Monthly Tax Update September 2023

In the September 2023 edition of Andersen in Australia’s Monthly Tax Update, we provide recent updates in legislation along with the latest developments in the areas of corporate tax, individual tax, indirect tax and international tax. We also outline the ATO’s recent activities, including its publications, rulings and other guidelines issued in the past month, latest Australian tax cases and other news in this edition.

Inside this Monthly Tax Update you will find

Legislation Update

OECD Updates

Other Updates

ATO Rulings & Activity

Latest Australian Tax Cases

Legislation Update

Since the last tax update, the following Bills have passed both houses and await assent, see also October monthly tax update

Treasury Laws Amendment (2023 Law Improvement Package No 1) Bill 2023

The Treasury Laws Amendment (2023 Law Improvement Package No 1) Bill 2023 (the Bill) contains technical amendments relating to tax and superannuation and amendments implementing recommendations made by the Australian Law Reform Commission (ALRC) to simplify and improve the navigability of the corporations and financial services laws.

Schedule 6 to the Bill makes minor and technical amendments to Treasury portfolio legislation to correct drafting errors, repeal inoperative provisions, address unintended outcomes, and make other technical changes. It includes the following amendments:

• amending the definition of “year of income” in s 10(1) of the Superannuation Industry (Supervision) Act 1993 to provide that it has the same meaning as it does in the ITAA 1936;
• amending s 38-510 of the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act), relating to the supply of GST-free cars and car parts to eligible individuals with current disability certificates, to clarify that certain certificates issued by nominated companies prior to the amendments in the Treasury Laws Amendment (2021 Measures No 5) Act 2021 would be valid for the purpose of the section, and
• amending the GST Act and sch 1 to the Taxation Administration Act 1953 relating to the withholding of monies (for GST purposes) by purchasers of new residential premises and potential residential land during settlement, to ensure that the entity that is liable to pay GST on the relevant taxable supply would be entitled to the credit for the GST paid by the purchaser.

In addition, schedules 1 to 3 of the Bill propose to implement recommendations outlined by the ALRC to simplify and improve the navigability of the law. The proposed amendments include changes to ensure that the current version of the Acts Interpretation Act applies to the Corporations Act and ASIC Act, repeal redundant definitions, address unclear or incorrect provisions and simplify unnecessarily complex provisions in the law. The amendments are minor and technical in nature, and do not engage policy considerations.

Treasury Laws Amendment (2023 Law Improvement Package No 1) Bill 2023

• the Taxation Administration Act 1953 and ITAA 1997 to make technical changes to the FHSS Scheme which were announced in the 2021–22 Budget aimed at improving the scheme’s flexibility, and

• the Corporations Act 2001 to better recognise the experience of existing financial advisers as equivalent to tertiary study. It also addresses technical limitations in the current framework, relevant to both new entrants into the financial advice industry and tax agents providing a tax (financial) advice service to retail clients.

Other legislation update:

Treasury Laws Amendment (Making Multinationals Pay Their Fair Share—Integrity and Transparency) Bill 2023

The Bill was referred to the Senate Economics Legislation Committee on 22 June.
The Committee requested an extension of time to report its findings. The Committee is now due to report by 22 September 2023.
The Treasury Laws Amendment (Making Multinationals Pay Their Fair Share—Integrity and Transparency) Bill 2023, which passed the House of Representatives on 9 August, proposes to:

• introduce new rules which will require Australian public companies (listed and unlisted) to disclose information about subsidiaries in their annual financial reports. The proposed amendments are to apply for financial years commencing from 1 July 2023, and
• amend the Thin Capitalisation Rules which limit the amount of debt deductions certain multinational entities can claim in an income year. The new rules are aligned with the OECD’s earnings-based best practice model which allows an entity to deduct net interest expense up to a benchmark earnings ratio. Specifically the proposed amendments:
  • replace the safe-harbour debt test with a fixed ratio test,
  • replace the worldwide gearing test with a group ratio test,
  • replace the arm’s length debt test with an external third party debt test,
  • Introduce a new concept of a “general investor” which replaces the previous “outbound” and “inbound” entity concept, and
  • Introduce new “debt creation” rules and associated integrity measures.

