Guidance released the week ended 24 March 2023

GSTR 2002/2A10 - Addendum - Goods and services tax: GST treatment of financial supplies and related supplies and acquisitions - This Addendum amends GSTR 2002/2 to reflect changes in the GST law (for instance, changes to the GST legislation applicable to cross-border supplies, and in relation to digital currency), includes new references to public guidance released relating to financial supplies, and contains some changes to modernise parts of the Ruling. The update also contains a new buy-now pay-later example, that applies the ATO’s longstanding view on interest-free loans and contains a number of updates to Schedule 2 of the Ruling to indicate when certain foreign currency denominated products and overseas payment products are GST-free.

Taxation Rulings

TR 2021/2A1 - Addendum - Fringe benefits tax: car parking benefits - amends Taxation Ruling TR 2021/2 to:

• incorporate changes which address the concept of ‘primary place of employment’ in light of the decision in Commissioner of Taxation v Virgin Australia Regional Airlines Pty Ltd [2021] FCAFC 209, and
• make stylistic changes.

Taxation Determinations 

TD 2019/1W - Income tax: what constitutes 'use' (and potentially first use) of a mining, quarrying or prospecting right, that is a depreciating asset, for the purposes of subsection 40-80(1) of the Income Tax Assessment Act 1997 ?

Practice Statements

PS LA 2001/6 - Update - Verification approaches for electronic device usage expenses - updated as a result of the publication of Practical Compliance Guideline PCG 2023/1 Claiming a deduction for additional running expenses incurred while working from home – ATO compliance approach. It will no longer contain a verification approach for home office running expenses.

PS LA 2005/2 - Penalty for failure to keep or retain records - Under the Treasury Laws Amendment (2022 Measures No. 2) Act 2022, the Commissioner can issue a tax records education direction (Direction to Educate) to a business that we consider has failed to comply with their record‑keeping obligations. A business offered this direction will need to complete an online educational course developed by the Commissioner, in lieu of receiving a record-keeping penalty. The aim of the direction is to help educate businesses about their tax‑related record-keeping obligations. The power comes into effect from 13 March 2023. This Practice Statement has been updated to help guide ATO staff about whether a Direction to Educate should be considered.

Practical Compliance Guidelines

PCG 2023/1 - Claiming a deduction for additional running expenses incurred while working from home - ATO compliance approach - outlines a practical compliance approach, referred to as the revised fixed-rate method, which taxpayers can use to calculate their deduction for certain working from home expenses. The Guideline applies from 1 July 2022 and allows taxpayers to claim a rate of 67c per hour for particular working from home expenses which are difficult to apportion, such as electricity and internet expenses. Deductions for the decline in value of depreciating assets used when working from home, such as office furniture and laptop computers, are calculated separately.

Other items

Fact sheets for small business - New South Wales Point to Point Financial Assistance Scheme for taxi licence owners. 

Electric vehicles and fringe benefits tax - Fact sheets for employers - The fact sheet outlines the operation of the electric vehicle exemption as to what is required for a car benefit to qualify for the exemption and the treatment of associated benefits that an employer may also provide to an employee. However, as further provided for in the fact sheet, even though an electric car benefit may be exempt, its taxable value must still be taken into account in working out the employee’s reportable fringe benefits amount.

Withdrawal notice - Application of GST to supplies of digital products made to Australian recipients from non-resident suppliers

interpretation NOW! Episode 93 – looks at delegations, extraterritoriality, statutory rights and recommends a new textbook on modern statutory interpretation.

interpretation NOW!  determining contractual terms under an informal agreement and meaning of ‘includes’ Episode 92 – looks at the meaning of ‘may’, determining contractual terms under an informal agreement and meaning of ‘includes’

TA 2023/1 - Interposition of a holding company to access company profits tax-free – The ATO is currently reviewing arrangements where:

• a company is interposed between a private company with retained profits (first company) and its shareholder, and a capital gains tax (CGT) roll-over is applied to disregard the CGT consequences
• the first company then pays a franked dividend to the interposed company, which uses the proceeds to fund a loan to the individual, on terms which do not comply with section 109N of the Income Tax Assessment Act 1936

The interposition of the company and the subsequent dividend paid by the first company is to ensure that neither company has a distributable surplus for the purposes of Division 7A therefore enabling the individual to access the first company’s retained profits tax-free.

Synthesised text - minor update - 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