The High Court has ruled that that a binding death benefit nomination (BDBN) in an SMSF does not need to comply with Reg 6.17A of the SIS Regs – which provides, among other things, that a BDBN lapses after three years and requires two independent witnesses. In this case, the deceased had inserted a BDBN clause in his SMSF trust deed which stated that if either member of the fund died, the trustee was to distribute the deceased member’s balance to the surviving member. The deceased died more than three years after making the BDBN in favour of his de facto (the only other member of the fund). The deceased’s daughter argued that the BDBN clause did not comply with the standards prescribed by reg 6.17A. However, the High Court unanimously held that Reg 6.17A does not apply to SMSFs and therefore a BDBN for an SMSF can last indefinitely. (Hill v Zuda Pty Ltd [2022] HCA 21, 15 June 2022.) Comment: SMSF members should consider having their trust deed reviewed to ensure the SMSF deed provides for non-lapsing BDBNs, that the deed is updated if it has a BDBN provision that relies on reg 6.17A, and to ensure the deed is valid and reflects their wishes and circumstances.GST fraud crackdown across the country
The ATO has advised that a dozen warrants were executed across the country last week as part of Operation Protego, as the ATO continues to work with the AFP and other Government agencies to crackdown on individuals suspected of defrauding the community by inventing fake businesses to claim false GST refunds. ATO Deputy Commissioner Will Day said that “the ATO has stopped more than a billion dollars in attempted fraud. This is a clear warning to individuals considering participating – you will not be successful, you are not anonymous, and you will face the consequences of your attempts”.
Shortcut Method. Gone but maybe not forgotten.
The 80c Shortcut Method (SCM) for claiming working from home (WFH) deductions throughout the pandemic has been a blessing for everyone whose home suddenly became their office during the many lockdowns as it greatly reduced the administrative burden that comes with the more traditional WFH methods (see the Explainer in the January-February 2022 edition of the Outlook magazine for a summary of the WFH methods available). When originally introduced the SCM was to run until 30 June 2022, but this was soon extended to 30 June 2021 and then 30 June 2022 as COVID lingered. However the SCM is due to end on 30 June 2022 and the ATO are adamant that it will not be extended. However all is not necessarily lost. While the SCM will be relegated to COVID history the ATO have indicated that they are considering a new cents per hour method for WFH claims, in recognition that WFH is here to stay for many Australians. Therefore workers who have been diligently recording their hours as part of the SCM calculation should continue to do so throughout the 2022-23 income year until a new WFH method lands.
The Land Tax Amendment (Foreign Investors) Bill 2022 (Tas) and the Land Tax Rating Amendment (Foreign Investors) Bill 2022 (Tas) have now been passed by the Tasmanian Parliament. Broadly, they introduce a 2% foreign investor land tax surcharge that applies to residential land that is acquired by a foreign resident from 1 July 2022 or residential land that is owned by company or trust that becomes foreign resident from 1 July 2022.AFS licensee fined for misleading conduct
ASIC has advised that the Federal Court in ASIC v Squirrel Superannuation Services Pty Ltd [2022] FCA 702 has ordered an AFS licensee to pay a $55,000 penalty for false and misleading marketing regarding investing in residential property via SMSFs. The Court found the AFS licensee distributed a brochure conveying misleading representations about residential property investment returns at a seminar and via email on about 9,420 occasions, between March 2015 to January 2019. The Court found that the AFS licensee engaged in conduct that was misleading and deceptive or likely to mislead or deceive and, accordingly, imposed the penalty.
The ATO has released further guidance for tax professionals and trustees to help them manage their obligations for 30 June 2022 in light of the draft guidance on trust reimbursement agreements where s 100A may apply. The ATO said for trust entitlements arising in the current income year ending 30 June 2022, trustees should: consider the ATO’s draft guidance to help understand the ATO’s view of “what is an ‘ordinary family or commercial dealing” and the instances where there is a potential risk that s100A may apply; refer to the ATO’s 2014 website guidance which sets out examples for when s 100A may or may not apply; and maintain good records to evidence arrangements.NSW 2022-23 Budget handed down
The NSW Government has handed down its 2022-23 Budget. The revenue measures include: a reduction in the land tax early payment discount from 1.5% to 0.5% from 1 January 2023; the foreign investor surcharge land tax will be increased from 2% to 4% pa from the 2023 land tax year; and, a funding program will be established to offer grant payments and payroll tax exemptions to encourage businesses of future industries to establish or expand in NSW. A “shared equity home purchase” scheme will also be available for eligible single persons and for first home buyers who are police, teachers and nurses under a 2-year trial. Importantly, a “First Home Buyer Property Tax option” scheme was also introduced (see below). Full details of the Budget papers can be found here.
