No special leave to appeal sought in Guardian case
It has been reported that neither the taxpayer nor the Commissioner has lodged special leave applications to appeal to the High Court from the decision of the Full Federal Court in FCT v Guardian AIT Pty Ltd ATF Australian Investment Trust [2023] FCAFC 3. As a result, the decision of the Full Court stands in which it found that “s 100A reimbursement” provisions did not apply to the distributions of trust income to a company beneficiary and payment of dividends back to the trust. However, the Full Court found in favour of the Commissioner that Pt IVA applied to a transaction in one income year.

ATO: Changes to home-based business expenses
The ATO has reminded those taxpayers who operate some or all of their business from home that the temporary shortcut method ended on 30 June 2022 and that the fixed-rate method has been revised. The ATO said that for the 2022–23 income year, the revised fixed rate is 67 cents per hour and that the no longer need to: have a dedicated home office space; work out the business-use portion of phone, internet, gas and electricity separately. The ATO also said that they can claim the decline in value of depreciating assets and equipment separately, including any repairs and maintenance costs.

ATO: Overdue TPAR – penalties may apply
The ATO has issued a reminder that if your clients make payments to contractors, they may need to report these payments in a Taxable payments annual report (TPAR) and that TPARs must be lodged by 28 August each year. The ATO also emphasised that from 22 March 2023, it will apply “failure to lodge penalties” to those who either did not lodge their 2022 or prior year TPAR or who have been sent three non-lodgment letters about their overdue TPAR. Finally, the ATO said that if you do not need to lodge a TPAR, you can submit a Non-lodgment advice to avoid unnecessary follow up.


NSW: Foreign resident surcharge land duty – not applicable to all foreign residents!
NSW Revenue has issued a release advising that the NSW land surcharge provisions for foreign residents are inconsistent with international tax treaties entered into by the Federal Government with New Zealand, Finland, Germany and South Africa. As a result, and effective immediately, it advised that individuals that are citizens of the nations concerned purchasing residential-related property or land in their own capacity will no longer be required to pay surcharge purchaser duty or surcharge land tax. NSW Revenue also advised that surcharge purchaser duty or surcharge land tax liability for non-individuals, such as corporations, trusts or partnerships that arises because of an entity’s affiliation with these nations, may also be affected by the international tax treaties. It also said that refunds may be available for purchasers/transferees, and landowners, from the nations concerned who paid surcharge purchaser duty or surcharge land tax on or after 1 July 2021.

Updated Practice statement re penalties for record-keeping failure
The ATO has updated Practice Statement PS LA 2005/2 (Penalty for failure to keep or retain records) in relation to the Commissioner’s power to require business taxpayers to undertake a record-keeping course as opposed to having a penalty imposed for failing to keep proper records. Affected taxpayers will be required to complete an approved online record keeping course.

ATO: Tips for reducing a study loan balance
The ATO has released tips that can be passed onto clients to reduce study loan balances. These include: Check the amount their employer is withholding and whether there is enough withheld to cover their compulsory repayment; Advise their employer to calculate the correct withholding amount using the repayments calculator; Check the loan balance by logging onto ATO online services via myGov; and make a voluntary repayment to reduce the total loan amount.


Treasurer’s current statement on Stage 3 tax cuts and Budget
In a recent press conference in Western Australia, the Treasurer Jim Chalmers, stated: “Our position on the tax cuts hasn’t changed. We’ve made it clear in other ways, that we do need to find ways to make the budget more sustainable over time. The very modest but meaningful change that we announced a couple of weeks ago, for example, to superannuation, will make the budget a bit more sustainable over time. But we’ve got those five big pressures on the budget – defence is one of those, this is necessary spending. And we need to make sure that we can find ways to make the budget more sustainable more broadly.”

NSW payroll tax: On-payment of Medicare benefits to practitioners deemed wages
The Court of Appeal of the NSW Supreme Court has dismissed the taxpayer’s appeal and confirmed that the taxpayer, who operated medical centres in Sydney, was liable for payroll tax in relation to Medicare benefits it collected on behalf of its practitioners and which it then on paid to them under the relevant contractual arrangements with the practitioners. In doing so, the Court of Appeal confirmed that the amounts paid by the taxpayer to the medical practitioners were deemed to be “taxable wages” by s 35 of the Payroll Tax Act 2007 (NSW) given the nature of the contractual relationship between the parties and the fact that the payments were made for or in relation to the performance of work. (Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40, 14 March 2023.)

