Monday
Section 100A reimbursement rulings to be issued
The ATO has advised that it proposes to issue the following “section 100A reimbursement” rulings in the week commencing 5 December 2022: Taxation Ruling TR 2022/4 Income tax: section 100A reimbursement agreements (previously issued as draft Taxation Ruling TR 2022/D1); and Practical Compliance Guideline PCG 2022/2 s 100A reimbursement agreements – ATO compliance approach.
ATO: Missed the director ID deadline?
The ATO has reminded directors that it is taking a reasonable compliance approach for those directors who are “trying to do the right thing”. However, it says that after 14 December 2022, penalties may apply for directors who are deliberately not meeting their obligations. The ATO emphasised that the fastest way to apply is online. To apply online, directors must have at least a Standard identity strength myGovID. This will streamline the process as they only need to provide their TFN or residential address, as held by the ATO, at the “proof of record ownership” step.
Miscellaneous Government grants & assistance avialable
The following is a summary of various Government grants & assistance available at present in relation to small business assistance, flood relief and investment incentives:
- Round 11 of the Coles Nurture Fund will open on Monday, 30 January 2023. The Fund, which provides grants of up to $500,000, is intended to help small to medium sized businesses develop new market-leading products, technologies, systems and processes.
- Applications for the NSW R&D fund are opening soon. This grant provides funding for small and medium enterprises (SMEs) and scaleups to commercialise products that address the health, social or economic impacts of the COVID-19 pandemic.
- The NSW Future Industries Investment Program will open on Thursday 8 December. The Program will provide rebates for eligible expenses to businesses investing in NSW-based projects that boost the productivity of the NSW economy.
- The Victorian Government’s Zero Emissions Vehicle Emerging Technologies grant is now open. The program provides $3.18 million in grants to support innovative technologies in electric vehicle charging. It closes on 10 February 2023.
- The Victorian Government’s Small Business Immediate Flood Relief Program is now open. The program provides emergency support grants for businesses directly affected by the Victorian flood events that commenced in October 2022. It closes on 13 January 2023.
- The Victorian Government’s Small Business and Not-for-Profit Flood Recovery Concessional Loans program is now open. The program provides concessional loans for small businesses and not-for-profit organisations which have suffered significant damage as a result of the recent Victorian floods. It closes on 25 May 2023.
Tuesday
Submissions called for 2023-24 Budget
The Government has called for submissions from individuals, businesses and community groups on their views regarding priorities for the 2023-24 Budget. Stakeholders are invited to share their submissions for the 2023-24 Budget by Friday 27 January 2023.
Safeguard Mechanism (Crediting) Amendment Bill introduced
The Safeguard Mechanism (Crediting) Amendment Bill 2022 has been introduced into Parliament. It deals with measures to reduce emissions in line with Australia’s climate targets. Among other things, it amends the ITAA 1997 so that proposed safeguard mechanism credit units (SMCs) receive the same tax treatment as other specified units, like Australian Carbon Credit Units.
Super prudential standard re audit requirements revised
The Superannuation (Prudential Standard) Determination No. 4 of 2022 has been made. It revokes the Superannuation (Prudential Standard) Determination No. 1 of 2018, including Prudential Standard SPS 310 Audit and Related Matters made under that determination. This instrument also determines the new Prudential Standard SPS 310 Audit and Related Matters, which applies to all RSE licensees and all RSE auditors. These include revised reporting standards for an RSE auditor’s report.
Court overturns decision not to disqualify SMSF auditor
The ASIC has advised that Federal Court in ASIC v Gilliland [2022] FCA 1421 has set aside a decision of the AAT not to disqualify John Gilliland’s registration as an SMSF auditor. Following an appeal by ASIC, the Court found that general deterrence is a relevant consideration in deciding whether to disqualify a person as an approved SMSF auditor under s 130F of the SIS Act 1993. The Court found that the AAT had not considered general deterrence when making its decision. The matter has been remitted back to the AAT to have the matter re-determined. As a result of the Federal Court’s decision, Mr Gilliland is again disqualified as an SMSF auditor, pending a final decision by the AAT.
