Chef on international cruise ship a resident for tax purposes
The AAT has ruled that a person who was employed as a chef on two Norwegian cruise-liners, and who spent 9 months of the year at sea mainly in international waters (and the remaining months in Australia), was a resident of Australia for tax purposes in the 2016 year. In doing so, the AAT confirmed that the chef’s domicile was in Australia and that there had been no intention to change that domicile to Norway in the 2016 year. Furthermore, the AAT found that he did not have a “permanent place of abode” outside Australia and that the ship could not amount to such a place of abode. In any event, the AAT found that there was otherwise no intention that any new place of residence be indefinite. Accordingly, the AAT affirmed that the chef was a resident of Australia for tax purposes in the 2016 income year. (Duff and FCT [2022] AATA 3675, 2 November 2022.)

ATO reminder to SMSFs: administrative penalties for failure to comply
The ATO has reminded trustees of SMSFs that as the regulator of SMSFs there are various courses of action available to the ATO when trustees have not complied with the super laws. This includes applying administrative penalties. The AAT also said that there are a number of factors that determine the amount of the administrative penalty. These include the type of contravention, when it occurred and the number of penalty units that apply. For example, if the provision you contravened during the 2021–22 financial year was in relation to borrowings, a penalty may apply of 60 penalty units and at $222 per unit this would result in you having to pay $13,320 – and that this could be even more if there are multiple contraventions.


Beneficial ownership register – consultation on first phase
The Government has opened consultation on the design features for the first phase of a publicly available “beneficial ownership register”. The register as part of the government’s plan to ensure multinationals pay their fair share of tax. The register is intended to increase transparency of beneficial ownership in Australia and discourage the use of complex structures that avoid legal requirements and obscure tax liabilities. In this consultation on the first phase of the reform, the Government seeks views on a proposal to require specified unlisted entities regulated under the Corporations Act 2001 to maintain beneficial ownership registers. It also seeks comments on proposed amendments to the substantial holding notice and tracing notice regimes in the Corporations Act. Submissions close on 16 December 2022. Note: In future phases, the Government intends to consult on approaches to disclosure of beneficial ownership held through other legal vehicles, such as trusts, and the centralisation of information in a single public registry.

Increased funding for TPB: further protection for taxpayers
The Tax Practitioners Board (TPB) has advised that taxpayers who use the services of a tax practitioner will now gain additional protection against the risk of engaging an untrustworthy agent due to increased funding to TPB in its 2022 October Budget. In its budget, the Government has announced it will invest an additional $30.4m to fund increased investigations by the TPB into high-risk tax practitioners and unregistered preparers. The funding will be delivered over 4 years. In relation to the increased funding, the Government said that it will enhance community confidence, support high standards in the tax profession and by removing unscrupulous tax practitioners from practice, will deliver additional revenue lost through tax dodging schemes.

ATO: How to view and maintain your client lists
The ATO has released information for tax-agents on how to view, download and maintain their client lists “in Online services for agents”. The information deals  with the following matters: viewing your client list; agents with more than 3,500 clients; clients not showing on the client list; FBT client list; maintaining your client list; and where your client list has clients you no longer represent.

APRA: amendments to first phase of SDT project
APRA has commenced consultation on minor amendments to reporting standards introduced under Phase 1 of the Superannuation Data Transformation (SDT) project. The proposed amendments clarify investment option reporting and expenses reporting, reduce the frequency of reporting for some requirements and increase the time for submission of data for some requirements. APRA’s SDT project aims to drive better industry practices and improve member outcomes through heightened transparency.


ATO warning re scams – “what we never do”
The ATO has again encouraged businesses and individuals to brush up on their knowledge of tax and superannuation scams – and that they know what to look out for. In this regard, the ATO states that here are a few things it never does:
  • Send you a link in an email or text asking you to log in to our online services. Scammers use this tactic to harvest your information.
  • Ask for your personal identifying information, such as your TFN or bank account details, on social media. To make sure you’re interacting with verified ATO accounts, look for the blue verified tick on Facebook and Twitter, and a high follower count on LinkedIn.
  • Request payments through unusual methods, such as gift cards, crypto assets or cardless cash.
  • Threaten you with immediate arrest. If this happens, report the incident to us.

The ATO also says that businesses and individual should review the ATO tips on keeping your business information secure.

NSW payroll tax: “de-grouping” discretion required
The NSW Court of Appeal has confirmed that 16 related companies were not required to be “grouped” for NSW payroll tax purposes. The companies had a sole controlling director and carried on, or invested in, various businesses. The Court of Appeal agreed with the decision at first instance that the operations of the companies were separate and independent from each other. Accordingly, the Court of Appeal unanimously agreed that the Commissioner should have exercised his discretion under s 79 of the Payroll Tax Act 2007 (NSW) to “de-group” the companies. (Chief Commissioner of State Revenue v Elanor Operations Pty Ltd [2022] NSWCA 222, 3 November 2022.)