The measures denying deductions for debt funded foreign subsidiaries (i.e. amendments to s 25-90 of ITAA1836 and s 230-15 of ITAA97) have also been deferred.

Superannuation Industry (Supervision) Act exemption No 1 of 2023

A legislative instrument has been made which exempts specific persons from compliance with certain provisions of the Superannuation Industry (Supervision) Act 1993 (SIS Act).

The Superannuation Industry (Supervision) Act exemption No 1 of 2023, exempts current, former and prospective directors of a registrable superannuation entity (RSE) licensee, from compliance with ss 29HA and 29JCB of the SIS Act where certain conditions are met.

The relevant provisions require a person to apply to APRA for approval to hold a “controlling stake” in an RSE licensee, and set out that a person that holds a controlling stake in an RSE licensee without approval commits an offence for which strict liability applies. A person holds a controlling stake in an RSE licensee if the person holds a stake of more than 15% in the RSE licensee. The SIS Act definition of “stake” in an RSE licensee has the same meaning as in the Financial Sector (Shareholdings) Act 1998 (FSS Act). Clause 10 of sch 1 of the FSS Act sets out that a person’s stake in a company is the aggregate of the person’s direct control interests and the direct control interests held by associates of the person. The provisions ensure that persons who seek to acquire a controlling stake in an RSE licensee are subject to an APRA approval process that is similar to that required to be undertaken to become an RSE licensee. This is to address the risk that an RSE licensee can be unduly influenced by persons that have a controlling stake in the ownership of the RSE licensee.

The exemption applies to a narrow class of persons and addresses an unexpected operation of the relevant FSS Act provisions in the superannuation industry context. It applies to persons that are directors of an RSE licensee who meet the following conditions:

• persons whose shareholding in the RSE licensee:
  • must be transferred or forfeited when they cease to be a director of the RSE licensee,
  • does not carry with it an entitlement to any financial benefit directly arising from the shareholding, and
  • is only a controlling stake based on the aggregation of their shareholding with the shareholdings of the other directors.

The legislative instrument commenced on 15 August 2023.

Fair Work Legislation Amendment (Closing Loopholes) Bill 2023

The Senate has moved to refer the provisions of the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 to the Education and Employment Legislation Committee for inquiry.

The Bill, which was introduced into parliament on 4 September 2023, seeks to:

• amend the Fair Work Act 2009 to close a labour hire loophole,
• introduce a criminal offence for wage theft, and
• amend the Work Health and Safety Act 2011 to introduce an offence of industrial manslaughter.

The Education and Employment Legislation Committee will table its report by 1 February 2024.

OECD Monthly Tax update

OECD Secretary-General Tax Report

The OECD Secretary has issued a General Tax Report to G20 leaders, setting out the latest developments in international tax reform, including:

• the Outcome Statement on the Two-Pillar Solution agreed upon by 138 members of the Inclusive Framework;
• OECD work on indirect tax;
• capacity building for developing countries; and
• major developments in tax transparency efforts, tax administration, tax and crime, tax policy and climate change.

Please refer here for the report.

Other updates

IGTO insights on improving the operation of the Small Business Litigation Funding Program

The Inspector-General of Taxation and Taxation Ombudsman (IGTO) has released recommendations to improve the ATO’s administration of the Small Business Litigation Funding Program.

The report shares insights and observations relating to the ATO’s communications and method of funding small business disputes under the Program. The Program was aimed at levelling the playing field for unrepresented small businesses which took matters to the Small Business Taxation Division of the AAT. In cases where the ATO chose to engage a barrister, the ATO was required to give the small business an up-front commitment to make a specified amount of funding available to reimburse some of the small business’ representation costs. The IGTO had received 5 unresolved complaints in which concerns were expressed regarding substantial uncertainty with respect to the ATO’s funding methodology under the Program.

The IGTO observed that the ATO’s opacity regarding the policy intent of the Program was the key contributing factor to the considerable amount of time, expense and effort expended by small business representatives in clarifying claimed costs, supporting evidence, calculation of reimbursement and the limit applied to the total funding made available.

