• Service: Tax, Global Indirect Tax, International Tax
  • Type: Regulatory update
  • Date: 5/5/2014

Australia - Shipping reform proposals, R&D claims, free trade agreements 

May 5:  The KPMG member firm in Australia prepared reports on the following developments (read the April and May 2014 reports by clicking on the hyperlinks provided below):
  • Australian shipping reform - The government recently released Options Paper on Review of Coastal Trading [PDF 6.4 MB] on the current operation of the Australian shipping industry. Any changes to the Coastal Trading Act—including flagging and licensing—may have implications for the application of other Commonwealth law relating to the regulation of ships in Australia, including workplace relations, customs, immigration and taxation matters. Submissions are due by 31 May 2014.

    Read a May 2014 report.

  • Cautionary tale for R&D tax claimants - The Administrative Appeals Tribunal (AAT) recently affirmed the Commissioner’s decision to disallow a large portion of a taxpayer’s research and development (R&D) claim under the R&D tax concession. In 2007, a taxpayer claimed a refundable R&D tax offset of approximately $370,000 for expenditure on an R&D project under the R&D Tax Concession. Upon review, the Commissioner reduced this to just under $25,000 and imposed a penalty for recklessness in an amount exceeding $172,000. The disputed expenditure included mould-making costs, prototype costs, travel, and legal and consultancy fees among others, and the primary issue considered by the AAT was whether the costs were “directly in respect of” eligible R&D activities.

    Read a May 2014 report.

  • Free trade agreements - Australia’s free trade agreement agenda is continuing at a rapid pace. Recently signed agreements with Korea and Japan highlight the government’s commitment to bringing Australia’s free trade negotiations to close and implementation phases. What does a free trade agreement actually mean for Australian importers and exporters? Australia’s general customs duty rate is 5%—other countries, particularly in Asia, have much higher customs duty rates. A free trade agreement reduces these duty rates, often to zero. However, just because there are imports from or exports to countries with which there is a free trade agreement does not automatically mean entitlement to the customs duty benefit. Each of Australia’s free trade agreements has a complex suite of “rules of origin” that are required to be met prior to being able to gain the customs duty benefit.

    Read an April 2014 report.

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