In this edition of the Monthly Tax Update, we provide the recent updates in legislation along with tax developments in the areas of corporate tax, individual tax, indirect tax and international tax. We also include the ATO’s recent activities, including its publications, rulings issued in the past month, latest Australian tax cases and other news in this edition.
Download the full PDF Report here
Inside you will find
| Legislation Update |
| COVID-19 Stimulus Packages Updates |
| OECD Updates |
| Other Updates (Cont.) |
| ATO Rulings and Activity |
| Latest Australian Tax Cases |
Legislation Update
The new Federal Parliament resumed sittings on 26 July 2022 following the election of the Australian Labour Party Government.
The following are the progress of tax-related Bills which were introduced into Parliament:
Treasury Laws Amendment (2022 Measures No 1) Bill 2022
Treasury Laws Amendment (2022 Measures No 1) Bill 2022, which was introduced into the House of Representatives on 27 July 2022, proposes a number of amendments to tax and superannuation laws, and to delay the commencement of the Modernising Business Registers program, has received assent as Act No 35 of 2022 on 9 August 2022.
It contains measures including, strengthen tax transparency laws by lowering the reporting threshold to a turnover of $100 million for Australian private companies. They remove grandfathering arrangements that exempted certain large proprietary companies from submitting audited annual reports to ASIC.
The Treasury Laws Amendment (2022 Measures No 1) Bill 2022 otherwise contains various measures amending the tax law including:
- recovery grants for Cyclone Seroja — to ensure certain grants paid to small business or primary producers will not be taxable in 2021–22 and later years;
- tax exemptions for FIFA Women’s World Cup — to provide income tax and withholding tax exemptions to FIFA and its wholly owned subsidiary FWWC2023 Pty Ltd for activities associated with the 2023 FIFA Women’s World Cup. The exemptions will apply from 1 July 2020 to 31 December 2028;
- make minor and technical amendments to various legislation including the Fringe Benefits Tax Assessment (FBT) to address unintended consequences and restore access to FBT exemptions for certain tax exempt not-for-profit societies and associations inadvertently excluded and prevent overlap between employees covered by the $30,000 exemption cap and those covered by $17,000 exemption cap;
- transitional provisions relating to the replacement of the Superannuation Complaints Tribunal with the Australian Financial Complaints Authority.
Amendments in the Bill will also delay commencement of the Modernising Business Registers program to 1 July 2026, or an earlier date specified by proclamation.
The Treasury Laws Amendment (Registries Modernisation and Other Measures) Act 2020 provided for the transfer of certain registry functions and powers from ASIC to the Registrar (the Commissioner of Taxation). Under this Act, the amendments commence from a date fixed by proclamation or, if not commenced prior to 22 June 2022, automatically from 22 June 2022. The delay is to provide more time for supporting IT systems to be ready for the change.
Treasury Laws Amendment (2022 Measures No. 2) Bill 2022
Treasury Laws Amendment (2022 Measures No. 2) Bill 2022 has been introduced into parliament on 3 August 2022.
The Bill proposes to:
- empower the Commissioner to direct an entity to complete an approved record-keeping course where the Commissioner reasonably believes the entity has failed to comply with its tax-related record-keeping obligations as an alternative to existing financial penalties;
- require electronic platform operators to provide information on transactions made through the platform to the Australian Taxation office (ATO);
- removes the $250 non-deductible threshold for work-related self-education expenses;
- enable small business entities to apply to the Small Business Taxation Division of the Administrative Appeals Tribunal (AAT) for an order staying, or otherwise affecting, the operation or implementation of decisions of the Commissioner that are being reviewed by the AAT; and
- allow individuals aged 55 and above to make downsizer contributions to their superannuation plan from the proceeds of selling their main residence.
Treasury Laws Amendment (Electric Car Discount) Bill 2022
The Treasury Laws Amendment (Electric Car Discount) Bill 2022 was introduced into the House of Representatives on 27 July 2022.
The Bill proposes to amend the FBT law to exempt from fringe benefits tax cars that are zero or low emissions vehicles that are first held and used on or after 1 July 2022.
COVID-19 Stimulus Packages Updates
Federal Government reinstates COVID-19 payment measures to 30 September
In recognition of the risks associated with more infectious new variants through the winter period, in a media release, the Federal Government has announced the reinstatement of the Pandemic Leave Disaster Payment to 30 September 2022.
Eligibility for the payment will be backdated to 1 July 2022, to ensure that anyone unable to work owing to isolation requirements in this period, without access to paid sick leave, is supported. Access to these payments will commence from Wednesday 20 July 2022, with existing eligibility requirements to continue.
In addition, the Federal Government will also reinstate the Crisis Payment – National Health Emergency (COVID-19) until 30 September 2022, with eligibility also to be backdated to 1 July 2022. This is to support those affected by COVID-19 isolation requirements who receive an income support payment or ABSTUDY Living Allowance, and who are in severe financial hardship.
The Government has further agreed to create a new, temporary telehealth item to help general practitioners assess their patient’s suitability for oral COVID-19 antivirals.
Access to Rapid Antigen Tests (RATs) will also be increased with National Cabinet agreeing to utilise existing RAT stocks funded through an equal cost share agreement with the Government.
For more information, please refer here.
OECD Updates
OECD releases progress report on Amount A of Pillar One
The Organisation for Economic Cooperation and Development (OECD) has released for consultation a progress report on Amount A of Pillar One.
The report outlines the technical work completed to date and includes a consolidated version of the operative provisions on Amount A (presented in the form of draft technical model rules).