To improve the administration of the Program, the IGTO recommends that the ATO:

• amends the template funding agreement to accord with the underlying policy objective of the Program, provide greater up-front clarity as to what expenses will be paid by the ATO and ensure that relevant terms are incorporated into the contractual agreement,
• amends its guidance material and internal instructions to provide greater up-front clarity to taxpayer applicants, their representatives and internal ATO staff,
• considers whether additional steps are necessary to preserve the integrity of the Program, and
• amends its procedures to establish a process for dealing with supporting claim documentation that contains information which is confidential, privileged, or the disclosure of which might otherwise prejudice the applicant in active litigation.

The IGTO understands that the ATO intends to consult with stakeholders before committing to any improvements and that the recommendations will be considered as part of this process. The underlying 2019 Budget measure which provided the ATO with $29.6 million over 5 years to fund the Program, ended on 30 June 2023. Accordingly, the ATO considers itself no longer bound by the policy intent for the Program set in 2019.
In December 2022, the government announced that the AAT would be abolished and replaced with a new administrative review body. It is unclear whether the Program will be replicated for that new body. The IGTO considers that implementation of its recommendations will improve the fairness of the existing Program’s administration and better realise its aim in the interim.

For more information, please refer here.

Modernising Business Registers program to be discontinued

The Federal Government has announced that the Modernising Business Registers (MBR) program will cease following the release of an independent review’s findings that that the program could not deliver value for money.

The MBR program was mobilised by the Coalition government in 2019 to transform the company, business and professional registry services of the government. It was initially projected to be completed by the 2023–24 financial year. It aimed to improve the user experience of registry interactions, strengthen the integrity of registry data and remediate technology risks. The program was also tasked with establishing a new Director Identification Number (Director ID) scheme to enhance company trust and reduce illegal phoenixing and other shadow economy behaviours.

An independent review found that the expected economic benefits of the MBR program do not justify the costs and that the program would not be able to be delivered in full until 2029 – a delay of 5 years.

The government says it remains committed to making it easy for businesses to register their details and will prioritise the stabilisation of existing registers. Business as usual registry operations will continue under ASIC. The Director ID regime which is already helping regulators target illegal anti-phoenixing behaviour, will also be unaffected. The government will consider options to update the registries following further analysis.

For more information, please refer here.

ASIC sues AustralianSuper over multiple superannuation accounts

ASIC has commenced civil penalty proceedings against the trustee of Australia’s largest superannuation fund, AustralianSuper, alleging failures to address multiple member accounts.

ASIC alleges that for almost 10 years AustralianSuper failed to have adequate policies and procedures to identify members who held multiple AustralianSuper accounts and to merge those accounts where a merger was in the member’s best interests. AustralianSuper instead continued to charge multiple sets of fees and insurance premiums to these members.

Between 1 July 2013 and 31 March 2023, approximately 90,000 AustralianSuper members were affected, with a total cost to members of approximately $69 million. ASIC is concerned that despite AustralianSuper allegedly being aware in 2018 of the number of multiple member accounts within the fund and possible gaps in its policies and procedures, it did not take adequate steps to investigate and resolve the issue until late 2021 and early 2022.

ASIC is seeking declarations, pecuniary penalties and other orders against AustralianSuper. The date for the first case management hearing is yet to be scheduled. This is the first case that ASIC has brought in its capacity as a co-regulator with APRA concerning contraventions of s 52 of the Superannuation Industry (Supervision) Act 1993 that relates to the conduct of trustee’s duties. For further details, please refer here.

ASIC to focus on vulnerable consumer and small business protection in 2023-24

The Australian Securities and Investments Commission (ASIC) has announced that it will be focusing further enforcement action to protect Australian consumers and small businesses over 2023-24.

According to its Corporate Plan 23—27, ASIC’s 4 strategic priorities are:

• Product design and distribution – reduce the risk of harm to consumers of financial, investment, credit and credit-like products, caused by poor product design, distribution and marketing, especially by driving compliance with design and distribution obligations
• Sustainable finance – support market integrity and efficiency through supervision and enforcement of current governance and disclosure standards to reduce harms from greenwashing, while engaging closely on climate-related financial disclosure requirements.
• Retirement outcomes – protect consumers, especially as they plan and make decisions for retirement, with a focus on superannuation products, managed investments and financial advice.
• Technology risks – focus on the impacts of technology in financial markets and services, drive cyber and operational resilience practices, including within companies and financial market infrastructure, and act to address digitally enabled misconduct.

