ATO data matching program: ride-sourcing data 
The ATO has advised that it will acquire ride sourcing data to identify individuals that may be engaged in providing ride sourcing services during the 2022–23 financial year. The data items include: (a) identification details (driver identifier; ABN, driver name; birth date; mobile phone number; email address; address); and (b) transaction details (bank account details, aggregated payment details, gross fares, net amount paid to driver, and all other income to which GST may or may not apply to) of all payments received in the relevant period. The ATO estimates that records relating to approximately 200,000 individuals will be obtained each financial year.

Super work test anomaly to be resolved 
The ATO has released draft Legislative Instrument LI 2023/D11 to address an anomaly that arose when changes that were made to the work test requirement saw the work test transfer from the SIS regulations to the Tax Act (1997).

To recap, since 1 July 2022, the requirement for anyone aged between 67 and 75 to satisfy a work test before making a voluntary superannuation contribution was abolished. While the work test no longer applies to most voluntary contributions, the work test (or the work test exemption) continues to apply if personal deductible contributions are made where an individual has reached age 67 at the time of making the contribution.

However, when the work test requirement was transferred to the Tax Act, an anomaly arose as the definition of employee in the Tax Act differs from that of the SIS regulations. That is, there is no definition of ’employee’ in the Tax Act so it takes its ordinary common law meaning. Whereas both the SIS Act and the SG Act 1992 provide for an extended meaning of employee to specifically include directors who are entitled to remuneration. Therefore, moving the work test requirement to the Tax Act created a situation where only ‘common-law employees’ were able to count their hours worked towards meeting the work test. This meant that certain individuals, such as company directors, that may have previously been eligible to make a contribution and claim a deduction prior to 1 July 2022 were impacted.

Fortunately, this unintended consequence will be resolved due to the draft LI which has been released by the ATO, which will ensure that an individual can meet the work test if they satisfy the extended definition of an employee under the SIS Act.



ATO Decision Impact Statement on s 100A Guardian case
On 24 April 2023, the Commissioner released a Decision Impact Statement (DIS) on the Full Federal Court’s recent decision in the Guardian case, where the taxpayer enjoyed a victory on the s 100A front while the Commissioner had one of his two Part IVA determinations upheld.

The DIS stresses (correctly in IFPA’s view) that the Full Court’s confirmation that there was no reimbursement agreement was very much evidence based. Whether the relevant agreement or understanding exists at the time the trust income is appointed will in future need to be decided on a case by case basis: “the question of whether an agreement exists at a particular time entails a fact-finding exercise which may require the examination of evidence from a range of sources.”

The DIS further indicates the Commissioner accepts the Full Court’s findings concerning the role of advisers, although this will depend on whether taxpayers have agreed in advance to follow an adviser’s plans or recommendations. On Part IVA, the DIS notes the effectiveness of the 2012 amendments to Part IVA, under which the higher Australian tax cost of the Commissioner’s counterfactual is to be disregarded in working out whether there is a tax benefit.

The most telling observation in the DIS is that the Full Court had no need to consider the scope of the ordinary dealing exception, which is in desperate need of clarification.

ATO: “Early engagement Commercial Deals” program
The ATO has issued a reminder of its “Commercial Deals” program engages to help understand the tax implications of transactions entered into with private vendors selling their business or commercial assets with a value in excess of $20m. The ATO said that it wants tax professionals with private clients who have undertaken a commercial deal to engage early with our Commercial Deals program to clarify the tax implications of the transaction, and that “the perfect time to engage with us is after completing the transaction and before lodging”. The ATO also emphasised that such engagement with the ATO is the key in “providing quality advice for your client”.

ASIC: Former financial adviser imprisoned for fraud
ASIC has advised that a former financial adviser has been sentenced to six years imprisonment (with eligibility for parole after one and a half years) after pleading guilty to nine counts of fraud totalling $652,500. He was a director and financial adviser of his financial planning business.  Between 2015 and 2018, he withdrew funds without authorisation from his clients’ SMSF accounts (and a related entity) and dishonestly used those funds for personal debts and expenses, as well as for Refocus’ business expenses.



