Judicial and legislative considerations in the taxation of compensation receipts : an international comparison

In 1995, the Federal Commissioner of Taxation released Taxation Ruling TR 95/35 in an attempt to comprehensively address the appropriate capital gains tax treatment of a receipt of compensation, awarded either by the courts or via a settlement. The ruling was in response to the numerous, somewhat contradictory, court decisions of the early 1990s. Despite the release of TR 95/35, there still appears to be a lack of consensus as to the appropriate treatment of such awards. It has been suggested that the only way a taxpayer can, with any certainty, determine their liability is to obtain a private binding ruling, a far from satisfactory situation. In an attempt to clarify what the capital gains tax consequences of a compensation receipt should be, this article examines the Australian position and explores the comparative jurisprudence of the United Kingdom and Canada to ascertain whether the Australian attitude is consistent with these international jurisdictions. This article concludes that while the jurisdictions, through differing approaches, achieve a similar result, there is still a need to address the uncertainties that remain.

Advance pricing arrangements : an Australian Tax Office success or a legislative failure?

Australia’s domestic income tax legislation and double tax agreements contain transfer pricing rules which are designed to counter the underpayment of tax by businesses engaged in international dealings between related parties. The current legislation and agreements require that related party transactions take place at a value which reflects an arm’s length price, that is, a price which would be charged between unrelated parties. For a host of reasons, it is increasingly difficult for multinational entities to demonstrate that they are transferring goods and services at a price which is reflective of the behaviour of independent parties, thereby making it difficult to demonstrate compliance with the relevant legislation. Further, where an Australian business undertakes cross-border related party transactions there is the risk of an audit by the Australian Tax Office (ATO). If a business wishes to avoid the risk of an audit, and any ensuing penalties, there is one option: an advance pricing arrangement (APA). An APA is an agreement whereby the future transfer pricing methodology to be used to determine the arm’s length price is agreed to by the taxpayer and the relevant tax authority or authorities. The ATO views the APA process as an important part of its international tax strategy and believes that there are complementary benefits provided to both the taxpayer and the ATO. The ATO promotes the APA process on the basis of creating greater certainty for all parties while reducing compliance costs and the risk of audit and penalty. While the ATO regards the APA system as a success, it may be argued that the implementation of such a system is simply a practical solution to an ongoing problem of an inherent failure in both the legislation and ATO interpretation and application of this legislation to provide certainty to the taxpayer. This paper investigates the use of APAs as a solution to the problem of transfer pricing and considers whether they are the success the ATO claims. It is argued that there is no doubt that APAs provide a valuable practical tool for multinational entities facing the challenges of the taxation of global trading under the current transfer pricing regime. It does not, however, provide a long term solution. Rather, the long term solution may be in the form of legislative amendment.

Inadequacy of land use and impervious area fraction for determining urban stormwater quality

Urban stormwater quality is multifaceted and the use of a limited number of factors to represent catchment characteristics may not be adequate to explain the complexity of water quality response to a rainfall event or site-to-site differences in stormwater quality modelling. This paper presents the outcomes of a research study which investigated the adequacy of using land use and impervious area fraction only, to represent catchment characteristics in urban stormwater quality modelling. The research outcomes confirmed the inadequacy of the use of these two parameters alone to represent urban catchment characteristics in stormwater quality prediction. Urban form also needs to be taken into consideration as it was found have an important impact on stormwater quality by influencing pollutant generation, build-up and wash-off. Urban form refers to characteristics related to an urban development such as road layout, spatial distribution of urban areas and urban design features.

Unitary taxation : The case for global formulary apportionment

Unitary taxation is the taxation of the worldwide income of a multinational enterprise (MNE) and is normally based on a formulary apportionment method, which allocates income to the relevant jurisdictions based on a percentage of the MNE's world-wide profits. The unitary taxation model has several advantages over the existing arm's length model: 1. Where MNEs are highly integrated, unitary taxation has greater consistency with economic reality. 2. Greater certainty is provided to taxpayers. 3. Unitary taxation conforms to the aim of efficient operations within the MNE. 4. The aim of unitary taxation, to find an equitable split of profits between the jurisdictions, should ultimately be the overall aim of any tax regime. The advantages and disadvantages associated with the adoption of a unitary taxation model through the implementation of a formulary apportionment approach to the taxation of MNEs are examined.

