Date posted: 03/06/2024

Decision Impact Statements

Decision impact statements (DISs) that feature in the CA ANZ Tax News AU.

View recent DISs released by the Australian Taxation Office (ATO)

NSD 816/2023 (Full Federal Court) - Commissioner of Taxation v Hannover Life Re of Australasia Ltd - The decision concerns the extent to which the taxpayer, a life insurer, is entitled to GST input tax credits for its acquisitions, when they make input taxed supplies of life insurance, as well as GST-free supplies of acquiring reinsurance. It explains that the ATO considers that the part of the decision relating to distribution and administrative costs aligns with the Commissioner’s existing approach, and that the overheads part of the decision was open to the Court based on the facts.

NSD 332 of 2022 (Full Federal Court) - Jamsek v ZG Operations Australia Pty Ltd (No 3) - The decision concerns whether a contract lecturer of a higher education provider was engaged as an employee pursuant to the common law meaning of the word under subsection 12(1) of the Superannuation Guarantee (Administration) Act 1992 or alternatively, under the extended meaning of ‘employee’ contained in subsection 12(3) of the Superannuation Guarantee (Administration) Act 1992. It explains with respect to the application of subsection 12(3), that the existence of a contractual right within a contract that allows a worker to delegate, subcontract or assign their work to another, whether subject to the consent of an engaging entity or not, will result in the contract not being either wholly or principally for the labour of the worker, subject to the contractual right not being challenged as being a sham, having been varied by the parties or unenforceable.

NSD 562 of 2022 (Full Federal Court) - JMC Pty Ltd v Commissioner of Taxation - The decision concerns whether 2 delivery drivers were employees of ZG Operations Australia Pty Ltd and its predecessors, pursuant to subsection 12(3) of the Superannuation Guarantee (Administration) Act 1992. It explains that the decision affirms the test set out in Dental Corporation Pty Ltd v Moffet [2020] FCAFC 118 in administering subsection 12(3) and that to assess whether a contract is for labour involves an evaluation of the terms of the relevant contract, assessed by reference to the benefit that the engaging entity receives out of the bargain.

Decision impact statement 2021/8256, 2021/8257 and 2021/8258 - BPFN and Commissioner of Taxation – outlines the ATO’s response to this decision about the application of the non-arm’s length income provision in subsection 295-550(5) of the Income Tax Assessment Act 1997 to distributions made to the Applicant, a beneficiary, self-managed superannuation fund.

Decision impact statement 2020/0826 - GQHC and Commissioner of Taxation - outlines the ATO's response to this case, which was concerned with whether:

  • the Commissioner has the power to assess or make decisions as to whether an R&D entity's registered activities are eligible 'R&D activities' as defined in Division 355 of the Income Tax Assessment Act 1997 in circumstances where no findings about an R&D entity's registration that bind the Commissioner were made (Finding) by Innovation and Science Australia (the Board) (the jurisdictional issue)
  • the Applicant's registered activities in the relevant year were research and development (R&D) activities, and if so, were the activities in fact conducted in the relevant income year (the eligibility issue), and
  • expenditure incurred by the Applicant in acquiring or producing both 'day old' chickens and poultry feed were feedstock input expenditure which requires a feedstock adjustment (the feedstock adjustment issue).

NSD 1162 of 2022 (Federal Court) 2020/0079 (Administrative Appeals Tribunal) - Commissioner of Taxation v Wood - outlines the ATO's response to Commissioner of Taxation v Wood [2023] FCA 574, which concerns whether a payment made by the taxpayer to settle litigation after his relevant employment ended was deductible under section 8-1 of the Income Tax Assessment Act 1997. The Court held that the payment by the taxpayer was deductible because it was incurred in gaining or producing his assessable income and not capital or of a capital nature. The decision does not represent a departure from established principles concerning section 8-1, as cases concerning the application of these principles always turn on their particular facts. 

VID 59 of 2022 - Simplot Australia Pty Limited v Commissioner of Taxation - outlines the ATO's response to this case, which concerned whether 6 frozen food products were 'food of a kind marketed as a prepared meal' for GST purposes. This decision confirms the Commissioner's classification of these particular products. 