ATO reminder: Early access to super on compassionate grounds
The ATO has issued a reminder that if you require access to your super on compassionate grounds, you should submit your application as soon as possible as any applications that haven’t been finalised prior to 23 December 2022 will not be assessed until our offices reopen. The ATO also emphasised that each application is individually assessed against the legislative requirements and that the amount of super you can withdraw is limited to what you reasonably need to meet the unpaid expense. Compassionate grounds include needing money to pay for: medical treatment and medical transport for you or your dependant; making a payment on a home loan or council rates so you don’t lose your home; modifying your home or vehicle to accommodate your or your dependant’s severe disability; and expenses associated with the death, funeral or burial of your dependant. Note also: the super you withdraw is paid and taxed as a normal super lump sum.
Wednesday
ATO: New “client-to-agent linking” process
Following on from a pilot project undertaken earlier in the year to prevent fraudulent activity, the ATO has advised that from 13 December 2022, it will introduce a new “client-to-agent linking” process for adding a new client (or adding additional authorisations to existing clients). The new process will apply to agents servicing businesses in the top 500 privately-owned wealthy groups (and most public and multinational businesses), although the intention is to progressively extend the process to other taxpayers. Existing client authorisations are not affected. The new linking process requires a client to set up access to Online services for business (‘OSfB’), have a myGovID (different to their myGOV account), use the Relationship Authorisation Manager to link to their business ABN, locate an agent’s Registered Agent Number, nominate the agent and inform the agent of the nomination. The agent then has 7 calendar days to action the nomination (i.e. to add or update the client).
IFPA comment: Like the Director Identification Number (director ID) registration process, tax agents cannot complete the agent nomination on behalf of the client (nor can an agent request an extension to the 7-day nomination period – the client must do this via the OSfB). The ATO’s privacy and security concerns are warranted, particularly considering the recent public data breaches that have occurred. IFPA support additional privacy and security measures being taken that complement the recent client verification practices. And for sophisticated taxpayers/clients, the new client-to-agent linking process should not be too burdensome. However, as recent experience with the director ID process has shown, this may not be the experience for many other taxpayers/clients – with agents having to wear the often-non-recoverable cost of compliance. It is difficult to see why the ATO would expect any different outcome here. Impediments to taxpayers/clients seeking to appoint (or change) agents should be avoided where possible, but if necessary, balanced with security risks.
Financial Sector Reform Bill 2022 passed
The Financial Sector Reform Bill 2022 passed Parliament on 2 December 2022. It amends the Credit Act to enhance the consumer protection framework for consumers of small amount credit contracts and consumer leases, while ensuring these products can continue to fulfil an important role in the economy. These amendments generally commence on the day after the end of the period of six months beginning on the day the Bill receives Royal Assent. The anti-avoidance measures commence on the day after the Bill receives Royal Assent.
STP reporting determination: Commonwealth to Australian Apprentices
The ATO has made Legislative Instrument LI 2022/36 Taxation Administration – Single Touch Payroll – Amounts to be Notified Amendment (Australian Apprenticeships Incentives) Determination 2022. It amends the Taxation Administration – Single Touch Payroll – Amounts to be Notified Determination 2021 to provide for information which may be required to be reported through Single Touch Payroll (STP). The amendment effectively brings support payments made by the Commonwealth to Australian Apprentices within STP reporting.
ATO super guidance: reporting successor and intra fund transfers
The ATO has released guidance for superannuation providers and suppliers who will be reporting successor and intra fund transfers. The information deals with a range of issues, including: Successor Fund Transfer; Intra-Fund Transfer; When considering an SFT or an IFT; Managing member accounts; Income streams; Intra fund transfer; and Minimum pension standards.
Thursday
Reminder: Section 100A reimbursement rulings to be issued today
The ATO has advised that it proposes to issue the following “section 100A reimbursement” rulings in the week commencing 5 December 2022: Taxation Ruling TR 2022/4 Income tax: section 100A reimbursement agreements (previously issued as draft Taxation Ruling TR 2022/D1); and Practical Compliance Guideline PCG 2022/2 s 100A reimbursement agreements – ATO compliance approach.
ATO’s December closure period
The ATO has advised that its offices, phone support services and customer response on our social media pages will be closed for a short time during our annual December closure. The closure will start midday local time Friday 23 December 2022. Normal services will resume at 8 am local time on Tuesday 3 January 2023. However, tax-agents and taxpayers can continue to use the ATO’s online services to lodge and pay any obligations during this period. Also, the ATO’s technical help desk, which offers supports with any technical issues accessing ATO online services, will be available from 27 to 30 December between 7 am and midnight AEDT.
