Talking Tax – Issue 4


Tax and Superannuation Laws Amendment (2015 Measures No 2) Bill 2015 has passed all stages without amendment and now awaits Royal Assent.

The Bill:

  • provides tax relief to taxpayers entering into certain arrangements in relation to mining, quarrying and prospecting rights and information;
  • amends the 1997 Tax Act by extending the statutory effective life of in-house software from four to five years to better align with the typical useful life of in-house software for businesses;
  • provides income tax ‘look-through’ treatment for installment warrants, installment receipts, and other similar arrangements, and for certain limited recourse borrowing arrangements entered into by regulated superannuation funds; and
  • makes a number of changes to the company loss recoupment rules in the 1997 Act, including:
    • modifying the continuity of ownership test for companies whose shares have unequal rights to dividends, capital distributions or voting power;
    • ensuring that for the purposes of applying this test, the ownership of companies does not have to be traced through various types of entity; and
    • clarifying that the entry history rule does not operate for an entity that becomes a subsidiary member of a consolidated group or multiple entry consolidated group, for the purposes of applying the same business test.

ATO updates

Class Rulings

The following class rulings were issued this week:

CR 2015/69: Capital Gains Tax scrip-for-scrip rollover. This ruling sets out the Commissioner’s opinion on an exchange of shares in Accenture SCA for shares in Accenture plc. It considers the scrip for scrip roll-over provisions in subdivision 124-M of the 1997 Act.

CR 2015/70: How transfer payments to employees are treated in the sale of Home Care Service business. The ruling discusses the tax treatment of transfer payments to employees in connection with the sale of the Home Care Service business. It considers the employment termination payment provisions in sections 82-130 and 82-135 of the 1997 Act.


The report of the Parliamentary Joint Committee on Law Enforcement Inquiry into financial related crime has been tabled in the Senate. One of the recommendations of the report was to designate the ATO as a “criminal law-enforcement agency” under the Telecommunications (Interception and Access) Act 1979, so that it can access intercepted telecommunications information for the purpose of protecting public finances from serious criminal activities such as major tax fraud.

Case law

DCT v McManus

The Federal Court decided that the Commissioner was able to serve a statement of claim on a taxpayer residing in Indonesia in order to recover over $1 million.

The Commissioner satisfied the Court that the requirements for service beyond Australia were met. This is because the Commissioner was able to prove that he had a prima facie case for the relief sought, and that the Court had jurisdiction in the matter.

Thomas v FCT

The Federal Court held that a discretionary trust cannot distribute franking credits to an individual beneficiary in a tax-advantaged way, independently from the way in which the trust’s net income is distributed. The Court held that franking credits are not ordinary income of a trust and therefore cannot be distributed separately from the trust’s net income. This is in contrast to fully franked dividends which are viewed as ‘dividends’ and represent a category of distributable trust income.

The Court decided that there was no ‘relevant nexus with net trust income’ required by Division 207 of the 1997 Act, regarding the allocation of franking credits to beneficiaries.

The Court said that the intention to allocate franking credits was to maximise inappropriately the beneficiary’s refund entitlement, because the franking credits were allocated in different proportions to the rest of the trust’s net income.


Emma Woolley

Partner & Head of Family Office Advisory

Karl Rozenbergs

Partner & Co-Lead, Health & Community

Ben Hamilton

Partner & Technology and Digital Economy Co-Lead

James Deady

Partner & Technology and Digital Economy Co-Lead

Eugene Chen

Partner & Head of China Practice

Oliver Jankowsky

Partner & Head of International Desks

John Bassilios

Partner & Fintech and Blockchain Lead

Matthew Curll

Partner & Insurance National Practice Leader

Melanie Smith

Director – Business Development, Marketing and Communications

Natalie Bannister

Partner & Commercial National Practice Leader

Nathan Kennedy

Partner, Head of Pro Bono & Community and ESG Co-Lead

Mark Dessi

Partner & Energy Co-Lead

Katie McKenzie

Director – People & Culture

James Bull

Special Counsel & Frank Lab Co-Lead

Melanie James

People & Culture Manager

Jacqui Barrett

Partner & Head of US Desk

Lauren Parrant

Senior People & Culture Advisor

Melinda Woledge

Marketing & Communications Manager

Jasmine Koh

Senior Associate & Frank Lab Co-Lead

Alison Choy Flannigan

Partner & Co-Lead, Health & Community

Jordon Lee


Geoff Benson


Meg Lee

Partner & ESG Co-Lead

John Gray

Partner, Technology & Digital Economy Co-Lead and NSW Government Co-Lead

Harvey Duckett


Luke Denham


Billie Kerkez

Manager – Smarter Recovery Solutions

Jemima Whiteman


Bradley White


Sarah Khan


Audrey Leahy

Special Counsel & Head of Irish Desk

Marie Mitilineos


Gloria Tam


Peter Jones

Senior Commercial Counsel

Eden Winokur

Partner & Head of Cyber

Sheldon Fu


Tamara Charlwood


James Pavlidis


Claire Bourke


Chloe Taylor


Silvana Brcina


Daphne Schilizzi


Andrew Banks


Isabella Urso


Jessica Liu


Amelia Spratt


Lisa Ziegert

Director – Client Solutions

David Cooper

Partner & Energy Co-Lead

Luke Raams


Emma McDonald


Carl Ayers


Maddison Reznik

Senior Associate & Trade Marks Attorney

Rebecca Dodd


Gretel Burns