Talking Tax – Issue 49

ATO updates

Singapore and Australia enter data sharing agreement

The ATO has entered a Competent Authority Agreement (Agreement) with the Inland Revenue Authority of Singapore (IRAS) providing for the automatic exchange of financial account information in a bid to combat tax evasion and improve tax transparency.

Under the Agreement, the ATO and the IRAS will exchange financial account information in respect of financial accounts in Singapore held by Australian tax residents and financial accounts in Australia held by Singapore tax residents.

The Agreement is based on the Common Reporting Standard endorsed by the OECD and the Global Forum for Transparency and Exchange of Information for Tax Purposes. Both jurisdictions have expressed their satisfaction with the existing confidentiality rules and data safeguards of their counterpart and are satisfied that the unauthorized use of information is prevented.

The automatic exchange of information will commence by September 2018.

Legislation and Government policy

Draft superannuation legislation released

The first tranche of exposure draft legislation has been released to effect the superannuation reforms announced in the 2016/17 Budget.

The tranche includes:

• the Superannuation (Objective) Bill 2016
• the Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016
• the Treasury Laws Amendment (Fair and Sustainable Superannuation) Regulation 2016.

This tranche of draft legislation aims to confirm the objective of superannuation in legislation, being to provide income in retirement that substitutes or supplements the age pension. The draft legislation also does the following:

• improves access to concessional contributions by allowing people under 75 to claim a tax deduction for personal superannuation contributions, irrespective of their employment arrangements
• encourages more people to make contributions to the superannuation fund of a low income spouse by providing a tax offset
• introduces the low income superannuation tax offset.

The Government also announced yesterday that it will not proceed with the implementation of a $500,000 lifetime cap on non-concessional contributions that was proposed in the 2016/17 Budget. Rather, it will reduce the annual cap on non-concessional contributions from $180,000 per year to $100,000 (or $300,000 over 3 years for individuals under 65). In addition, from 1 July 2017, no individual will be able to make non-concessional contributions if they have a superannuation balance greater than $1.6 million.

The Government will continue to work with stakeholders to progress implementation of the other measures announced in the 2016/17 Budget.

Case law

Vasiliades v Commissioner of State Revenue [2016] VSC 544

Broad powers of the Commissioner confirmed

The Supreme Court of Victoria has confirmed the Commissioner’s power to reassess a taxpayer’s liability to pay land tax.

In this case, land tax assessments were issued to the taxpayer and then withdrawn by the Commissioner. The Commissioner determined that the taxpayer’s claim to the ‘permanent place of residence’ exemption was inconsistent with evidence she gave in a separate Federal Court proceeding regarding freezing orders against her assets. The Commissioner purported to reassess the taxpayer on her land tax.

The court held that the taxpayer had failed to establish a jurisdiction error on the Commissioner’s part by the issue of the reassessments.

The court outlined that the power to issue assessments, as contained in section 8 of the Taxation Administration Act 1997 (TAA), is that ‘the Commissioner may make an assessment of a tax liability of a taxpayer’. Section 9 of the TAA confers the power to issue reassessments.

The land tax assessments had previously been withdrawn under section 8 of the TAA, but the power to reissue under section 9 of the TAA had not been spent, and was not predetermined by any previous position taken by the Commissioner.

As a result, the Commissioner’s reassessments were validly made.

This case demonstrates the broad power held by the Commissioner to vary and reissue assessments, even where assessments have already been withdrawn.