Date posted: 20/10/2022

2022 ATO advice and guidance

List of rulings, determinations, legislative instruments, practical compliance guidelines and other items released by the Australian Taxation Office (ATO) since 1 January 2022 (excluding class rulings and product rulings)

Guidance released the week ended 21 October 2022

TD 2022/15 – Income tax: value of goods taken from stock for private use for the 2022– 23 income year –  provides an update of amounts that the Commissioner will accept as estimates of the value of goods taken from trading stock for private use by taxpayers in named industries.

TD 2017/9W – Income tax: value of goods taken from stock for private use for the 2016– 17 income year.

Taxation Determinations

TD 2022/14 - If a non-contingent liability to pay a specified amount is included in the cost base of your CGT asset under either subsection 110-25(2) or section 112-35 of the Income Tax Assessment Act 1997 and you deduct or can deduct that amount, does subsection 110-45(2) of that Act apply? - This Determination sets out that the law does not permit ‘double counting’ of certain amounts by way of inclusion in the cost base of an asset and claiming a tax deduction for the same amount.

TD 2022/7ER - Erratum – Income tax: aggregated turnover - application of the 'connected with' concept to partnerships, foreign hybrids and non-entity joint ventures - amended to correct typographical errors.

TD 2022/10ER - Erratum – Income tax: what are the reasonable travel and overtime meal allowance expense amounts for the 2022-23 income year?

TD 2022/1 – Income tax: commercial debt forgiveness - does the exclusion for debts forgiven for reasons of natural love and affection require that the creditor be a natural person?

TD 2022/2 – Fringe benefits tax: reasonable amounts under section 31G of the Fringe Benefits Tax Assessment Act 1986 for food and drink expenses incurred by employees receiving a living-away-from-home allowance fringe benefit for the fringe benefits tax year commencing on 1 April 2022

TD 2022/3 – Fringe benefits tax: what are the rates to be applied on a cents per kilometre basis for calculating the taxable value of a fringe benefit arising from the private use of a motor vehicle other than a car for the fringe benefits tax year commencing on 1 April 2022

TD 2022/4 – Income tax: when are you genuinely restricted from immediately disposing of an interest provided under an employee share scheme? This Determination outlines the legal principles for determining whether an ESS’s disposal restrictions were ‘genuine disposal restrictions’ and, if they were, when employees are no longer ‘genuinely restricted’ by the scheme for determining the ESS deferred taxing point. 

TD 2022/5 – Income tax: aggregated turnover - application of the 'connected with' concept to corporate limited partnerships

TD 2022/6 – Income tax: aggregated turnover - application of the public entity exception to the indirect control test

TD 2022/7 – Income tax: aggregated turnover - application of the 'connected with' concept to partnerships, foreign hybrids and non-entity joint ventures

TD 2022/8 – Income tax: deductibility of expenses incurred in establishing and administering an employee share scheme.  

TD 2022/11 – Income tax:Division 7A: when will an unpaid present entitlement or amount held on sub-trust become the provision of 'financial accommodation'? - describes when a private company provides financial accommodation within the meaning of section 109D of the Income Tax Assessment Act 1936 where that company is made presently entitled to income of a trust and either that entitlement remains unpaid (an unpaid present entitlement) or the trustee sets aside an amount from the main trust and holds it on a new separate trust (sub-trust) for the private company beneficiary. It applies to trust entitlements arising from 1 July 2022. It also clarifies the ATO’s compliance approach, with practical examples, on how to meet the timing requirements to ensure that an unpaid present entitlement or amount held on sub-trust does not cause a deemed dividend to arise under Division 7A of Part III of the ITAA 1936 via implementation of complying loan agreements.

TD 2022/12 Income tax: is the source concept in Division 6 of Part III of the Income Tax Assessment Act 1936 relevant in determining whether a non-resident beneficiary of a resident trust, or trustee for that trust, is assessed on an amount of trust capital gain arising under Subdivision 115-C of the Income Tax Assessment Act 1997? - confirms that following the 2011 trust streaming amendments, the source rules in the trust provisions are no longer relevant in determining whether a capital gain is assessable to a foreign-resident beneficiary, as this is determined solely under the capital gains tax provisions.