The commission will also be focusing on core strategic projects, which are:

• scams;
• sustainable finance practices;
• crypto-assets;
• design and distribution obligations;
• cyber and operational resilience; and
• digital technology and data

For more information, please refer here.

ATO Rulings & Activity

Implementation of Pillar Two GloBE Model Rules

On 9 May 2023, the Treasurer announced in the 2023–24 Budget that the Australian Government will implement the Organisation for Economic Cooperation and Development (OECD) Global Anti-Base Erosion (GloBE) Model Rules (also known as global minimum tax) and domestic minimum tax.

This measure is not yet law and new legislation will be introduced.

The ATO is undertaking targeted consultation with significant global entities and their advisors on the implementation of the OECD GloBE Model Rules in Australia with a focus on potential administration issues.

For large multinational groups (with an annual global revenue of EUR750 million or more), the proposed start dates:

• for the 15% global minimum tax will occur over two years with the:
  • Income Inclusion Rule to apply to income years starting on or after 1 January 2024; and
  • Undertaxed Profits Rule to apply to income years starting on or after 1 January 2025.
• for the 15% domestic minimum tax is for income years starting on or after 1 January 2024.

According to the ATO, the implementation of the GloBE Model Rules will also require in scope multinational groups to:

• provide new information to adhere to the reporting obligations under the global minimum tax and domestic minimum tax regime (this may require new systems); and
• lodge a GloBE Information Return (GIR):
  • the GIR will need to be lodged 18 months after the first year-end (15 months for subsequent years); and
  • the OECD has published GIR requirements

According to the ATO, the consultation will not cover matters of policy as Treasury will be developing policy and the ATO will administer the laws once enacted.

For more information, please refer here.

Draft determinations on reporting exemptions for certain EDP operators

The ATO has issued draft legislative determinations on reporting exemptions for certain electronic distribution platform (EDP) operators.

– LI 2023/D15 (Transitional Exemptions for Reporting by Electronic Distribution Platform Operators – Relevant Accommodation and Taxi Travel) Determination 2023) – provides a temporary reporting exemption (for the reporting period ending on or before 30 June 2024) for small EDPs in certain circumstances where transactions involve a supply of relevant accommodation or taxi travel.

Where operators choose not to rely upon the exemption, LI 2023/D15 also provides for extensions of time to report where certain conditions are met.

LI 2023/D15 is proposed to commence on 1 July 2023. It has a retrospective commencement date to provide support to operators of EDPs while they transition to the new sharing economy reporting regime that commenced on 1 July 2023.

– LI 2023/D16 (Reporting Exemptions for Electronic Distribution Platform Operators – Relevant Accommodation and Taxi Travel) Determination 2023 – proposes to exempt the operator of an EDP from having to report transactions involving a relevant supply where the supplier is either a ‘listed entity’ or a wholly owned subsidiary of a listed entity, or in circumstances where a supply is made through more than one EDP.

The proposed instrument will also exempt the operator of an EDP from having to report transactions that involve the provision of consideration relating to a ‘substantial property’ (ie property in relation to which, for that reporting period, at least 2,000 transactions were facilitated by the EDP for the property in the 12 months ending on the last day of the reporting period)

The closing date for comments on LI 2023/D15 and LI 2023/D16 is 12 September 2023.

Taxation determination on Commissioner’s discretion that an entity does not “control” another entity

The ATO has finalised its guidance on the Commissioner’s discretion in s 328-125(6) of ITAA 1997 which deals with when the Commissioner can exercise his discretion to find that an entity does not “control” another entity for purposes of the “connected entity” test.

Taxation Determination TD 2023/5 provides guidance on the specific issues that have emerged from the Commissioner’s administration of the discretion in subsection 328-125(6) of the Income Tax Assessment Act 1997. For example, the Determination considers:

• whether the discretion should be exercised where a third entity has sole or primary responsibility for day-to-day management of the affairs of the test entity, but holds relatively insignificant or no interests in the income or capital of the test entity, or in shares carrying voting rights, and
• whether control percentage interests of between 40% and 50% should be disregarded because the remaining holders of interests in the test entity will together necessarily control the entity, irrespective of their number or relationship to each other.