ATO: Do personal services income (PSI) rules apply to you?
The ATO has released information on whether the Personal Services Income (PSI) rules apply to “you”. It states that if over half the income you’ve received from a contract is a reward for your personal efforts or skills (rather than from the use of assets, the sale of goods, or from a business structure), then your income is classified as personal services income (PSI). It further states that you can receive PSI in almost any industry, trade or profession. For example, as a financial professional, IT consultant, construction worker or medical practitioner. The ATO emphasises that if you earn PSI, it’s important to check whether these rules apply to you and that you can self-assess as a PSB if you either: meet the results test for at least 75% of your PSI; or meet one of the other PSB tests and less than 80% of your PSI is from the same entity and its associates.


Super: contribution caps remain unchanged in 2023/24
The concessional cap will remain at $27,500 in 2023/24 as the AWOTE figure for the December 2022 quarter was not high enough for the concessional contributions cap to be indexed from $27,500 to $30,000. This means the non-concessional contributions (NCC) cap for 2023/24 will remain at $110,000 (as it is four times the concessional cap).

As the general transfer balance cap is increasing to $1.9m on 1 July 2023, this means the NCC bring forward thresholds in 2023/24 will be as follows:

Total super balance on 30 June 2023 Maximum NCC cap Bring forward period 
Less than $1.68m $330,000 3 years
$1.68m but less than $1.79m $220,000 2 years
$1.79m but less than $1.9m $110,000 Nil
$1.9m or more Nil Nil

Exposure Draft legislation: Disclosure of subsidiary information
As part of the October 2022-23 Budget, the Government announced a transparency measure for Australian public companies (listed and unlisted) to disclose information on the number of subsidiaries and their country of tax domicile. The proposed measure is intended to strengthen public scrutiny over disclosures made by public companies. The Government has now prepared exposure draft legislation giving effect to this measure. Submissions are due by 13 April 2023. The exposure draft legislation and accompanying materials is available on the Treasury website, here. Note: Previous consultation on the multinational enterprise tax integrity and transparency proposals was held in August and September 2022.

Exposure Draft legislation: Multinational Tax Integrity – thin capitalisation rules
As part of the 2022-23 Budget, an integrity measure was announced to address risks to Australia’s domestic tax base stemming from the use of excessive debt deductions. The proposed measure is intended to strengthen Australia’s thin capitalisation rules. The Government has now prepared exposure draft legislation giving effect to this measure, which replaces the existing asset-based thin capitalisation rules with new earnings-based rules for certain entities. Additionally, the arm’s length debt test, referred to as an external third-party debt test in the draft legislation, will be available for most entities claiming debt deductions on their external third-party debts. Submission are due by 13 April 2023. The exposure draft legislation and accompanying materials is available on the Treasury website, here. Note: a previous consultation on this initiative, along with other multinational enterprise (MNE) tax integrity and transparency proposals, was held in August and September 2022.

Taxpayer’s application to set aside default judgment successful
The NSW Supreme Court has granted a taxpayer’s application to set aside a default judgment given in the ATO’s favour. In did so given the factual circumstances, which included that the taxpayer had not been notified of the filing of application for default judgment and therefore could not submit a defence. The Court also emphasised that the taxpayer’s health issues meant that he did not provide adequate or timely instructions to his solicitors. It also noted that there had not been any significant delay in bringing the current application to set aside the default judgment. (DCT v Judge [2023] NSWSC 204,  9 March 2023.)

Vic: Taxes on foreign property investors – no change
The Victorian State Revenue Office (SRO) has issued a statement saying that it is aware of the announcement made by RevenueNSW regarding the imposition of the NSW foreign owner surcharge and surcharge purchaser duty for residents of South Africa, New Zealand, Finland and Germany (see Daily Update, Wednesday 15 March 2023). However, it states that the position in Victoria has not changed and that the SRO will continue to apply the Victorian provisions to all foreign purchasers and absentee owners.

Weekly Updates