The income distribution by a trustee of a discretionary trust was successfully challenged by discretionary objects on the basis that the trustee was not sufficiently informed of the circumstances of all the discretionary objects at the time of the distribution. The Supreme Court distinguished a High Court decision which required a more onerous test for a successful challenge.
This case is important for a number of reasons including the broad interpretation taken of the word “recommendation”, the broad interpretation taken of the expression “personal advice”, the recognition of “social proofing” as a basis to effectively provide a recommendation for the purposes of the Corporations Law and the basis upon which the disclaimer used by Westpac was ineffective.
Adesso Consulting is concerned about the confusion to the law posed by the Commissioner's arguments in the ACN 154 Case. The decision in Benidorm Case is welcomed and the Court of Appeal congratulated by distinguising law from lore.
The Full Federal Court in two unamimous judgements determined the term arm's length must be understood from both a risk adjusted basis and a net present value basis. Both these cases will be welcomed by all international investors in infrastructure.
This is an important case as the majority upheld the principle from the Visy case that a loss is deductible even if it is a one off loss outside of a business operation provided that the loss arose as a result of a business transaction which would have otherwise produced assessable income.
Provided the relevant treaty is a Covered Tax Agreement its terms are now modified by the MLI Act. This article looks to the practical implications of the modifications.
On the basis that TR 2018/5 is revenue neutral, confusing, inconsistent with precedent and will result in Australia breaching its international treaties it is not surprising that an amendment of the law is required. Adesso urges all interested parties to support either the elimination of the test for central management and control or the introduction of a modified central management and control test along the lines set out in TR 2004/15.
The changes proposed by the Treasurer will not result in any major investment by non residents. The proposals ignore Division 415 and assume green field projects are revenue positive from the first year of operation. If the losses are indexed it is likely that the project will become tax positive towards the end of the 15 year period. Further the proposals will result in debates between the Commissioner and the taxpayer over what is a land asset. Adesso Consulting's proposals will limit the cost to the revenue by firstly increasing the tax rate to 20% and disallowing all related party debt. Further compliance will be minimised by ensuring that the new rate applies to all income. Finally by treating the vehicle as tax transparent Australian super funds will also benefit.
The High Court has disallowed expenditure incurred by a taxpayer to acquire a 10 year gaming license under both Section 8-1 and Section 48-880. In particular the valuation methodology, the meaning of goodwill for tax purposes, the operation of the black hole deduction provisions needs to be reinterpreted by investors, valuers and those involved with greenfield infrastructure investment.
Glencore won a major transfer pricing case which significantly affects the Commissioner’s powers to adjust transactions. The decision is reported as Glencore Investment Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia [2019] FCA 1432 (“the Glencore Case”). The ATO has recently sought to appeal, we wait with interest to see the result in the Full Federal Court. .
The High Court rejected the Commissioner's view that a person remained a resident of Australia unless he had a permanent home in a foreign country.
The OECD is proposing to significantly increase tax on industries that produce green house emissions and at the same time subsidise low income citizens with part of the additional revenue collected.
A consultation paper will be issued in November 2019 and the final report will be issued in June 2020.
On 9 October the OECD released a discussion paper detailing a public consultation which is proposed to be held on 21 and 22 November 2019 at the OECD Conference Centre.
Proposed changes to Testamentary Trusts only apply to transfers of property arising other than by way of will, codicil, intestacy or order of a court