Leveraging value within IT-backed collaborative alliances

Organizations today make radical use of the IT resources to sustain or better their existing competitive position. One such initiative is forming alliances on a shared IT backbone with partners of their value chain. We term these alliances the collaborative organizational structures (COS). Regardless of the nature of engagement with IT resources, organizations will require unique competencies to obtain performance-differentiating value from these IT resources. In a collaborative environment, these competencies would be a result of the synergy between the alliances’ unique competences. We call these the inter-firm IT-related capabilities. The resource centric theoretical frameworks suggest a trajectory of competence development and the structure of inter-firm competencies, but does not inform on the nature of these competencies. We employ an interpretive design to suggest three inter-firm IT-related capabilities for IT-backed collaborative alliances. We discuss these capabilities in this research and suggest that their effectiveness be measured directly against the collaborative rent, and indirectly against the firm-level performance of the alliance partners. This forms a model of leveraging and evaluating value within IT-backed collaborative alliances.

Developing tools to support complex infrastructure decision-making

Purpose – The rapidly changing role of capital city airports has placed demands on surrounding infrastructure. The need for infrastructure management and coordination is increasing as airports and cities grow and share common infrastructure frameworks. The purpose of this paper is to document the changing context in Australia, where the privatisation of airports has stimulated considerable land development with resulting pressures on surrounding infrastructure provision. It aims to describe a tool that is being developed to support decision-making between various stakeholders in the airport region. The use of planning support systems improves both communication and data transfer between stakeholders and provides a foundation for complex decisions on infrastructure. Design/methodology/approach – The research uses a case study approach and focuses on Brisbane International Airport and Brisbane City Council. The research is primarily descriptive and provides an empirical assessment of the challenges of developing and implementing planning support systems as a tool for governance and decision-making. Findings – The research assesses the challenges in implementing a common data platform for stakeholders. Agency data platforms and models, traditional roles in infrastructure planning, and integrating similar data platforms all provide barriers to sharing a common language. The use of a decision support system has to be shared by all stakeholders with a common platform that can be versatile enough to support scenarios and changing conditions. The use of iPadss for scenario modelling provides stakeholders the opportunity to interact, compare scenarios and views, and react with the modellers to explore other options. Originality/value – The research confirms that planning support systems have to be accessible and interactive by their users. The Airport City concept is a new and evolving focus for airport development and will place continuing pressure on infrastructure servicing. A coordinated and efficient approach to infrastructure decision-making is critical, and an interactive planning support system that can model infrastructure scenarios provides a sound tool for governance.

Unfair terms in residential land contracts : will the Australian consumer law improve a buyer’s bargaining position?

The prohibition on unfair contract terms in standard form consumer contracts has the potential to significantly impact on the terms of contracts for the sale of land. The definition of ‘consumer contract’ includes contracts for the sale or grant of an interest in land to an individual wholly or predominantly for personal or domestic use. Therefore, a contract for the purchase of a residence for personal occupation by the buyer, as opposed to a purchase for investment purposes, will be a consumer contract potentially attracting the application of the unfair terms provisions. Significant consumer protection mechanisms already exist in most state jurisdictions requiring disclosure of relevant matters to the buyer and providing remedies for the provision of misleading conduct. Minimal evidence of unfair terms in land contract was presented to the Productivity Commission Inquiry into the Australian Consumer Policy Framework raising the question as to whether there is an identified problem of unfair terms in real estate contracts and if so, whether the same economic and ethical rationales justify regulatory intervention. This article examines what effect if any the introduction of the unfair contract provisions will have on the enforcement of residential land contracts and the viability of previously accepted conditions if challenged as being “unfair terms”. The article concludes that despite the existence of several potentially unfair terms in some land contracts, the intervention of the rules of equity to overcome perceived hardship or unfairness to buyers from strict enforcement of terms means the unfair terms provisions are only likely to operate on terms untouched by those principles. In the authors’ view the scope for operation of the unfair terms provisions will be limited to terms untouched by the principles of equity and consumer protection legislation making it unlikely that there will be any significant realignment of the contractual obligations and rights of buyers and sellers of land.

