Supplement 6: Most Recent Developments in Case Law

Joshua Easton

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Purchasers now obliged to pay vendor GST to ATO in sales of certain residential property

The Treasury Laws Amendment (2018 Measures No. 1) Act 2018 (Cth) (Act) means a new GST withholding regime now applies to certain residential real property transactions.

This imposes GST withholding obligations on purchasers of certain residential real property requiring them to withhold and remit GST directly to the Commissioner of Taxation. The Regime can also apply to certain long-term leases.

In addition, the Regime imposes obligations on vendors to provide written notice to purchasers.

First announced in the May 2017 Federal Budget, the Regime is an integrity measure designed to prevent some property developers from intentionally avoiding their GST obligations. Non-complying property developers have been known to claim input tax credits on inputs used in the construction process and then fail to remit GST to the Commissioner after making taxable supplies of new residential premises.

The GST withholding obligations apply in relation to taxable supplies of the following:

  • new residential premises (other than those created through substantial renovation and other than commercial residential premises); and
  • subdivisions of potential residential land (where the subdivision does not contain any buildings used for a commercial purpose). A withholding obligation only arises in relation to the supply of potential residential land if the recipient (e.g. the purchaser) is not registered for GST, or if the land is not acquired for a creditable purpose.

The measures apply where the contract is entered into:

  • on or after 1 July 2018; or
  • before 1 July 2018, but only if consideration (other than the deposit) is first provided after 1 July 2020.

Some common transactions where the GST withholding obligations will apply include off-the-plan residential sale contracts and contracts for the sale of vacant residential land.

Reguero – Puente v City of Rockingham (2018) FWC 3148

With the “Me Too” movement, we can expect to see more of these cases.

Mr Reguero-Puente had worked with the City since 1990, employed in a variety of building surveying roles in the Building Services Department (BSD). After a period of time, he was promoted to a senior surveying position and was considered to be a trusted and experienced member of staff.

In September 2017, two City employees made complaints that Mr Reguero-Puente had been sending them unwelcome and unsolicited emails and text messages after hours and on weekends. Although warned this conduct was inappropriate and ordered to cease immediately, the inappropriate text messages and emails to other staff continued.

In the letter dated 12 October 2017, Mr Reguero-Puente was advised that he was being suspended on full pay pending the outcome of a full investigation into his conduct. On 12 December 2017, he was summarily dismissed on the grounds that he allegations had been substantiated and constituted serious misconduct under the Corruption, Crime and Misconduct Act 2003 (WA).


 On 26.12.2017, Mr Reguero-Puente filed an application pursuant to s 394 of the Fair Work Act 2009 (Cth) with the FWC alleging he was unfairly dismissed by the City and sought an order that he be reinstated.


The FWC dismissed Mr Reguero-Puente’s application that he be reinstated. While acknowledging there were some allegations of a “he said, she said” nature, Deputy President Binet found that much of the evidence adduced by the City had been corroborated by witnesses. Mr Reguero-Puente’s evidence on the other hand lacked corroboration.

To quote Deputy President Binet the exhibits revealed a “pattern of Mr Reguero-Puente sending overfamiliar, sexually loaded and sexually explicit texts and images to young female co-workers, often late at night and in the early hours of the morning”. This was not a case of an office romance between two consenting adults. Despite Mr Reguero-Puente’s assertion that all the text messages were “welcome and reciprocated”, the text message histories he tendered, demonstrated that he was aware that there were boundaries to acceptable behaviour. Indeed, Deputy President Blinet could not understand how Mr Reguero-Puente reasonably believed that all these women “seriously welcomed his advances”.

In dismissing Mr Reguero-Puente’s application, Deputy President Binet concluded by stating that:

“in this day and age young women should not have to tell their older superiors that they do not want to be sent salacious texts during or after working hours, nor have comments of a sexual nature made about them or be directed toward them in their workplace”.

Take out

Senior Employees must act in a professional manner at all times when interacting with junior employers in or outside the workplace. Clearly this behaviour was completely unacceptable.


These apply from 1.7.2018

Minimum Pay Rates

National Minimum Wage (before statutory superannuation

2017/2018 financial year

2018/2019 financial year

$694.90 or $18.29 per hour

$719.20 or $18.93 per hour

Junior employees (those aged from 16 to 20) are entitled to a percentage of the minimum wage calculated on a sliding scale by reference to their age.

For modern award covered employees, minimum wages are increased by 3.5%, rounded to the nearest 10 cents.

The default casual loading is maintained at 25%.

High Income Threshold

High Income Threshold (before statutory superannuation)

2017/2018 financial year

2018/2019 financial year



Award and enterprise agreement free employees who earn over the High-Income Threshold aren’t eligible to make a claim for unfair dismissal.

Statutory Superannuation – Maximum Contributions Base

The earnings base upon which statutory superannuation contributions are calculated is subject to a maximum amount known as the Maximum Contributions Base.

