerage services are GST-free, even if the services are supplied to recipients in Australia.

The ATO released its updated Code of Settlement (PSLA 2015/1) which, although streamlined, provides a broad range of options for taxpayers and the ATO to settle issues in dispute. This code is consistent with the recent practice of the ATO to clear a backlog of outstanding disputes with taxpayers.

The Australian Senate Economics Committee enquiry into Corporate Tax Avoidance has been principally focussed on multinationals and international tax planning. The Committee received 69 submissions which reflects an overwhelming level of interest in global tax issues.

Finally, and most importantly, Joe Hockey, the Australian Treasurer, has indicated that major structural reform of the Australian tax system (including a tax white paper/tax reform options approach) will be delayed for a couple of months, being after the release of the government's inter-generational report (IGR). The IGR is expected to emphasise the extent of likely budget deficits over the coming decades if government spending and tax policy is not reshaped. The government's Budget in May 2015 will be critical in establishing the basis for broader structural tax reform thereafter.

Matthew Cridland (matthew.cridland@dlapiper.com)
DLA Piper
Tel: +61 2 9286 8202
Website: www.dlapiper.com

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