2021/3330-3331 and 2021/3324-3327 - Bendel and Commissioner of Taxation - This Interim Decision impact statement provides the ATO's view of the Administrative Appeals Tribunal’s decision in Bendel and Commissioner of Taxation, together with the ATO’s administrative approach until the appeal process is completed. Until the appeal process is finalised, the Commissioner does not intend to revise the current ATO views relating to private company entitlements to trust income, as set out in Taxation Determination 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'? The case concerned whether a private company’s failure to call for payment of entitlements to income of an associated trust was the provision of ’financial accommodation’ and, therefore, a loan for the purposes of section 109D of the Income Tax Assessment Act 1936.

2021/5828 - Bains and Commissioner of Taxation - In this case, the Tribunal determined, based on the facts and circumstances of the case, that a payment received by the Applicant from the Victorian Taxi Reform Fairness Fund was not income according to ordinary concepts. The Commissioner accepts the Tribunal's decision and will administer the law in accordance with the Tribunal's decision. 

Decision impact statement - Domestic Property Developments Pty Ltd as trustee for the Dals Property Trust and Commissioner of Taxation which considers whether the sale of residential property was input taxed since it was used for the making of rental supplies for 5 years.  The decision impact statement says that the Tribunal confirmed the ATO’s view that: 

  • marketing the premises for sale is a 'use' of the premises 
  • the 5-year period can be any continuous period of at least 5 years between when the premises would otherwise have first become new residential premises and when they are sold. 

The decision impact statement states that the Tribunal's findings provide further support for the Commissioner's view regarding the ‘passing on’ issue. 

Decision impact statement NSD 1089 of 2021 (Full Federal Court) 2019/1708 and 2020/2991 (Administrative Appeals Tribunal) - Commissioner of Taxation v Complete Success Solutions Pty Ltd. ATF Complete Success Solutions Trust - outlines the ATO's response to this case which concerns the application of the dominant purpose test and the principal effect test under the general anti-avoidance provisions in Division 165 of the A New Tax System (Goods and Services Tax) Act 1999.

S62/2021Commissioner of Taxation v Carter – outlines the ATO’s response to the High Court’s decision dealing with the issue of whether the default beneficiaries who were entitled to gains from the sale of properties held in a trust under the deed remained liable to tax despite validly disclaiming their right to those gains after year end.

P5/2021; WAD 584 of 2019; VID 1191 of 2018
Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd

Outlines the ATO’s response to the High Court’s decision concerning the ordinary meaning of the term ‘employee’. While the Commissioner was not a party to proceedings, the decision relevantly impacts tax and superannuation legislation administered by the Commissioner that uses the ordinary meaning of ‘employee’ in its provisions.

Appears in Tax News AU: Edition 11

NSD 561 of 2021 NSD 562 of 2021 - Commissioner of Taxation v Virgin Australia Regional Airlines Pty Ltd - This Decision impact statement outlines the ATO's response to the Full Federal Court's decision concerning the interpretation of ‘primary place of employment’ in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 when read with the extended meaning of ‘business premises’ in subsection 136(2) of that Act. 

Appears in Tax News AU: Edition 7

S25/2021 B49/2020 QUD 724 QUD 108 of 2018 - Addy v Commissioner of Taxation - This case decided that a British citizen (the taxpayer) who held a working holiday visa but who was, in unusual circumstances, held to be a resident of Australia was entitled to be taxed at the more favourable rates applicable to her level of income that apply to Australian nationals who are resident of Australia, not the rates normally applicable to individuals who hold working holiday visas.

Appeared in Tax News AU: Edition 1

2020/6929 – MJ and IT Holdings Pty Ltd and Commissioner of Taxation - outlines the ATO's response to the AAT’s decision concerning whether recording an increase in a company loan liability in favour of the Director constituted a constructive payment under section 11-5 of Schedule 1 to the Taxation Administration Act 1953 and whether the making of that record constituted a scheme under section 5(1)(g) of the Boosting Cash Flow for Employers (Coronavirus Economic Response Package) Act 2020. The Tribunal found that there was a constructive payment but that the making of that payment constituted a scheme. The ATO questions the Tribunal’s reasoning on the constructive payment issue notwithstanding that the ultimate decision in the case was favourable to the Commissioner. The decision has not been appealed.

Appeared in Tax News AU: Edition 1

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