What were they thinking: clarifying the policy

Given the broad application of this regime (eg. deeming all vendors of real property to be foreign residents unless they produce a clearance certificate from the ATO) and its red tape implications for day to day transactions, there is an urgent need for the ATO to issue class variations for situations where there is no tax payable including:

• transactions attracting roll-over relief;

• transactions required to give effect to orders made by a Court;

If a beneficiary is absolutely entitled to a trust asset, they, rather than the trustee, are required to return any capital gain, or claim any capital loss from a CGT event that happens to the asset. A common example that illustrates the significance of this concept is that of a nominee who holds shares on behalf of a principal. If the principal directs the nominee to sell the shares, the principal returns the capital gain, not the nominee. "Absolute entitlement" is therefore an important concept in the CGT rules.

Amendments were made to the employee share scheme rules in 2015 to introduce concessions for small start up companies. If certain conditions are met, the discount provided in relation to shares / options is not included in the assessable income of the employee. Section 115-30 has been amended to ensure that for the purpose of the CGT discount, when options are issued under the start up rules the ownership period is not reset when the options are exercised (item 9A of the table).

Some odd outcomes can arise when working through adjusted income calculations for certain tax and other purposes. The problem seems to mainly arise when someone has a net investment loss for the year as well as an overall tax loss for the year.

When an employee leaves they are paid annual leave and long service leave, but no superannuation. This means that when an employer won't let the employee work out their leave, the employee misses out on the super. This is unfair and confusing.

The super for the annual leave is confusing. Under the Fair Work Act 2009 Section 90 it says

Subsection 83.175(2)(a) of the Income Tax Assessment Act 1997 requires that the employee is dismissed before the day he/she turns 65 to satisfy the genuine redundancy provisions. The provision was inserted in July 2007 as part of the Tax Laws Amendment (Simplified Superannuation) Bill 2007. No mention of this provision was included in the Explanatory Memorandum, nor in the second reading speeches. The earlier Treasury consultation and Final decisions report do not refer to the provision.

There is an apparent disconnect between the language of Item 1 in section 152-70, which requires an entity to hold a legal and equitable interest in the shares in a company, and Example 1.2 in the Explanatory Memorandum to the Tax Laws Amendment (2006 Measures No. 7) Bill 2006 - which introduced this section.

There appears to be a drafting error in subsection 328-430(1)(d)(ii) dealing with small business entity ['SBE'] rollovers. A SBE is defined in section 328-110 as an entity that has an aggregated turnover of less than $10 million, accordingly it should be possible to roll an asset into a SBE using Subdivision 328-G provided the SBE is either an affiliate of or connected with the transferor (assuming the other requirements in section 328-430 are met).

There is a defect in the way that the main residence exemption applies if a deceased person's legal personal representative (LPR) or beneficiary is taken to have acquired the deceased's main residence for market value at the date of death: item 3 in the table in subsection 128-15(4) of the ITAA 1997. The defect is that the rewritten partial main residence rules in section 118-200 of the ITAA 1997 fails to incorporate the effect of subsection 160ZZQ(20AA) of the ITAA 1936.

There is a deficiency in the CGT main residence exemption relating to deceased estates which has a considerable impact on tax compliance costs.

The deficiency is that the market value cost base rule in item 3 in the table in subsection 128-15(4) of the ITAA 1997 does not literally apply where a deceased's dwelling was used to produce assessable income just prior to death, but this would not have affected an exemption for the deceased because, for example, of an absence choice (section 118-145 of the ITAA 1997).