2017/2018 financial year

2018/2019 financial year

$52,760 per quarter or $211,040 per annum

$54,030 per quarter or $216,120 per annum

The statutory superannuation contribution remains at 9.5%

Tax free threshold for ‘genuine redundancy’ payments

2017/2018 financial year

2018/2019 financial year

First $10,155 tax free; and $5,078 tax free for each completed year of service

First $10,399 tax free; and $5,200 tax free for each completed year of service


The recent decision of the Federal Court in Harding v Commissioner of Taxation has significant implications for Australians living and working overseas to be non-residents for tax purposes.

Australian tax residents are taxed on their world-wide income. For taxpayers who are living and working overseas, the difference between being a non-resident and tax resident will often mean a significant tax cost. In a number of overseas jurisdictions particularly the United Arab Emirates, Australian pat little or no tax.

Under the Australian tax law, a person is a tax resident of Australia if they meet any one of four tests:

  1. They ‘reside’ in Australia, based on the ordinary meaning of the word ‘resides’.
  2. They have an Australian domicile, and the Commissioner is not satisfied they have a ‘permanent place of abode’ outside Australia.
  3. They are in Australia for more than 183 days in an income year (subject to one exception).
  4. They are members of Commonwealth superannuation schemes, which mostly apply to members of the Commonwealth public service and armed forces.

Mr Harding had lived and worked in the Middle East from 1990 to 2006 and had returned to Australia to live and work between 2006 and 2009. In 2009, he and his then-wife decided to return to the Middle East permanently with Mr Harding taking on a full-time permanent role. Mr Harding’s wife intended to join him with their youngest child once their middle child completed his last year of high school. Mr Harding stayed in furnished apartments in the Middle East on 12-month leases.

In 2011 as Mr Harding and his wife had separated, she didn’t join him in Middle East. They later divorced. Mr Harding has continued living and working in the Middle East since then

There were two issues for the Court to decide:

  1. Did Mr Harding continue to ‘reside’ in Australia?
  2. Had Mr Harding established his ‘permanent place of abode’ outside Australia?

Mr Harding prevailed on this issue, the Court endorsing the usefulness of particular checklists to identify factors that are ‘frequently relevant to the determination of the nature and quality of a person’s presence in or association with a particular location’.

Regarding whether Mr Harding had established his ‘permanent place of abode’ outside Australia…

This does cause concern for many Australian ex-pats living in furnished accommodation.

In Harding, the Court decided that Mr Harding’s furnished accommodation was not a ‘permanent place of abode’. This was despite:

  • having 12-month leases on residential apartments in the same apartment building; and
  • living in the same apartment building for six years.

Crucially here the lease stipulated that Mr Harding could be moved from apartment to apartment within the same building.

Harding effectively reverses the favourable decisions for taxpayers that came out in 2014 including: Dempsey, Agius and Engineering Manager.

It can be a fine line and Australian ex-pats need to carefully review their position on a year by year basis.


Income earned from foreign employment by independent contractor not exempt


PZTL and Commissioner of Taxation [2018] AATA 461 (23 February 2018)

The above A.A.T. case found that income earned by a taxpayer while deployed overseas in a support role by the Australian Defence Force was not exempt under s 23AG of the Income Tax Assessment Act 1936. The taxpayer was employed by an independent contracting entity as a Field Service Representative.

The AAT found that the taxpayer’s continuous foreign service did not arise from his being deployed by the Commonwealth or a Commonwealth, State or Territory authority, within s23AG(1AA)(d). Crucially it was the taxpayer’s employer who was the relevant responsible entity.


In this case, High Court has refused the taxpayer’s special leave application to appeal against the Full Federal Court’s decision Cable & Wireless Australia & Pacific Holding BV (in liquidatie) v Commissioner of Taxation [2017] FCAFC 71. The Full Federal Court held that a ‘buy-back reserve’ account was not a share capital account such that the debit entry to the buy-back reserve did not record a transaction reducing share capital. Accordingly, the transaction was correctly treated as a dividend that was subject to withholding tax.

Keris Pty Ltd (Trustee) v Deputy Commissioner of Taxation [2017] FCAFC 164 (13.10.2017)

The Full Federal Court has upheld the constitutional validity of s.255-100 of Schedule 1 of the Taxation Administration Act 1953 (Cth). The taxpayer held a large tract of land with the intention of subdivision and sale. Before this occurred, the Commissioner gave notice to the taxpayer under s.255-105 requiring it to give security to the Commissioner, by means of a mortgage over its real estate assets, “for the due payment of a tax related liability”, being the future GST liability the ATO expected to arise in relation to the sale of the lots. The Court upheld the validity of the notice under s.255-100, distinguishing the requirements in s.255-100 from the statutory contexts of the retention obligations in ss.254 and 255 of the Income Tax Assessment Act 1936 (Cth), as well as the constitutional validity of s.255-100. 

On the GST issue are note in passing that from 1.7.2018, purchasers of new residential properties or new subdivisions are now required to remit the GST directly to the ATO on settlement. This was announced in the May 2017 Federal in Budget.