Monday
ATO: Tax issue consultations for November 2022
The ATO has advised that it plans to seek formal comment on the following issue under its consultation program in November 2022: the meaning of “legally and economically independent” under the excise refund scheme; car parking fringe benefits; and the Commissioner’s discretion to determine that an entity does not control another entity. The ATO also advised that “if you are concerned about the delay in the delivery of particular pieces of public advice and guidance, email us at publicguidance@ato.gov.au”.
Taxpayer appeals s 100A reimbursement agreement decision
It has been reported that the taxpayer has appealed to the Full Federal Court against from decision in BBlood Enterprises Pty Ltd & Anor v FCT [2022] FCA 1112. In that case, the Federal Court held that a share buy-back scheme undertaken by a company, which involved the distribution of retained earnings to the discretionary trust that owned it, was a “reimbursement agreement” under s 100A of the ITAA 1936. The Court held in the alternative that the deemed dividend component of the scheme was part of a “dividend stripping operation” as defined by s 207-155 of the ITAA 1997.
Tax agent registration terminated – not and fit and proper person
The AAT has affirmed the decision of the Tax Practitioners Board’s (TPB) to terminate a tax agent’s registration on the basis that he was no longer a “fit and proper person”. Among other things, the AAT found that the tax agent failed to adequately supervise employees working under their registration and to ensure that taxation services provided on his behalf were competently provided. The AAT also noted that the attitude of the tax-agent to the ATO and to the TPB “has not and could not presently be conducted in an atmosphere of mutual trust”. (Grech and Tax Practitioners Board [2022] AATA 3401, 19 October 2022.)
ATO reminds taxpayers to lodge or appoint tax agent
The ATO has reminded Australians who haven’t lodged their 2021–22 tax returns to take action by 31 October by either lodging their return themselves or appointing a registered tax agent by this date. The ATO also noted that by lodging with a registered tax agent, taxpayer will have access to the same pre-filled information available in myTax, and they may have a bit longer to lodge their return.
NSW land tax threshold released
The NSW Government has gazetted land tax thresholds for the 2023 land tax year (based on an 25.61% average increase in property values in NSW between 1 July 2021 and 1 July 2022). The tax-free threshold for 2023 is $969,000.
October Federal Budget for 2022-23 handed down
The 2022-23 October Federal Budget was handed down last night [Tues 25 October 2022]. The Budget estimates an underlying cash deficit of $36.9 billion for 2022-23 (and $44 billion for 2023-24).
The tax-related measures announced in the Budget included the following:
- Intangible assets depreciation – reversal of previously announced option to self-assess effective life for certain intangible assets (eg intellectual property and in-house software), and instead will continue to be set by statute;
- Digital currencies not a foreign currency – legislation will be introduced to clarify that digital currencies (such as Bitcoin) continue to be excluded from the Australian income tax treatment of foreign currency;
- Denial of deductions for payments by “significant global entities” for intangibles – an anti-avoidance rule will be introduced to prevent significant global entities (entities with global revenue of at least $1 billion) from claiming tax deductions for payments made directly or indirectly to related parties in relation to intangibles held in low- or no-tax jurisdictions (ie with a tax rate of less than 15% or “a tax preferential patent box regime without sufficient economic substance”);
- Off-market share buy-backs – the tax treatment of off-market share buy-backs undertaken by listed public companies will be aligned with the treatment of on-market share buy-backs;
- COVID grants treated as NANE – the Budget contain a listing of further State and Territory COVID-19 grant programs eligible for non-assessable, non-exempt treatment; and
- Penalty unit increase – the amount of the Commonwealth penalty unit will increase from $222 to $275 from 1 January 2023.
- The Government announced that it will abandon 8 measures (including superannuation measures) announced by the previous Government, and defer the start date of 3 others.
The superannuation measures announced in the Budget include:
- SMSF residency changes – the proposal to extend the CM&C test safe harbour from 2 to 5 years, and remove the active member test, will now start from the income year commencing on or after assent to the enabling legislation (previously 1 July 2022);
- SMSF audits every 3 years – the Government will not proceed with the former government’s proposal to allow a 3-yearly audit cycle for SMSFs with a good compliance history; and
- retirement income products – the Government will not proceed with the proposal to report standardised metrics in product disclosure statements.
The 2022-23 October Budget Papers can be found, here.
The ATO has released its latest data on “ATO impersonation scams”. Among other things, the ATO states that in September 2022, it received 1,272 reports of “ATO impersonation scams”. Further, the ATO said that “people reported losing $1,374 to scammers” and that this is an 89% decrease from the previous month and a 94%% drop from September 2021. The ATO also said that the most common method of scam payment was gift card.
ATO: Latest news on tax and super law and policy
The ATO has released its latest news on tax and super law and policy. These latest announcements include: Budget 2022–23; Multinational Tax Integrity Package – improved tax transparency; Multinational Tax Integrity Package – amending Australia’s interest limitation (thin capitalisation) rules; Multinational Tax Integrity Package – denying deductions for payments relating to intangibles held in low- or no-tax jurisdictions; and, Improving the integrity of off-market share buybacks.
ATO’s statutory demand for unpaid PAYG upheld
In a matter related to a statutory demand issued by a Deputy Commissioner to a company for an estimate of unpaid PAYG of over $4m, the company has been unsuccessful before the NSW Court of Appeal in seeking to have the demand set aside. The main issue before the Court of Appeal was whether a supporting affidavit by the company’s director, in which she stated that the company did not pay any “wages” in the relevant period, was sufficient to prove that the underlying taxation liability never existed. In affirming the decision at first instance, the Court of Appeal found that the affidavit was “deficient” in that it failed to address whether other payments from which PAYG should have been withheld (such as commission, bonuses and allowances) were paid by the company. (Priority Matters Pty Ltd v DCT [2022] NSWCA 208, , 19 October 2022.)
WA: Duties concessions for farm-in agreements Bill 2022
The Duties Amendment (Farm-in Agreements) Bill 2022 has been introduced into the Western Australian Parliament. Broadly, it amends the Duties Act 2008 to maintain the long-standing duty concessions for mining “farm-in agreements”.
The Treasury Laws Amendment (2022 Measures No. 3) Bill 2022 and the Foreign Acquisitions and Takeovers Fees Imposition Amendment Bill 2022 were introduced into Federal Parliament yesterday [Thurs 27 October 2022]. Among other things, the Bills will: double the maximum financial penalties for contraventions of provisions that relate only to residential land; enable the disclosure of protected information to Australian government agencies for the purpose of administering major disaster support programs approved by the minister; extends the temporary mechanism which enables ministers to make alternative arrangements for meeting information and documentary requirements. At the same time, the Income Tax Amendment (Labour Mobility Program) Bill 2022 was also introduced to change the title of the Income Tax (Seasonal Labour Mobility Program Withholding Tax) Act 2012 to the Income Tax (Labour Mobility Program Withholding Tax) Act 2012 to reflect the reduction in the tax on certain income earned by foreign resident workers participating in the Pacific Australia Labour Mobility scheme from 32.5% to 15%
