Eichmann v Federal Commissioner of Taxation - Law Assignment Help

Assignment Task

QUESTION 1 –

In Eichmann v Federal Commissioner of Taxation [2020] FCAFC 155 (‘Eichmann’), the Full Federal Court upheld an appeal against the decision of Derrington J in Federal Commissioner of Taxation v Eichmann [2019] FCA 2155 overturning the decision of the Administrative Appeals Tribunal (AAT) at first instance in Eichmann v Commissioner of Taxation [2019] AATA 162.
Required:
(i) Discuss the facts with particular focus on the specific legislative provisions in dispute in Eichmann? 
(ii) Why did Derrington J disagree with the AAT? 
(iii) Why did the Full Federal Court disagree with Derrington J? 
(iv) In your opinion, explain which judgment (the Full Federal Court or Derrington J) best reflects the policy and legislative intention of the tax rules considered in Eichmann?

Note: Your answer must be supported by footnote references to relevant legislation, explanatory memoranda, case law and/or tax rulings. This includes references to relevant paragraphs from the Eichmann judgments.

QUESTION 2 –

Newflix Pty Ltd (NPL) is a company resident in the Netherlands. Its main business is the production and supply of digital entertainment content to subscribers around the world. NPL owns the copyright to all digital material it produces as well other videos it has acquired for the purpose of streaming to its subscribers. The subscribers must pay a monthly fee, which then entitles them to access and download, at any time, the digital content onto the subscribers’ own electronic devices. The fee contract is created by NPL and emailed to a subscriber’s individual email account, who then completes it electronically.

In Australia, the supply by NPL to Australian consumers of digital content is subject to Goods and Services Tax (‘GST’). This requires NPL to be registered for GST purposes. To this end, NPL establishes a GST agent in Australia for the sole purpose of processing the fee contracts, issuing invoices to individual subscribers and collecting GST and remitting it to the Australian Taxation Office on behalf of NPL. However, the monthly subscription fees are paid directly to NPL with the Australian GST agent having no authority to vary the fees charged or the terms of the contract entered into with Australian subscribers.

Australia and The Netherlands have concluded a double tax agreement (Australia-Dutch DTA) in identical terms to the 2017 OECD Model Tax Convention (MTC), which applies where the resident of one of the contracting countries to the relevant double tax agreement earns income in the other contracting country.

Discuss:
(i) Whether paying a monthly subscription fee to download content onto a mobile device constitutes a royalty for:
a. Australian tax law purposes?
b. purposes of the OECD MTC? 
(ii) Whether the activities of NPL in Australia through its GST agent constitute a permanent establishment for:
a. Australian tax law purposes?
b. purposes of the OECD MTC?
(iii) Under Australian taxation law, what would be the source of the monthly subscription fee paid to NPL?
(iv) Whether Australia should introduce a Digital Services Tax (‘DST’) similar to that recently foreshadowed by France.

QUESTION 3 –
Both Parts A and B (below) are compulsory
PART A 
Monica who is aged 54, is employed as a Senior Manager with Abacus, a large accounting firm based in Sydney. During the 2020 tax year Abacus contributed $20,000 into QRest Super, which Monica advised is her complying Superannuation Fund of choice. In addition, on 30 June 2019 Monica entered into a salary sacrifice arrangement with Abacus to sacrifice 20% of her 2020 salary into superannuation. This results in an additional contribution of $52,000 for the 2020 tax year. This is the first time Monica has made a salary sacrifice arrangement. Monica’s marginal tax rate is 45% (excluding Medicare Levy) and her superannuation balance as at 30 June
2020 was $900,000.
Discuss the tax consequences for Monica and Abacus (if any) arising in relation to the above facts.

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