Creating and evaluating IT-related business value in developing markets : part 1

There is no doubt that information technology (IT) resources are important for organisations in any jurisdiction to manage their processes. Organisations consume considerable financial resources to acquire and manage their IT resources with various IT governance structures. Investment in IT, thus, is a strategic necessity. IT resources, however, do not contribute fully to business value on their own. Business value considers performance impacts of resources at various organisational levels (e.g., processes and firm levels). ITs are biased resources in that they require some form of manipulation to attain their maximum value. While we know that IT resources are important, a deeper understanding on two aspects of use of IT resources in organisations is important. First, is how to leverage the IT resources to attain its maximum value, and second, is where to evaluate IT-related business value in the organisation’s value chain. This understanding is important for organisation to sustain their operations in an ever-changing business environment. We address these issues in two parts. This paper discusses the first aspect of ways in which organisations can create and sustain their IT-related business value.

Creating and evaluating IT-related business value in developing markets - Part 2

A deeper understanding on two aspects of use of IT resources in organisations is important to ensure sustainable investment in these IT resources. The first is how to leverage the IT resources to attain its maximum value. We discussed this aspect of use of IT resources in part 1 of this series. This discussion suggested a complementary approach as a first stage of IT business value creation, and dynamic capabilities approach to secure sustainable IT-related business value from the IT resources. The second important aspect of IT business value is where to evaluate IT-related business value in the organisations value chains. This understanding is important for organisations to ensure appropriate accountability of the investment and management of IT resources. We address this issue in this second part of the two part series.

An analysis of holding cost impact on housing affordability in relation to midsized Greenfield residential property developments in South East Queensland

The position of housing demand and supply is not consistent. The Australian situation counters the experience demonstrated in many other parts of the world in the aftermath of the Global Financial Crisis, with residential housing prices proving particularly resilient. A seemingly inexorable housing demand remains a critical issue affecting the socio-economic landscape. Underpinned by high levels of population growth fuelled by immigration, and further buoyed by sustained historically low interest rates, increasing income levels, and increased government assistance for first home buyers, this strong housing demand level ensures problems related to housing affordability continue almost unabated. A significant, but less visible factor impacting housing affordability relates to holding costs. Although only one contributor in the housing affordability matrix, the nature and extent of holding cost impact requires elucidation: for example, the computation and methodology behind the calculation of holding costs varies widely - and in some instances completely ignored. In addition, ambiguity exists in terms of the inclusion of various elements that comprise holding costs, thereby affecting the assessment of their relative contribution. Such anomalies may be explained by considering that assessment is conducted over time in an ever-changing environment. A strong relationship with opportunity cost - in turn dependant inter alia upon prevailing inflation and / or interest rates - adds further complexity. By extending research in the general area of housing affordability, this thesis seeks to provide a detailed investigation of those elements related to holding costs specifically in the context of midsized (i.e. between 15-200 lots) greenfield residential property developments in South East Queensland. With the dimensions of holding costs and their influence over housing affordability determined, the null hypothesis H0 that holding costs are not passed on can be addressed. Arriving at these conclusions involves the development of robust economic and econometric models which seek to clarify the componentry impacts of holding cost elements. An explanatory sequential design research methodology has been adopted, whereby the compilation and analysis of quantitative data and the development of an economic model is informed by the subsequent collection and analysis of primarily qualitative data derived from surveying development related organisations. Ultimately, there are significant policy implications in relation to the framework used in Australian jurisdictions that promote, retain, or otherwise maximise, the opportunities for affordable housing.