TD 2022/13 Income tax: does Subdivision 855-A (or subsection 768-915(1)) of the Income Tax Assessment Act 1997 disregard a capital gain that a foreign-resident (or temporary-resident) beneficiary of a resident non-fixed trust has because of subsection 115-215(3)? - confirms the ATO’s longstanding view that Division 855 does not enable a foreign-resident beneficiary of a resident non-fixed trust to disregard their share of a non-taxable Australian property trust capital gain.

TD 2011/15A1 - Addendum – Income tax: Division 7A - unpaid present entitlements - factors the Commissioner will take into account in determining the amount of any deemed entitlement arising under section 109XI of the Income Tax Assessment Act 1936

TD 2015/20A1 - Addendum – Income tax: Division 7A - is a release by a private company of its unpaid present entitlement a 'payment' within the meaning of Division 7A of Part III of the Income Tax Assessment Act 1936?


Taxation Rulings

IT 2650W – Notice of Withdrawal - Income tax: residency - permanent place of abode outside Australia.

TR 98/17W – Income tax: residency status of individuals entering Australia.

TR 2005/5DC2 – Income tax: ascertaining the right to tax United States (US) and United Kingdom (UK) resident financial institutions under the US and the UK Taxation Conventions in respect of interest income arising in Australia – This draft update amends this Ruling to clarify certain aspects of the second limb of the definition of ‘financial institution’ as used in Australia’s double-tax conventions with the United States and the United Kingdom. Key aspects covered by the draft update include: 

  • when an enterprise is substantially deriving its profits from carrying on a business of spread activities 
  • why some activities are not considered to be the provision of finance, and 
  • changes to the use of the word ‘bank’ by financial institutions following changes to Australian banking law.

The draft update will also apply to residents of other countries with a double-tax agreement with Australia if they contain an article that is similarly worded and has the same effect as the United States or United Kingdom conventions.

TR 2005/5DCW – Income tax: ascertaining the right to tax United States (US) and United Kingdom (UK) resident financial institutions under the US and the UK Taxation Conventions in respect of interest income arising in Australia - This draft update is being withdrawn and being replaced by a further draft update to TR 2005/5 to allow additional community consultation and comment.

TR 2022/2 – Income tax: the games and sports exemption – considers when a society, association or club will qualify as exempt from income tax under section 50–45 of the Income Tax Assessment Act 1997 for the encouragement of a game or sport. This Ruling does not change the Commissioner's view expressed in TR 97/22 and reflects case law that has occurred since that Ruling was published.

GSTR 2012/3A3 – Addendum – Goods and services tax: GST treatment of care services and accommodation in retirement villages and privately funded nursing homes and hostels - This Ruling has been amended to broaden the circumstances in which an operator of a retirement village is considered to ‘provide daily meals’ for all residents living within that operator’s serviced apartment in order for the residential care services to be GST-free. The changes were made in response to feedback from industry representatives and they provide principles to assist with compliance.

TR 2015/4A1 – Income tax: CGT small business concessions: unpaid present entitlements and the maximum net asset value testTR 2015/4A1 - Addendum - Income tax: CGT small business concessions: unpaid present entitlements and the maximum net asset value test


Practice Statements

PS LA 2008/4 - Update - Publication of edited versions of written binding advice - This Practice Statement has been refreshed to align with the recommended processes of the Office of the Australian Information Commissioner’s Australian Privacy Principles guidelines (2019) to ensure confidentiality of taxpayer information and to meet the requirements of the Privacy Act 1988.

PS LA 2022/1-  Administrative penalties for electronic sales suppression tools

PS LA 2011/17 - Debt relief, waiver and non-pursuit - updated and policy clarified in paragraph 11 of this Practice Statement with respect to the relevant factors the Commissioner may take into account when considering release decisions.

