Stamp duty has been abolished in NSW on lease instruments first executed on or after 1 January 2008. The obligation to pay duty in respect of a lease instrument and a variation of a lease instrument executed before 1 January 2008 still exists.

In relation to lease instruments first executed on or after 1 January 2008, stamping is not required unless the document falls under one of the following categories:

Such transactions remain subject to duty. However, duty will not apply to a variation of lease made on or after 1 January 2008 regardles of when the lease was executed.

Argyle comment - all those who have avoided a lease involving their own business real property and their super fund no longer have an excuse, section 109 of SIS requires it and now it is stamp duty free.

The Australian Crime Commission (ACC) has released its 2006-07 annual report which details the ACC's operations and performance, including Operation Wickenby tax fraud investigations, for the financial year ending 30 June 2007.

The ACC reported that, in 2006-07, its Operation Wickenby activities resulted in close to $1.2m in tax assessments being issued. However, in the same year, there were no proceeds for crime restrained or forfeited in relation to Wickenby matters. Further, no tax recoveries were made in 2006-07.

The ACC reported that Operation Wickenby investigations have been the subject of legal challenges, including challenges focused on:

Since inception, 3 persons have been arrested on charges relating to conspiracy to defraud the Commonwealth. One individual has been charged as a result of his failure to take the oath or make an affirmation. Further, the Victorian County Court in R v Wheatley [2007] VCC 718 sentenced Glenn Wheatley on 19 July 2007 to imprisonment for 2½ years, with a 15 month non-parole period, in relation to defrauding the Commonwealth and other related charges. Out of the $17.3m 5 year funding for the project, in the these first two years, $4.1m has been spent.

Argyle comment - does the end result justify the cost? Certainly not, but as press reports indicate the media objective has been achieved. And Australia is not alone, there are similar ‘Wickenby’ projects under the Revenue Departments of many countries. Argyle’s current experience of four Wickenby and High Net Worth Taskforce matters emphasises a new manner of ATO approach using the same old blunt investigation tools.

In the TD released the ATO states that, if a private company provides trade credit to a shareholder (or associate) on arm's length terms, a failure to repay the amount within the agreed payment term will not prevent s 109M of the ITAA 1936 from applying.

The provision of trade credit is a loan for Div 7A purposes because it falls within the definition of "loan" in s 109D(3). For s 109M purposes, the TD states that it is not relevant whether a trade debt is paid outside of payment terms such as 30, 60 or 90 day terms so long as it can be accepted that the credit was provided in the ordinary course of the private company's business and is similar to the usual arrangements made by the company with parties at arm's length.

According to the ATO, provided the private company deals with the failure to repay in the same manner in which it deals with defaults on similar loans made to parties at arm's length, section 109M will apply. However, if the amount is fully repaid before the company's lodgment day (or by the end of the income year for the 2003-04 and earlier income years), section 109M does not need to be considered.

A mortgage broking company that had entered into an agreement with a bank to "originate and manage" loans on the bank's behalf has failed to discharge the onus of proving that "management fees" paid to it under the agreement were not assessable income.

The taxpayer was a mortgage broking company that entered into an agreement with a bank to "originate and manage mortgages". The taxpayer was to receive a monthly management fee calculated by reference to the loans it made, and it originally returned such fees as assessable income.

At a later stage the taxpayer sought to exclude the management fees from its assessable income and argue that the "management fees" were in fact advances by way of loans made to the taxpayer by the bank to provide it with funds for the loans that it then made to customers. The taxpayer maintained that it was required to repay the loans, subject to an offsetting mechanism for payment of the management fees due to it.

The Court found that there was no evidence to support the claim that there was "an oral agreement in existence for the advance of funds which were to be repaid primarily by way of reductions in the amounts payable as management fees". The Court also noted that the bank treated the payment as commissions. The Court also found there was no evidence to support the claim that the funds were loans. There was (a) neither any evidence of an express or implied promise to repay the amounts; (b) nor any evidence of the making of any loan repayments; (c) nor any evidence of any outstanding loan balances.

The NSW ADT has held that 2 adjacent properties are to be regarded as a "parcel of land" for the purposes of the principal place of residence (PPR) land tax exemption, regardless of the fact that the two properties were separated by a fence with a 2.4 metre gate.

The taxpayer owned 2 properties, one being his home and the other acquired some time later adjoining the property with his home. After purchasing the adjoining property, the taxpayer removed a section of the boundary fence (2.4 metres wide) and installed a gate to enable his family members to access the property.

The adjoining property was assessed to land tax for the 2005 to 2007 years. The taxpayer maintained that while the first property contained fixtures and the second property did not, the second property was intrinsic to his family's recreational needs.

The Tribunal concluded that the 2 properties were undivided both in use and in physical separation. The Tribunal found that the use of the second property was a use in conjunction with the residential purposes of the first property, and at all relevant times, was not used for any other purpose. Accordingly, the Commissioner's assessment was set aside.

The Minister for Human Services has recently announced that Centrelink has conducted a series of welfare fraud investigations targeting the taxi industry, picking up 75 taxi drivers who had their Government payments cancelled or suspended, potentially saving more than $500,000 in welfare fraud.

It was noted that Centrelink fraud investigators work alongside other police and government agencies, such as the Tax Office, Federal Police and the Department of Immigration and Citizenship, in conducting investigations into cash economy activity. It was also noted that particular attention is directed to the taxi, building, harvesting and hospitality industries.

The recent announcements, the Federal Treasurer has now released a discussion paper outlining the proposed features of the ‘Concessionally Taxed First Home Saver Accounts’ and how they would operate. An individual will be able to open one of the new accounts if they:

It is proposed that individual contributions of up to $10,000 (indexed) may be made into an account each year by the account holder or another party, such as an employer, on behalf of the account holder. However, such contributions have to be made from after-tax income.

The Government will make an additional contributions, which will be paid directly into the account, with arrangements reflecting those for superannuation. Features of the first home savers accunt include:

Contributions will not be subject to tax when contributed to an account. Investment earnings (or interest) will be taxed at a rate of 15%. Withdrawals will be tax-free if used to purchase or build a first home to live in.

To withdraw their benefits, individuals will have to contribute a minimum of $1,000 in each of at least four years. However, individuals will be able to withdraw their account balance tax free to buy or build a first home to live in.

The full amount in the account will need to be withdrawn and the account closed. Alternatively, individuals can close their account and contribute the full amount in the account to superannuation at any time.

Individuals will be able to apply to access their account in cases of severe financial hardship and terminal illness, and on compassionate grounds, through the superannuation early release provisions by transferring the full amount in their account to superannuation and closing the account.

Most superannuation providers, life insurers, banks, building societies, and credit unions will be able to offer the accounts. Self-managed and non-public offer superannuation funds will not be able to offer the accounts.

The Australian Government has released an exposure draft of its proposed ten National Employment Standards (NES), covering the key minimum entitlements for all Australian employees, to apply from 1 January 2010. Such entitlements will be guaranteed in legislation so that they cannot be excluded or modified in a way that undermines the safety net.

The proposed 10 national standards, which are to apply from 1 January 2010, are:

The 10 standards would form one part of the safety net, with the second being a "modern, simple award system" for employees earning $100,000 or less.

The Tax Laws Amendment (2008 Measures No 1) Bill 2008 was passed by the House of Reps on 21 February 2008 without amendment and now moves to the Senate. The Bill includes amendments: