Monday
Assessments for $2.3m of undeclared income upheld
A taxpayer has failed to prove that amended assessments issued to him for the 2007 to 2011 income years for $2.3m of undeclared income were excessive. The taxpayer claimed that the amounts were mainly from gambling winnings. However, the AAT found that the taxpayer had not shown that the assessments were excessive or established what actual taxable income should have been. The AAT also found that the taxpayer had not discharged the onus of proving that there was no fraud or evasion, thereby enabling the assessments to be issued out of time. (Chhua and FCT [2022] AATA 2593, 12 August 2022.)
WA: Separating de-factos can now split super
The Western Australian government has announced that separating de facto couples will be able to split their superannuation in the same way as their eastern States counterparts following the passage of new laws through State Parliament. The long-anticipated reform will mean that de-factos in WA are no longer disadvantaged with regard to splitting superannuation assets in the event that their relationship breaks down. Prior to the reform, the Family Court of Western Australia was unable to make an order splitting superannuation assets when it came to de facto couples. This was in contrast to married couples in WA, as well as married and de facto couples elsewhere in Australia.
ATO: Super – annual balance reporting reminders
The ATO has issued a reminder that super funds need to report the 30 June 2022 account balance amount, any applicable phase values, notional taxed contributions, and defined benefit contributions, on or before 31 October 2022 via the Member account transaction service (MATS). When reporting annual amounts and balances for 30 June 2022, super funds should ensure the member account is already reported through the Member Account Attribute Service (MAAS). The Australian business number (ABN), unique superannuation identifier (USI) and member account identifier reported in the MATS should be identical to those reported through MAAS for the member account.
ATO reminder: Rental properties and second-hand depreciating assets
The ATO has issued a reminder that since 1 July 2017, taxpayers can’t claim the decline in value of second-hand depreciating assets used in residential rental properties, unless the property is used for carrying on a business (eg a hotel) or they are an excluded entity. Furthermore, the change doesn’t apply to properties rented out prior to this date, or where the property is: newly built; substantially renovated (where all or most of a building is removed or replaced) and no-one else has claimed a deduction for the assets; no-one resided in the property before you acquired it, or the taxpayer acquired the property within 6 months of the build or substantial renovation.
No grouping for GST purposes
The AAT has upheld the ATO’s decision to revoke a GST group registration as the same ownership requirements for “grouping” were not met. The AAT found that the taxpayer had failed to show that there was at least a 90% stake held in the taxpayer and another company with which it was originally grouped for the purpose of the ownership requirements in s 48-10 of the GST Act. It, therefore, affirmed the ATO’s decision to revoke the GST group registration. (Adcon Resources Vic Pty Ltd and FCT [2022] AATA 2629, 16 August 2022.)
Crypto asset reforms: Government consultation paper
The Federal Government has announced that it will improve the way Australia’s regulatory system manages crypto assets, to keep up with developments and provide greater protections for consumers. In this regard, the Government said that, for example, the ATO estimates that more than one million taxpayers have interacted with the crypto asset ecosystem since 2018. In the light of these matters the Government said that a public consultation paper on “token mapping” will be released soon, which will aim to help identify how crypto assets and related services should be regulated.
GST liabilities cannot be released
The AAT has confirmed that GST liabilities are not a “tax debt” that can be released on the grounds of serious hardship. The AAT found that GST liabilities were not listed “tax liabilities” that were eligible for release under s 340-10 of Sch 1 of the TAA 1953. It also found that there was no discretion to waive a GST liability or any other tax liability not listed in s 340-10. Further, the AAT could not take into account the fact that the taxpayer was a “victim of family violence, perpetrated against them by their former partner, who …was trading under their ABN”. However, the taxpayer was partly successful in having other tax liabilities waived. (FSYC and FCT [2022] AATA 2680, 19 August 2022.)