An entity’s aggregated turnover is relevant to determining whether it is a small business entity for an income year and able to access a range of concessions including capital gains tax concessions, shorter periods of review, an exemption from fringe benefits tax for car parking fringe benefits, simplified depreciation and the small business restructure rollover. In addition, a company’s aggregated turnover is relevant for the purposes of determining whether the company is a base rate entity and therefore can access the reduced company tax rate. Similarly, companies with aggregated turnover of less than $20m can access a refundable rather than a non-refundable tax offset for their eligible R&D expenditure and also potentially access concessions under the debt/equity rules in Div 974 of ITAA97 in relation to a-call loans.

Aggregation will be necessary where there is a connection between the entities based on “control”. Section 328-125(2) and (4) set out primary tests of control for the purposes of s 328-125. These subsections provide for the calculation of a “control percentage”. An entity (the first entity) is considered to control another entity (the test entity) for the purposes of s 328-125 where the first entity holds a percentage of at least 40% of the relevant interests in the test entity.

Where the first entity has a control percentage of at least 40% but less than 50%, s 328-125(6) provides the Commissioner with a discretion to determine that it does not control the test entity (the Commissioner’s discretion). To make that determination, the Commissioner must find the test entity is controlled by an entity or entities (the third entity or entities) that is not, or does not include, the first entity or any of its affiliates.

The statutory condition for exercising the Commissioner’s discretion requires that the Commissioner positively conclude that there is actual control by a third entity or entities. It is not sufficient to merely show that the first entity is not a controller.

As noted above, the issues in TD 2023/5 have taken on added significance following the introduction of tax incentives with higher aggregated turnover threshold requirements, thereby extending their relevance beyond the small business market. For example, the temporary measures introduced in 2020 in response to the COVID-19 pandemic, such as the full expensing of depreciating assets and loss carry back rules.

The determination does not seek to deal comprehensively with the concept of “control” for the purposes of considering the Commissioner’s discretion, nor the wide range of circumstances in which it will be relevant for the exercise of the Commissioner’s discretion. While the Determination does provide some scenarios where the exercise of the discretion would be appropriate, the Commissioner notes that his conclusion on control in a given case will turn on its specific facts and circumstances and further provides that general statements on the concept, supported by generic examples with narrow fact patterns, would be of limited assistance as guidance for individual cases and may even mislead. Additional public guidance may be considered in future if there is a need to clarify the ATO’s views on further discrete issues arising from the ongoing administration of the discretion.

TD 2023/5 was previously released as Draft Taxation Determination TD 2023/D2.

Luxury car tax determination

The ATO has finalised guidance and set out a compliance approach for determining the principal purpose of a car for luxury car tax (LCT) purposes.

Luxury Car Tax Determination LCTD 2023/1 sets out the Commissioner’s view on how to determine if a car is a commercial vehicle that is not designed for the principal purpose of carrying passengers. Such cars are excluded from being a luxury car under s 25-1(2)(c) of the A New Tax System (Luxury Car Tax) Act 1999 (LCT Act).

LCTD 2023/1 finalises draft LCTD 2022/D1 and clarifies that factors to be considered in determining principal purpose are to be considered objectively, with no specific weighting applied to any individual factor. A vehicle’s classification under the Australian Design Rules is not solely determinative in assessing the principal purpose of a vehicle under the LCT Act.

The finalised determination also addresses specific issues regarding vehicle modifications purporting to alter the principal purpose of a luxury car. Consideration is given to the principal purpose of the vehicle as originally designed and to any modifications that are incapable of being readily reversed. In assessing the permanency of modifications, consideration is given to the totality of modifications made. This guidance sets out specific examples of modifications the Commissioner considers to be readily reversible or readily accommodated by a vehicle’s design.

The Determination also includes a compliance approach which outlines how the Commissioner will allocate compliance resources with respect to this issue.

Market valuations for tax purposes

The ATO has updated its guidance on market valuations.

This guide, which is meant to help taxpayers understand the Commissioner’s general expectations on market valuations for tax purposes, has been updated to remove specific references to certain institutes that provide certification and standards for valuers. General statements have also been inserted to explain the need for valuers to have the appropriate certification and registration or licensing.

