Issue 176 - 20 June 2008

	Issue 176, 20 June 2008 Welcome to the latest issue of Thomson's Tax & Accounting Insight, your free news service for tax and accounting professionals. Tax & Accounting Insight is the easy way to keep up with the latest developments in your industry. Watch your inbox for your fortnightly issue of this free, informative service from Thomson.		Articles in this edition include: General law partnerships and margin scheme - Draft GST Ruling GSTR 2008/D2 General law partnerships: Draft Addendum and partial withdrawal of GST Ruling CGT main residence - renovation Thomson Tools Editorial Enquiries: Tel: 1300 304 197 LRA.Service@thomson.com Copyright: Thomson Legal & Regulatory Limited ABN 64 058 914 668 100 Harris Street Pyrmont NSW 2009 All rights reserved. To subscribe, please click here. To unsubscribe, please reply to this email with Unsubscribe in the heading. Disclaimer: The information contained in this bulletin neither represents nor is intended to be legal or professional advice. While every care has been taken in its preparation, no person should act specifically on the basis of the material contained herein. If expert assistance is required, competent professional advice should be obtained. Privacy Policy
	General law partnerships and margin scheme - Draft GST Ruling GSTR 2008/D2 This Draft GST Ruling, released today [Wednesday 11 June 2008], states the preliminary view of the Tax Office on how the margin scheme in Div 75 of the GST Act applies to general law partnerships and their partners. According to the Draft Ruling, a supply of real property by a partner in exchange for an interest in a partnership can be a supply by way of sale under s 75-5(1), provided the property becomes the partnership property. The Tax Office says that for the purposes of the margin scheme, the consideration for the supply and the consideration for the acquisition may be either monetary or non-monetary, or both. The Draft Ruling states that the calculation of the margin for the supply will depend on the acquisition date of the real property. If the property was acquired prior to 17 March 2005, the margin is calculated under either s 75-10(2) or 75-10(3). If the property was acquired on or after 17 March 2005, the margin is generally calculated under s 75-11(7). The Tax Office says that a reconstitution of the partnership does not give rise to a supply or acquisition of the real property because any property held by the partnership prior to its reconstitution is retained by the reconstituted partnership. Further, the Tax Office considers that a distribution of real property to a partner following a general dissolution is a supply by way of sale for the purposes of s 75-5(1), provided it becomes the property of the partner. Comments are due by 25 July 2008. ATO contact: Steven Iselin - Tel: (07) 3213 8417; Fax (07) 3213 8588; Email: steven.iselin@ato.gov.au Return to TOP
	General law partnerships: Draft Addendum and partial withdrawal of GST Ruling The Tax Office has partially withdrawn GST Ruling GST 2003/13 (general law partnerships) with effect from today [Wed 11 June 2008]. The Tax Office says the Ruling is being partially withdrawn to the extent that it relates to the GST treatment of an in-kind distribution as part of a final distribution from a general law partnership. Specifically, the Ruling is being partially withdrawn because the Tax Office has revised its view in relation to the GST treatment of an in-kind distribution as part of a final distribution from a general law partnership. The revised view is expressed in a Draft Addendum to GSTR 2003/13 released today [Wed 11June 2008], which provides the Tax Office's view in relation to the treatment of an in specie distribution during the operation and on general dissolution of a general law partnership. The Tax Office says in the Draft Addendum that an "in specie distribution" has the same meaning as an "in kind distribution", which is the terminology used in GSTR 2003/13. Also, the revised Tax Office view is expressed in Draft GSTR 2008/D2 issued today [Wed 11 June 2008]. Date of effect of Draft Addendum: It is proposed that when finalised, the Addendum will amend GSTR 2003/13 with effect from the date of issue of the Draft Addendum [ie 11 June 2008]. Comments are due by 25 July 2008. ATO contact: Steven Iselin - Tel: (07) 3213 8417; Fax: (07) 3213 8588; Email: steven.iselin@ato.gov.au The two articles above appeared in Thomson's daily Latest Tax News (Wednesday 11th June). With tax fast-moving and ever changing - EVERY DAY, practitioners rely on Thomson's daily Latest Tax News for quick, accurate, comprehensive information - no compromises. When you need to know what's new in tax and related news every day, there's only one place to look - LTN. To find out more, see your nearest Thomson representative. Return to TOP
	CGT main residence - renovation Q. Is the concession under s 118-150 of the ITAA 1997 for extending the CGT main residence exemption available where the taxpayer takes longer than four years to build, repair or renovate a dwelling? A. Yes. However, the concession will not operate to treat the dwelling as the taxpayer's main residence for the period in excess of four years. Instead, the concession will, in effect, apply on a pro-rata basis. This is because s 118-150(4) provides that the concession only operates to treat the dwelling as the taxpayer's main residence for a maximum period of four years before the dwelling actually becomes the taxpayer's main residence. This is to be contrasted to the situation where the conditions in s 118-150(3) for using the concession have not been satisfied - namely, moving in as soon as practicable after the work is finished and occupying the dwelling for a maximum period of three months. If these requirements are not satisfied, the taxpayer will not be entitled to use the concession at all as s 118-150(3) provides that a taxpayer can only make the choice to use the concession if these conditions are met. Where a dwelling already exists on the land and it ceases to be occupied by the taxpayer or another person (eg a tenant) so that the repair or renovation work can be carried out, the four-year period is measured from the time when the dwelling is vacated: s 118-150(5). This works in the taxpayer's favour by excluding the period during which the dwelling was occupied by the taxpayer or the tenant from the four-year maximum period for building, renovating or repairing a dwelling. However, where the dwelling was occupied by someone other than the taxpayer (eg where the dwelling was a rental property occupied by a tenant), even though the taxpayer may qualify for the full benefit of the building concession, there will still be a partial CGT liability under s 118-185 in respect the period during which the original dwelling was not the taxpayer's main residence (unless, for example, the taxpayer can apply for the absence concession under s 118-145 in respect of this period). This issue appeared recently in Thomson Tax Q&A. *Thomson Tax Q&A* is issues based and uses actual scenarios confronted in practice to help you understand how developments affect your client's tax position. New Q&As are added regularly and the answers provided online are updated to take into account tax changes that impact on the issues raised. It therefore provides an up-to-date database of real solutions to actual tax issues facing tax advisers in practice. Return to TOP
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