As part of the its Budget for 2022-2023, the NSW Government has announced that first home buyers will be able to choose between an upfront payment or a smaller annual property tax under proposed reforms to housing stamp duty in NSW. The property tax option will be available for properties for up to $1.5m, with proposed effect from 16 January 2023. First home buyers who opt into the property tax will pay an annual property tax of $400 plus 0.3% of the land value of the property. Full details of the proposal can be found here.Queensland 2022-23 Budget handed down
The Queensland Government has handed down its 2022-23 Budget. Among other things, it contains the following revenue measures: a 0.25% “mental health levy” on large employers with annual Australian taxable wages over $10m (for payroll tax liabilities arising on or after 1 January 2023); a 5% racing levy to the betting tax and making bonus or free bets taxable (with effect from 1 December 2022); retirement visa holders to be exempt from additional foreign acquirer duty for purchases of their principal place of residence on or after 1 January 2023; extending the payroll tax deduction will be extended from the current ceiling of $6.5m annual Australian taxable wages up to $10.4m (for payroll tax liabilities arising on or after 1 January 2023); extending the 50% payroll tax rebate on exempt wages of apprentices and trainees to 30 June 2023.
Cents per km rate for car expenses for 2022-23
The Income Tax Assessment – Cents per Kilometre Deduction Rate for Car Expenses Determination 2022 has been registered. It provides that work-related car expense can be deducted at the rate of 78 cents per kilometre for 2022-23. It applies to eligible taxpayers who elect to use the cents per kilometre method when calculating income tax deductions for their work-related car expenses.
Crypto to be excluded from foreign currency rules
The Federal Government has announced that crypto currencies will continue to be excluded from foreign currency tax arrangements. The Government will move to clarify current arrangements in legislation that will mean crypto assets will not be regarded as a foreign currency for tax purposes. Capital gains tax will continue to apply to crypto assets that are held as investments. This clarification will deliver a consistent tax requirement for crypto asset holders and will be backdated to 1 July 2021 for the avoidance of ambiguity.
ATO approach to responding to LPP claims
The ATO has published its recommended approach to respond to formal notices requiring production of documents; specifically, for identifying communications covered by Legal Professional Privilege (LPP) and making LPP claims where the taxpayer does not wish to provide those communications to the ATO. The ATO explained that the protocol had been developed to address ATO concerns where LPP claims were inappropriately asserted, either deliberately or through taking short cuts, with the result that key materials, facts, and evidence were inappropriately withheld from the ATO.
CGT improvement threshold for 2022-23 released
The CGT improvement threshold for the 2022–23 year has been released and is $162,899 (up from $156,784 for the 2021-22). The threshold is used for the purposes of s 108-70 (when a capital improvement to a pre-CGT asset is a separate asset) and s 108-5 (capital improvements to CGT assets for which a roll-over may be available) of the ITAA 1997.
ATO updates information on applying for a private ruling
The ATO has updated its website page on how it “deals with your application for private rulings”. It provides information on the following: Timeframes and communicating with you; Requesting further information from you; Ruling on matters not raised in the application; Making assumptions and using information from third parties; If you’ve been given an earlier ruling; Private rulings relating to assessments; Withdrawing your application; Valuations; Delayed rulings; What to do if you don’t agree with our decision.
ASIC releases guidance on CCIVs
ASIC has released a range of documents to support the licensing and other requirements for corporate collective investment vehicles (CCIVs). The requirements come into effect on 1 July 2022, when the CCIVs regime commences. They include information on “How to register a corporate collective investment vehicle and sub-fund”.