For more information, please refer here.

Taxation Ruling on Foreign Employment Income

The ATO has issued an addendum to Taxation Ruling TR 2013/7 which deals with the application of the foreign employment income exemption under s 23AG(1AA) of ITAA 1936.

The addendum amends TR 2013/7 to confirm a member of the Australian Border Force is not a member of a disciplined force for the purpose of s 23AG(1AA)(d) as set out in Willard v FC of T 2022 ATC; [2022] AATA 3723.

The addendum applies before and after its date of issue.

For more information, please refer here.

ATO updated guidance on exempt foreign employment income

The ATO has issued an addendum to Taxation Determination TD 2005/14 and an addendum to Taxation Determination TD 2005/15.

• TD 2005/14 addresses the question of whether s 23AG(2) of ITAA 1936 applies where foreign earnings are exempt from tax in a foreign country for one or more of the reasons listed in that section and there is no additional reason for exempting that income. The addendum, which applies before and after its date of issue, amends TD 2005/14 to modernise it.
• TD 2005/15 addresses the question of whether s 23AG(2) applies where foreign earnings are exempt from tax in the foreign country for a reason listed in that section as well as a reason not listed. The addendum amends TD 2005/15 to note the decision in Tanddo v FC of T [2022] AATA 4143 which provides that positive action is usually required to come within the operation of a memorandum of understanding or a general agreement on development cooperation for the purpose of s 23AG(2). The addendum applies before and after its date of issue.

Employees guide for work expenses

The ATO has updated its guidance on employee work expenses.

The Employees guide for work expenses contains information to help employees decide whether their expenses are deductible and the records that need to be retained to substantiate them.

The Guide has been updated to:

• include up to date information on claiming a deduction for working from home expenses. The fixed rate method for claiming additional running expenses has been revised and this information has been updated. The temporary shortcut method is no longer available so the information on this method has been removed.
• remove the content on the $250 reduction of self-education expense deductions following the repeal of s 82A of ITAA 1936.

For more information, please refer here.

ATO updated guidelines on deductions for additional running expenses incurred while working from home

The ATO has updated its guideline on the method for taxpayers to calculate their deduction for certain additional running expenses while working from home from 1 July 2022.

The minor update to PCG 2023/1 has been undertaken to clarify the availability of the fixed rate method in circumstances where some, but not all, additional work from home expenses have been paid or reimbursed by the employer.

Class rulings issued:

• Class Ruling CR 2023/45 Western Australian Debating League Incorporated – payments to League Members. This ruling applies from 1 July 2022 to 30 June 2024.

• Class Ruling CR 2023/46 MetalsTech Limited – return of capital by way of in specie distribution. This ruling applies from 1 July 2021 to 30 June 2022 and will continue to apply after 30 June 2022 to all entities within the specified class who entered into the scheme during the term of the ruling.

• Class Ruling CR 2023/47 Blackmores Limited – scheme of arrangement and special dividend. This ruling applies from 1 July 2023 to 30 June 2024.
• Class Ruling CR 2023/48 Abacus Property Group – de-stapling and re-stapling as Abacus Group and Abacus Storage King. This ruling applies from 1 July 2023 to 30 June 2024.
• Class Ruling CR 2023/49 Navman Wireless Australia Pty Limited – use of FTC Manager for fuel tax credits. This ruling applies to taxable fuel acquired on or after 1 July 2023 to 30 June 2024.
• Addendum to Class Ruling CR 2023/20 Navman Wireless Australia Pty Limited – use of FTC Manager for fuel tax credits. It amends CR 2023/20 to change the period of application of the ruling. The addendum applies from 1 July 2023.
• Erratum to Class Ruling CR 2023/46 MetalsTech Limited – return of capital by way of specie distribution. The erratum amends a typographical error by omitting “$0.0945″ from para 25 of the ruling and substituting “$0.20”. The erratum applies from 23 August 2023.