 

Practical Compliance Guideline

PCG 2022/1 – Non-commercial business losses – Commissioner's discretion regarding flood, bushfire or COVID-19 - provides a safe harbour for individuals who make a loss because their non-commercial business was affected by special circumstances of flood, bushfire or some COVID-19 impacts (a government-imposed lockdown, business closure and/or restriction). The Guideline allows the individual to offset the loss (but not past year’s deferred losses) against other income in the relevant year. If the Guideline applies, the individual does not need to seek a private ruling on whether the Commissioner would exercise their discretion to allow that loss to be offset.

    PCG 2017/13 – Update – Division 7A – PS LA 2010/4 sub-trust arrangements maturing in or after the 2016–17 income year.

    PCG 2019/5 - Update - The Commissioner's discretion to extend the two year period to dispose of dwellings acquired from a deceased estate - This Guideline has been revised to improve the practical application of it and further ease the compliance burden.


    Taxpayer Alerts

    TA 2022/2 – Treaty shopping arrangements to obtain reduced withholding tax rates – this alert communicates the ATO concern that some taxpayers have entered into, or are considering implementing, arrangements that typically involve the interposition of related entities in treaty jurisdictions to obtain a more favourable tax outcome. This Alert is not intended to cover the field of treaty shopping arrangements and is limited to arrangements which inappropriately access treaty benefits under a double-tax agreement in relation to Australian royalty or dividend payments.

    TA 2022/1 – Parents benefitting from the trust entitlements of their children over 18 years of age 23/02/22 


    Other items

    Chapter 7 – Car fringe benefits – This chapter has been rewritten to provide a step-by-step guide to identifying and calculating the taxable value of car fringe benefits. While not providing a new ‘ATO view’ on the topic, the reader should find the revised information and examples easier to follow and apply to their circumstances.

    Interpretation NOW! Episode 87 – looks at extrinsic materials, uncertainty in statutes, principle of legality and legislative purpose in statutory interpretation. 

    Self-review guide and toolkit – A guide to assist financial institutions with CRS and FATCA obligations.

    Hungary – Synthesised Text of the MLI and the Agreement Between Australia and the Republic of Hungary.

    Synthesised text update - Malaysia – Synthesised Text of the MLI and the Agreement between the Government of Australia and the Government of Malaysia for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income.

    Synthesised text - update – New Zealand – Synthesised text of the MLI and the Convention between Australia and New Zealand for the Avoidance of Double Taxation with Respect to Taxes on Income and Fringe Benefits and the Prevention of Fiscal Evasion.

    Market valuation for tax purposes – Understanding the Commissioner's general expectations on market valuation for tax purposes. This Guide updates and replaces the ‘Market valuation for tax purposes’ web content.


    Late releases from 2021

    TD 2021/9 – Income tax: JobKeeper payments received or expected as a result of research and development expenditure.

    Edition 1 of Tax News AU - ATO issued: 9 February 2022

    TR 2021/5 – Income tax: research and development tax offsets - the 'at risk' rule

    Edition 1 of Tax News AU - ATO issued: 22 December 2021

    LCR 2021/3 – Temporary full expensing

    Edition 1 of Tax News AU - ATO issued: 22 December 2021

    PCG 2021/4 – Allocation of professional firm profits - ATO compliance approach.

    Edition 1 of Tax News AU - ATO issued: 16 December 2021

    PCG 2021/5 – Imported hybrid mismatch rule - ATO's compliance approach.

    Edition 1 of Tax News AU - ATO issued: 16 December 2021

    GSTR 2004/7A3 – Goods and services tax: in the application of items 2 and 3 and paragraph (b) of item 4 in the table in subsection 38-190(1) of the A New Tax System (Goods and Services Tax) Act 1999:  - when is a 'non-resident' or other 'recipient' of a supply 'not in Australia when the thing supplied is done'?  -when is 'an entity that is not an Australian resident' 'outside Australia when the thing supplied is done'?

    Edition 1 of Tax News AU - ATO issued: 15 December 2021


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