ATO: Tax agent phone services guide
The ATO has released information on its “tax agent phone services (Fast Key Code) guide” to enable tax-agents obtain the right phone number for relevant topic areas. These include: Account information Fast Key Code; Activity statements Fast Key Codes; Debt and payment Fast Key Codes; JobMaker Hiring Credit Fast Key Code; Lodgment Fast Key Codes; Practice administration Fast Key Codes; Registration Fast Key Codes; Super Fast Key Codes; Tax law and advice Fast Key Codes; and, General phone services
Entities denied deductions for management fees, interest etc
In two related cases, a trust and several companies have been denied deductions for management fees, bad debts and interest on loans essentially on the basis that the amounts in question were not incurred in gaining or producing the assessable income of the entities and that amounts were, in effect, set for their “fiscal convenience”. There was also insufficient evidence to show whether the alleged bad debts were actually written-off as required. In short, the Federal Court ruled that the taxpayers failed to show, on the balance of probabilities, that the relevant amended assessments were “excessive” – having also found that the taxpayers failed to show that there was no fraud or evasion in respect of the assessments that were issued out of time. (Anglo American Investments Pty Ltd (Trustee) v FCT [2022] FCA 971, 19 August 2022; Melbourne Corporation of Australia Pty Ltd and Anor v FCT [2021] FCA 972, 19 August 2022.)
Thursday
Improved financial adviser standards – consultation
The Government has announced that as part of improving the overall professional qualification framework to support the provision of quality financial advice, a consultation paper has been published for the purpose of exploring options for improving the overall advice offering. The consultation paper proposes removing the requirement for a bachelor’s degree if an advisor has ten years’ experience, a clean record and has passed relevant exams. It also proposes several options for amending current education requirements on new industry entrants.
Note: Tax and Super Australia is inviting its members to provide feedback to us as part of Tax and Super Australia’s submission. Please send any feedback to Submissions@taxandsuperaustralia.com.au
Draft leg: Corporations and Financial Services Law
The Government has announced that it is releasing exposure draft legislation with the intention of reducing the complexity of Australia’s corporations and financial services laws by making these laws more adaptive, efficient and navigable within existing policy settings. The draft legislation implements formal recommendations and informal suggestions made by the Australian Law Reform Commission (ALRC) in Interim Report A of its Review of the Legislative Framework for Corporations and Financial Services Regulations.
APRA and ASIC release notes on super CEO roundtable
APRA and ASIC are releasing the public notes on the Superannuation CEO Roundtable held on 12 August 2022. The event focused on the implementation of the Retirement Income Covenant, which took effect on 1 July 2022.
Friday
New Covid-related grant programs declared NANE
The Treasurer has issued Income Tax Assessment (Eligible State and Territory COVID-19 Economic Recovery Grant Programs) Amendment Declaration (No. 4) 2022. It declares various grant programs administered by Victoria and the ACT as eligible programs for the purposes of being non-assessable non-exempt income (NANE) under s 59-97 of the ITAA 1997. The new Victorian grant programs include: Business Costs Assistance Program Round Two – Top Up; Business Costs Assistance Program Round Three; Business Costs Assistance Program Round Four; Business Costs Assistance Program Round Four – Construction; and Business Costs Assistance Program Round Five.
ATO: Final warnings to lodge SMSF annual returns
The ATO has advised that in April and June this year it issued final warning letters to trustees of 573 SMSF where at least one trustee was either a tax agent or auditor. The letter provided a warning to lodge outstanding annual returns or be disqualified and risk other enforcement action. Following these campaigns, the ATO identified 702 trustees from 356 funds who have yet to lodge. The ATO also said that it will shortly be contacting those trustees who have ignored it final warnings to begin compliance action where appropriate.
ATO Decision Impact Statement: Aurizon Holdings
The ATO has released its Decision Impact Statement on the Federal Court decision in Aurizon Holdings Limited v FCT [2022] FCA 368. In that case the Court considered whether an amount credited to a “Capital Distribution” account of a company by the State of Queensland which did not coincide with the company issuing shares to the State could be properly characterised as an amount of “share capital” of the company (within the meaning of the ITAA 1997). The Court held that the amount so was an amount of “share capital”.