ATO: Credit for interest on early payments
The ATO has reminded taxpayers that they are entitled to interest on early payments (IEP) when they pay certain tax liabilities more than 14 days before the due date. The ATO also said that IEP is worked out and paid to your bank account – so taxpayers need to make sure their bank account details are up to date. The ATO also said that if it doesn’t have the correct bank account details, it will only pay IEP by cheque if the amount is over $9.99. Lesser amounts will remain on the account for a maximum of 12 months, unless the amount has been offset against an existing tax debt or paid with another credit. Nevertheless, taxpayers can request payment of an IEP credit retained on your account through secure mail in Online services for business or in writing.
Friday
Long-awaited Ruling on s 100A reimbursement agreements released
The ATO has released TR 2022/4 Income tax: section 100A reimbursement agreements. It provides the Commissioner’s view about what is a reimbursement agreement for s 100A of the ITAA 1936, including the exceptions for agreements that do not have a tax reduction purpose and for agreements entered into in the course of ordinary family commercial dealing. Importantly, it applies to trust arrangements both before and after its issue and should be read in conjunction with Practical Compliance Guideline PCG 2022/2 Section 100A reimbursement agreements – ATO compliance approach (below). Note: It was originally released in February 2022 as Draft Taxation Ruling TR 2022/D1 Income tax: section 100A reimbursement agreements and takes into account feedback received from the community and tax professionals on the draft Ruling.
IPFA comment: While clarifying a number of issues and including some additional examples, the finalised guidance continues to read down the scope of the ordinary family or commercial dealing exception in section 100A(13). The Commissioner remains reluctant to give more practical guidance as to when the exception applies, insisting that each case depends on its own facts and circumstances. This makes making distributions to adult beneficiaries fraught with risk, unless trustees are prepared to hand substantial amounts of money to those beneficiaries with no strings attached.
ATO compliance approach on s 100A reimbursement agreements
The ATO has released PCG 2022/2 Section 100A reimbursement agreements – ATO compliance approach. It sets out how the ATO assesses risk for a range of trust arrangements to which s 100A of the ITAA 1936 might apply and aims to provide more certainty to taxpayers and advisers by setting out how we will engage with them. Among other things, it provides more examples to help taxpayers understand how the Commissioner will dedicate compliance resources for the arrangements that are low risk (green zone) or high risk (red zone), and it should be read in conjunction with Taxation Ruling TR 2022/4 Income tax: section 100A reimbursement agreements. Importantly, it applies before and after its date of issue (albeit, for entitlements arising before 1 July 2022, the Commissioner will apply the guidance first published on the ATO’s website in 2014 to the extent it is more favourable to the taxpayer’s circumstances).
IPFA comment: The finalised PCG is not intended to indicate when section 100A will or will not apply – it is a risk matrix governing the way in which the ATO will dedicate its compliance resources. An increase in the number of scenarios helps taxpayers and advisers better understand which arrangements are likely to attract the ATO’s interest. The PCG scenarios do not go much further than the ruling in clarifying the scope of the ordinary family or commercial dealing exception.
ATO data-matching program – private health insurance details
The ATO has advised that it will conduct a data matching program to acquire private health insurance (PHI) statement data from private health insurance statement providers for 2014-15 through to 2027-28. The information that will be obtained includes: software provider’s identification details; PHI provider’s identification details; insured individuals’ identification details; and PHI statement details. The ATO estimates that records relating to approximately 14.6 million individuals will be obtained each financial year.
Regulations re 4 year period of review for complex affairs
The ATO has made Income Tax Assessment (1936 Act) Amendment (Period of Review) Regulations 2022. This instrument amends the ITAA 1936 Act Regulations to exclude certain entities with particularly complex tax affairs or significant international tax dealings from a shortened two year period of review in respect of income tax assessments, which are instead subject to the standard four year period of review.
ASIC: Tips for giving SMSFs advice
ASIC has released Information Sheet 274 (INFO 274). It provides tips to help advisers comply with their legal obligations when giving advice about SMSFs. This includes factors to consider when advising a client to withdraw their superannuation from a fund regulated by APRA to set up an SMSF. The information also covers the following topics: understanding your obligations when giving SMSF advice; using your professional judgement to assess whether an SMSF is suitable for your client; considering the risks of an SMSF compared to an APRA-regulated superannuation fund; and providing appropriate advice to your client that considers the costs of an SMSF and how much they would need to set up an SMSF.