ATO: Late super guarantee contributions – what to do
The ATO has reminded employers that employee super guarantee (SG) contributions for the quarter ending 30 September were due by 28 October and that if you didn’t pay the correct amount of SG to your employees’ super funds in full and on time, you will need to pay the SG charge (SGC). In this case, you will need to: lodge an SGC statement to the ATO by 28 November to avoid additional penalties; and pay the SGC to the ATO. The ATO also reminded employers that there have been some changes since the last quarter that started on 1 July 2022. These were: the rate increased from 10% to 10.5%; and the $450 per month threshold to be eligible for super was removed.


ABF officer not entitled to s 23AG exemption for foreign income
The AAT has ruled that an Australian Border Force (ABF) officer who was seconded to the PNG Customs Service on a temporary basis was not entitled to the exemption for overseas employment income under s 23AG of the ITAA 1936. This was because he was not a member of a “disciplined force” as required. The AAT found that the term “disciplined force” applied to defence and police forces (and the like), but not to ABF officers. The AAT further said that the key factor that “distinguishes military and police forces as ‘disciplined forces’ is that each member of that force is under a legal obligation to comply with any lawful directions of any superior officer in the hierarchy” and that this was not the case in respect of ABF officers who were not under such an obligation. (Willard and FCT [2022] AATA 3723, 2 September 2022.)

Government “objective” for superannuation
The Government has confirmed it will legislate an objective for superannuation and will also address the superannuation tax concessions for high balance funds. The Government made reference to 32 SMSFs with more than $100m in assets, with the largest SMSF having over $400 million in assets. The view is that the objective of superannuation is to provide for retirement income but if individuals have very large retirement balances in a superannuation fund, it is hard to argue those funds are all for retirement income. The Government has confirmed it will firstly focus on implementing an objective for superannuation before making other policy decisions around the taxation of superannuation.

ATO: Insolvency advice and illegal phoenix activity
The ATO has updated its advice to taxpayers around businesses that are insolvent or struggling to pay their debts and the importance of seeking specialist advice from a qualified and registered insolvency practitioners as soon as they can. However, it warned that such businesses should be wary of inappropriate insolvency advice that could lead to illegal phoenixing activity.

ATO: Time’s running out to apply for a director ID
The ATO has reminded directors that they need to apply for a director ID by 30 November 2022. The ATO said the fastest way to apply is online. Directors can streamline their online application by setting up their myGovID with a Strong identity strength. This means they’ll only need to provide either their TFN or residential address, as held by the ATO, at the proof of record ownership step. However, the ATO said that if they can’t set up their myGovID to a Standard or Strong identity strength, there are other ways to apply.
Vic: Business and Community Sport Flood Recovery Grants program
On Wednesday 9th November, the Victorian Government’s Business and Community Sport Flood Recovery Grants program was launched. The key features of the program are:

  • It is jointly funded by the Commonwealth and Victorian Governments under the Disaster Recovery Funding Arrangements in relation to the Victorian Floods which commenced in October 2022 (AGRN 1037) (the “2022 Victorian Floods”).
  • It provides up to $50,000 grants to small businesses, not-for-profit and community sport and active recreation organisations that have suffered direct loss or damage from the 2022 Victorian floods.
  • The objective is to support clean-up, relief and recovery costs for eligible business and/or organisations.
  • Applications for this program will close at 4:00pm on 1 May 2023 or when funds are exhausted, whichever is sooner.

Further program details can be found here:

It is noted that, in the instance of a non-employing business (e.g. sole trader who has no employees), the business owner must derive at least 50% of their income from the business, as evidenced by a ‘Qualified Agent’ (using the required template for the program). Qualified Agent is defined as including a registered Tax Agent who belongs to Tax & Super Australia.

ATO: Consolidation valuation shortcuts
The ATO has released information about how businesses can use valuation shortcuts to determine the market value of certain assets for consolidation purposes. The information includes the following matters: using valuation shortcuts; constraints on use of valuation shortcuts; shortcut 1 – depreciating assets that have not been depreciated on an accelerated basis; shortcut 2 – depreciating assets that have been depreciated on an accelerated basis; shortcut 3 – trading stock; shortcut 4 – employee share interests; shortcut 5 -membership interests that are unlisted shares.

APRA: Consultation re transferring members in or out of funds
APRA has begun consultation on a series of measures to enhance planning by superannuation trustees in the event they need to transfer members out of – or into – their fund. In a discussion paper, APRA outlined proposals aimed at ensuring trustees prepare for, manage and execute successor fund transfers more smoothly and efficiently. The proposals have been prompted by a period of heightened transfer activity in the industry, which has been amplified by APRA’s focus on combating underperformance through measures including the annual performance test and heatmaps. While APRA strongly supports further industry consolidation, APRA said successor fund transfers often ran into problems that eroded the benefits to members.

Weekly Update