The report does not include the rules on the administration of the new taxing right, including the tax certainty-related provisions, which are expected to be released before October 2022. Under a revised timeline, the new multilateral convention to implement Pillar One is due to be finalised by mid-2023 for entry into force in 2024.
Submissions in response to the Progress Report are due by 19 August 2022.
For more information, please refer to the OECD website and for a copy of the progress report.
Other Updates
Foreign investors - Increase to fees and penalties
In a media release, the Treasurer has announced an increase in foreign investment fees and penalties. From 29 July 2022, foreign investment application fees will double, which the Government expects will generate an additional $455 million in budget revenue over the forward estimates.
Assistant Treasurer Stephen Jones says foreign investment fees will continue to make up only a small proportion of total foreign direct investment, with application fees ensuring the cost of administering the foreign investment framework is not borne by Australians.
For more information, please refer to the Treasure’s website and the Foreign Investment Review Board’s website.
ATO Rulings and Activity
Below is a summary of key ATO Rulings & activity. Further details on each ruling can be found in the downloadable pdf file.
International tax - ATO Taxpayer Alert issued on treaty shopping arrangements
The ATO has released a taxpayer alert (TA), TA 2022/2 - Treaty shopping arrangements to obtain reduced withholding tax rates on 20 July 2022. The TA outlines the ATO’s concerns about treaty shopping arrangements designed to obtain the benefit of a reduced withholding tax rate under a double tax agreement (DTA) in relation to royalty or dividend payments from Australia.
For details please download the full PDF Report here
Private company loans - TD 2022/11 - Income tax Division 7A: when will an unpaid present entitlement or amount held on sub-trust become the provision of ‘financial accommodation”?
The ATO has issued Taxation Determination TD 2022/1 on unpaid present entitlements (UPEs) and sub-trust arrangements in the context of the deemed dividend rules in Division 7A of the Income Tax Assessment Act 1936.
This Determination describes when a private company provides financial accommodation where it is made presently entitled to income of a trust and either:
- that entitlement remains unpaid (an unpaid present entitlement (UPE)), or
- the trustee satisfies the present entitlement by setting aside an amount from the main trust fund (main trust) and holding it on a new separate trust (sub-trust) for the exclusive benefit of the private company beneficiary.
For details please download the full PDF Report here
ATO written binding advice - PS LA 2008/4 - Publication of edited versions of written binding advice
This Practice Statement has been refreshed to align with the recommended processes of the Office of the Australian Information Commissioner’s Australian Privacy Principles guidelines (2019) to ensure confidentiality of taxpayer information and to meet the requirements of the Privacy Act 1988.
For details please download the full PDF Report here
ATO releases FATCA and Common reporting standard guidance
The ATO is responsible for data collection and exchanges with foreign jurisdictions for 2 automatic exchange of information (AEOI) regimes: the United States of America's Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS).
The ATO has released a guide and toolkit to assist financial institutions and CRS and FATCA obligations.
For details please download the full PDF Report here
TD 2022/7ER – Income tax: aggregated turnover – application of the ‘connected with’ concept to partnerships, foreign hybrids and non-entity joint ventures
The ATO has issued an erratum to Taxation Determination TD 2022/7 dealing with aggregated turnover and the application of the “connected with” concept to partnerships, foreign hybrids and non-entity joint ventures. This determination has been amended to address typographical errors. Please refer here for further information.
For details please download the full PDF Report here
Reverse charge of GST on things purchased from offshore
The ATO has released a guide on how to account for goods and services tax (GST) and apply reverse charge GST on purchases from offshore.
Generally, the entity making an offshore purchase is responsible for making a reverse charge GST payment if the offshore purchase falls under the reverse charge rules. The reverse charge rules are outlined in the ATO guide.
For details please download the full PDF Report here
ATO releases guide on tax treatment of crypto assets
The ATO has published a guide to help taxpayers understand their tax obligations in respect of crypto assets. According to the ATO, crypto assets are considered an asset for capital gains tax (CGT) purposes, which must be reported when there has been a disposal. A disposal event arises when you no longer own the asset.
For details please download the full PDF Report here
Property investment – ATO focus on rental property income and deductions
The ATO has indicated that income and tax deductions from rental properties is one of the four key areas they are focusing on this tax time. The ATO further mentioned that the rental property income and deductions is an area that’s easy to get wrong, and needs extra care when lodging.
For details please download the full PDF Report here
Share investment - ATO releases guidance to assist preparation of tax positions and filings
The ATO has released a guide to help taxpayers record their shares and investments correctly in their tax returns.
According to the ATO, taxpayers can reduce the need for amendment down the track by avoiding some of the common mistakes.
For details please download the full PDF Report here
ATO guide on how to wind-up a Self-Managed Super Fund
The ATO has released a guide on the steps and obligations involved in winding up a Self-Managed Super Fund (SMSF). SMSF managers are advised to have an ‘exit plan’ in place at all time, as this will make it easier when the time does come. The ATO also advises that the exit plan should consider all the circumstances of the fund’s members and be signed off by all trustees. Furthermore, the plan should be with the SMSF’s records and be reviewed regularly.
For details please download the full PDF Report here
Top 100 and Top 1,000 public and multinational businesses and superannuation funds - ATO Agent Nomination pilot program
On 19 June 2022, the ATO started a pilot program with a small number of businesses who are part of the Top 100 and Top 1,000 public and multinational businesses and superannuation funds.
Participating businesses in the pilot now need to nominate an authorised agent, via online services for business, before the agent can link to their accounts digitally.
For details please download the full PDF Report here
Latest Australian Tax Cases
For details please download the full PDF Report here