Default assessments upheld: failure to discharge onus
The AAT has ruled that a taxpayer has failed to discharge the onus of proving that default amended assessments issued to him for the 2010 to 2016 income tax years were “excessive”. The assessments arose in relation to unexplained amounts deposited in the taxpayer’s bank accounts. Before the AAT, the taxpayer was unsuccessful in arguing, among other things, that the amounts were loans from his father or amounts owed to him from working in his father’s business. The AAT also found that the taxpayer failed to produce any appropriate records or corroborating evidence to support his claims. The AAT also upheld penalties for false and misleading statements in relation to the omissions in his tax returns and “intentional disregard” of his tax obligations for, in effect, not properly engaging with his accountant in the preparation of his returns. (Elcheikh and FCT [2023] AATA 859, 21 April 2023).

ABS: Taxation Revenue statistics released
The Australian Bureau of Statistics (ABS) has released statistics about taxation revenue collected by the various levels of government in Australia. In the year 2021-22 across all levels of government, total taxation revenue was $683.0 billion (which was $89.9 billion (15.2%) higher than 2020-21). It also represented 29.6% as a percentage of GDP.

Greens to oppose the Government’s housing Bill?
In an address to the National Press Club on 26 April 2023, Greens Leader Adam Bandt said the upcoming Budget must include more for renters and that the Greens were willing to hold out on passage of the government’s housing bill until Labor addresses the rental crisis. Mr Bandt also pointed out that the biggest Budget “tax expenditures” in regard to housing were negative gearing and capital gains tax breaks, which he said will push up rents and make the housing crisis worse. Mr Bandt also outlined the Greens’ proposal to scrap tax handouts for landlords and wealthy property investors with more than one home, to fund an incentive for states to implement a two year rent freeze, to build publicly-owned housing and to double rent assistance for 1.4 million students, single parents, pensioners, people with disabilities, families and those looking for work.

APRA: latest Choice Heatmap
APRA has published its latest Choice Heatmap to show member outcomes in the superannuation product segment where investment options are actively chosen by consumers. Among other things, the heatmap illustrated that one in five Choice investment options with an eight-year history has significantly underperformed the heatmap benchmarks. By comparison, in the 2021 Choice Heatmap, one in four Choice investment options significantly underperformed the benchmarks. The heatmap also showed that two-thirds of Choice investment options that are closed to new members had poor or significantly poor performance relative to the heatmap benchmarks. It also showed that average fees are higher in Choice products that are closed to new members.



ATO: STP and managing Super Guarantee non-compliance
The ATO (via the Tax Practitioner Stewardship and Forum) has released information about expanding the use of Single Touch Payroll data for the purpose of managing Superannuation Guarantee (SG) non-compliance. It states that the ATO is enhancing how it matches and store STP and MATS data to proactively support employers and future improvements to its administration of SG. Among other things, the ATO says that practitioners and tax agents should make sure they understand the record keeping rules for business and that they should check that reporting and payments are timely and accurate. The ATO also states that payroll governance processes should be regularly reviewed to confirm they are appropriate for the relevant business. Finally, the ATO emphasises that SG payments need to be received by the employees’ fund on or before the due date.

ATO: Applying for a lodgment deferral
The ATO has released information about how to apply for a lodgment deferral. The ATO states that before you apply, you will need to find out how lodgment deferrals work, which obligations are eligible and when you don’t need to apply. The information you need will to apply, include full details of: why you are submitting the request and if applicable, why it’s after the lodgment due date; and the exceptional or unforeseen circumstances affecting your ability to lodge by the due date.

ASIC: updated guidance for licensees on “reportable situations”
ASIC has reported that it has released updated guidance for industry on making notifications to ASIC under the reportable situations regime (formerly breach reporting). The updates to Regulatory Guide 78 Breach reporting by AFS licensees and credit licensees (RG 78) clarify aspects of the existing guidance and provide new guidance in response to operational issues that have arisen since the implementation of the regime on 1 October 2021. ASIC said its focus is to improve consistency and quality of reporting practices by licensees and reduce regulatory burden.

Weekly Updates