27 MARCH 200927 MARCH 2009

SALGFMG SALGFMG Conference Conference

Local Government Tax Local Government Tax UpdatesUpdates

GST DevelopmentsGST Developments

Compulsory Acquisitions – Hornsby Shire Compulsory Acquisitions – Hornsby Shire Council vs ATOCouncil vs ATO

The ATO has made a decision that it will NOT appeal the decision The ATO has made a decision that it will NOT appeal the decision of the Administrative Appeals Tribunal in the above case.of the Administrative Appeals Tribunal in the above case.

The most significant outcome is that entities acquiring land under The most significant outcome is that entities acquiring land under compulsory acquisition may no longer assume that such compulsory acquisition may no longer assume that such transactions are out of scope of GST. GST may be payable on transactions are out of scope of GST. GST may be payable on some compulsory acquisitions.some compulsory acquisitions.

The Tribunal's decision affirms the Tax Office's view in GSTR The Tribunal's decision affirms the Tax Office's view in GSTR 2006/9 that, as a general principle, an entity must do something in 2006/9 that, as a general principle, an entity must do something in order to make a supply.order to make a supply.

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GST DevelopmentsGST Developments

What if you’re unsure about GST on Grants received?What if you’re unsure about GST on Grants received? Grantee and grantor must continue to treat grant transactions Grantee and grantor must continue to treat grant transactions

consistently for GST purposes.consistently for GST purposes. You must continue to treat grants according to the RCTI. That is, if You must continue to treat grants according to the RCTI. That is, if

the RCTI shows that the grant transaction is a taxable supply, you the RCTI shows that the grant transaction is a taxable supply, you must pay the GST. Do not treat a grant transaction as non-taxable must pay the GST. Do not treat a grant transaction as non-taxable where an RCTI has been issued showing that the transaction is where an RCTI has been issued showing that the transaction is taxable.taxable.

You and the grantor lodge a joint private ruling requestYou and the grantor lodge a joint private ruling request

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GST DevelopmentsGST Developments

GST and FBT – definition of fringe benefitGST and FBT – definition of fringe benefit The FBT legislation provides that an exempt fringe benefit is not a The FBT legislation provides that an exempt fringe benefit is not a

fringe benefit.fringe benefit. The GST legislation provides that an exempt benefit is a fringe The GST legislation provides that an exempt benefit is a fringe

benefit.benefit. The different treatment of exempt benefits has implications for The different treatment of exempt benefits has implications for

both GST and FBT and you need to be aware of these. Two both GST and FBT and you need to be aware of these. Two situations in which this treatment manifests itself are;situations in which this treatment manifests itself are;

It is because the GST legislation treats exempt benefits as fringe It is because the GST legislation treats exempt benefits as fringe benefits that employee contributions towards exempt benefits can benefits that employee contributions towards exempt benefits can be subject to GST.be subject to GST.

Exempt benefits are not reflected on the FBT return. This should Exempt benefits are not reflected on the FBT return. This should be contrasted where an FBT reduction reduces the FBT value of a be contrasted where an FBT reduction reduces the FBT value of a benefit to nil.benefit to nil.

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FBT DevelopmentsFBT Developments

Home to work travel and home garaging – effect on pool Home to work travel and home garaging – effect on pool carscars

Where more than one employee garages a car at or near their Where more than one employee garages a car at or near their home, the car will qualify as a pool car. Depending upon the home, the car will qualify as a pool car. Depending upon the circumstances it is possible the journeys to and from home by a circumstances it is possible the journeys to and from home by a second employee may be treated as business journeys if the second employee may be treated as business journeys if the operating cost method is used andoperating cost method is used and

the relevant documentation is kept. You should note that this will the relevant documentation is kept. You should note that this will not affect the application of the regulation as the home garaging not affect the application of the regulation as the home garaging resulted in more than 1 employee receiving a car benefit.resulted in more than 1 employee receiving a car benefit.

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DevelopmentsDevelopments

Ordinary Times Earnings (OTE) – allowance in lieu of car Ordinary Times Earnings (OTE) – allowance in lieu of car UsageUsage

The payment made to the employee in lieu of the use of the motor The payment made to the employee in lieu of the use of the motor vehicle is a payment in respect of their employment not in respect vehicle is a payment in respect of their employment not in respect of ordinary hours of work, therefore the payment is not considered of ordinary hours of work, therefore the payment is not considered to be OTE for the purposes of subsection 6(1) of the SGAAto be OTE for the purposes of subsection 6(1) of the SGAA

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