Land fraud and inappropriate dealings in an electronic environment : An Australian and New Zealand perspective

The thesis presented in this paper is that the land fraud committed by Matthew Perrin in Queensland and inflicted upon Roger Mildenhall in Western Australia demonstrates the need for urgent procedural reform to the conveyancing process. Should this not occur, then calls to reform the substantive principles of the Torrens system will be heard throughout the jurisdictions that adopt title by registration, particularly in those places where immediate indefeasibility is still the norm. This paper closely examines the factual matrix behind both of these frauds, and asks what steps should have been taken to prevent them occurring. With 2012 bringing us Australian legislation embedding a national e-conveyancing system and a new Land Transfer Act for New Zealand we ask what legislative measures should be introduced to minimise the potential for such fraud. In undertaking this study, we reflect on whether the activities of Perrin and the criminals responsible for stealing Mildenhall's land would have succeeded under the present system for automated registration utilised in New Zealand.

Evaluating responses to land degradation mitigation measures in Southern Italy

The main factors affecting environmental sensitivity to degradation are soil, vegetation, climate and management, through either their intrinsic characteristics or by their interaction on the landscape. Different levels of degradation risks may be observed in response to particular combinations of the aforementioned factors. For instance, the combination of inappropriate management practices and intrinsically weak soil conditions will result in a severe degradation of the environment, while the combination of the same type of management with better soil conditions may lead to negligible degradation.The aim of this study was to identify factors and their impact on land degradation processes in three areas of the Basilicata region (southern Italy) using a procedure that couples environmental indices, GIS and crop-soil simulation models. Areas prone to desertification were first identified using the Environmental Sensitive Areas (ESA) procedure. An analysis for identifying the weight that each of the contributing factor (climate, soil, vegetation, management) had on the ESA was carried out using GIS techniques. The SALUS model was successfully executed to identify the management practices that could lead to better soil conditions to enhance land use sustainability. The best management practices were found to be those that minimized soil disturbance and increased soil organic carbon. Two alternative scenarios with improved soil quality and subsequently improving soil water holding capacity were used as mitigation measures. The ESA were recalculated and the effects of the mitigation measures suggested by the model were assessed. The new ESA showed a significant reduction on land degradation.

Investigating the potential value of individual parameters of histological grading systems in a sheep model of cartilage damage : the modified Mankin method

A total histological grade does not necessarily distinguish between different manifestations of cartilage damage or degeneration. An accurate and reliable histological assessment method is required to separate normal and pathological tissue within a joint during treatment of degenerative joint conditions and to sub-classify the latter in meaningful ways. The Modified Mankin method may be adaptable for this purpose. We investigated how much detail may be lost by assigning one composite score/grade to represent different degenerative components of the osteoarthritic condition. We used four ovine injury models (sham surgery, anterior cruciate ligament/medial collateral ligament instability, simulated anatomic anterior cruciate ligament reconstruction and meniscal removal) to induce different degrees and potentially 'types' (mechanisms) of osteoarthritis. Articular cartilage was systematically harvested, prepared for histological examination and graded in a blinded fashion using a Modified Mankin grading method. Results showed that the possible permutations of cartilage damage were significant and far more varied than the current intended use that histological grading systems allow. Of 1352 cartilage specimens graded, 234 different manifestations of potential histological damage were observed across 23 potential individual grades of the Modified Mankin grading method. The results presented here show that current composite histological grading may contain additional information that could potentially discern different stages or mechanisms of cartilage damage and degeneration in a sheep model. This approach may be applicable to other grading systems.

Nangkha Nangdrik in the land of the thunder dragon

- The Kingdom of Bhutan is a country on the move - In July 2008, Bhutan transitioned from an absolute monarchy to a constitutional monarchy - The Constitution and a number of pieces of national legislation make specific reference to alternative dispute resolution. - An alternative dispute resolution Bill will come before the Bhutanese parliament in early 2012.