Other rulings issued:

• Product Ruling PR 2023/15 Challenger Guaranteed Annuity (Floating Rate Fixed Term). This  ruling applies from 1 July 2023 to the specified entities in connection with an annuity purchased from 1 July 2023 until 30 June 2026.
• Product Ruling PR 2023/16 Chess depositary interests over interests in the SPDR® S&P 500® ETF Trust. This ruling applies from 1 July 2023 to investors specified in the ruling who enter into the scheme described in the ruling from 1 July 2023 until 30 June 2026.
• Product Ruling PR 2023/17 Fuel tax: Navman Wireless Australia Pty Limited and FTC Manager – FTC Self Claim level clients. This ruling applies to taxable fuel acquired on or after 1 July 2023 by the class of entities that enter into the scheme for the fuel tax credit results from the FTC Manager Product from 1 July 2023 until 30 June 2024, being its period of application. However, the ruling only applies to the extent that there is no change in the scheme as described in paras 17 to 104 of the ruling, or in the entity’s involvement in the scheme.
• Addendum to Product Ruling PR 2018/15 Income tax: taxation consequences for a Customer entering into a Prepay and Grow Agreement with Ruralco. The addendum amends PR 2018/15 to expand the class of entities that rely on it by including entities covered by s 82KZM(1A) of ITAA 1936.
• Addendum to Product Ruling PR 2019/3 Income tax: taxation consequences for a Customer entering into a Prepay Plus Agreement with Landmark. The addendum amends PR 2019/3 to expand the class of entities that rely on it by including entities covered by s 82KZM(1A) of ITAA 1936.
• Addendum to Product Ruling PR 2021/4 Income tax: taxation consequences for a customer entering into an XLD Grain and Fertiliser Prepayment Program with XLD Commodities Pty Ltd. It amends PR 2021/4 to expand the class of entities that rely on it by including entities covered by ITAA 1936 s 82KZM(1A).
• Addendum to Product Ruling PR 2023/13 UBS Structured Option and Loan Facility. It amends PR 2023/13 to update the class of entities to which it applies.
• Addendum to Product Ruling PR 2020/10 Income tax: taxation consequences of investing in CDIs over interests in the SPDR® S&P 500® ETF Trust – 2020. It amends PR 2020/10 to update the list of documents upon which the scheme that is the subject to the ruling is identified and described.
• Addendum to Product Ruling PR 2020/5 Income tax: UBS Structured Option and Loan Facility. It amends PR 2020/5 to incorporate the application of s 82KZM(1A) and 82KZMA(2A) of ITAA 1936.
• Addendum to Product Ruling PR 2023/4 Fuel tax: Navman Wireless Australia Pty Limited and FTC Manager – FTC Self Claim level clients. It amends PR 2023/4 to change the period of application of the ruling. This addendum applies from 1 July 2023.

Latest Australian Tax Cases

• Income tax, trading stock – The Federal Court has determined that a parcel of land purchased by a property developer in 2006 and then subdivided, developed and ultimately sold in 2013 and 2014 was held as trading stock from the date of its acquisition, not 5 years later when the taxpayer’s dreams to build his own home evolved into a 16-lot subdivision reality. [Makrylos v FC of T 2023 ATC; [2023] FCA 971, 17 August 2023.]

• Income tax, Default assessments – The Federal Court has dismissed an appeal against an AAT decision (2021 ATC ¶10-606; [2021] AATA 4820) that upheld default assessments issued by the Commissioner in respect of unreported income and penalties imposed on the basis of fraud or evasion. The court held that the AAT did not, as the taxpayer contended, apply the wrong test in respect of the burden of proof or make conclusions that were unreasonable. Nor did the AAT misconstrue or misapply s 6-5 of ITAA 1997 (ordinary income) or item 5 of s 170(1) of ITAA 1936 (fraud or evasion). [Buzadzic v FC of T 2023 ATC; [2023] FCA 954, 16 August 2023.]

• Income tax, delayed bonus payment – The AAT has held that a taxpayer who became entitled to a bonus payment relating to his employment in Kuwait when he was not a resident of Australia but who did not receive the bonus until later (by which time he had become a resident), was assessable to tax in respect of such. [Tawfik v FC of T 2023 ATC; [2023] AATA 2541, 10 August 2023.]

If you would like more information or would like to discuss this tax update, please contact:

Cameron Allen

Office Managing Director

Tel: +61 (0) 3 9939 4488

Tel: +61 (0) 2 8226 8756

Email: cameron.allen@au.Andersen.com

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