In this edition of the Monthly Tax Update for December 2021, our last for this year, 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 UpdateTreasury laws No 5 Bill now law The Treasury Laws Amendment (2021 Measures No 5) Bill 2021 has received assent as Act No 127 of 2021 on 7 December 2021. The Act:
For more details, please refer here. Draft legislation on intangible asset depreciation The Treasury has released draft legislation for public consultation giving effect to a 2021 Budget measure that will allow taxpayers to self-assess the tax effective lives of certain depreciating intangible assets, such as patents, copyrights and in-house software. The proposed legislation amends the tax law to allow taxpayers to choose whether to self-assess the effective life of eligible depreciating intangible assets or to continue to use the tax effective life set by the statute. This change will apply to assets acquired from 1 July 2023, after the temporary expensing measure has concluded. Submission of feedback closes on 23 December 2021. For more details, please refer here. Draft legislation: Miscellaneous amendments to Treasury portfolio laws 2022 The Treasury has released draft legislation, regulations and rules for consultation which propose to make minor and technical amendments to the Treasury portfolio law. The amendments seek to ensure the law operates as intended by addressing unintended outcomes. The amendments are part of the government’s commitment to the ongoing care and maintenance of Treasury laws. The proposed amendments include fixing an unintended outcome affecting income tax exempt not-for-profit private health insurers operating hospitals, in the Fringe Benefits Tax Assessment Act 1986. The legislation replaces the concept of rebatable employer in the case where a Fringe Benefits Tax (FBT) exemption is provided to employees by an employer that is a society or association carrying on a private hospital. Submission of feedback closes on 15 December 2021. For more details, please refer here. |
OECD UpdatesOECD Economic Outlook The Organisation for Economic Cooperation and Development (OECD) has released an Economic Outlook for December 2021. OECD says the output in most OECD countries has now surpassed its late-2019 level and is converging on its pre-pandemic path but. However, the report also finds lower-income economies, particularly those where vaccination rates are low, are at risk of being left behind. For Australia, the report projected real GDP to grow by 3.8% in 2021, 4.1% in 2022 and 3% in 2023. Based on the report, the Australian economy is recovering as strict containment measures first imposed in some states in mid-2021 have now been lifted. As the recovery continues, labour market conditions will improve and spare capacity will be absorbed. Wage and price pressures will subsequently build, even though they are expected to remain contained. Please refer here for details regarding Australia. For full report, please refer here. |
ATO Rulings and ActivityATO Reportable Tax Position Schedule findings report – high risk tax arrangements / arrangements of concern not prevalent among large corporate taxpayer segment The ATO released its findings report regarding disclosures in the Reportable Tax Position (RTP) Schedules for the 2017-18 to 2019-20 income year, and this signals some welcome relief for corporate taxpayers operating both in and from Australia. The ATO has concluded that high risk tax arrangements or arrangements of concern are not prevalent among large public and multinational businesses. As context, the RTP Schedule is an attachment to the company income tax return that must be completed by taxpayers that are part of a group with Australian revenues of $250 million or more. The Schedule requires disclosures of a range of uncertain tax positions and arrangements that the ATO considers pose a systemic risk to the corporate tax base. The ATO uses the RTP Schedule as part of its assurance work, to aid in detecting and preventing high risk tax arrangements and tax avoidance schemes. The findings report provides aggregated disclosures made by companies for the 2017-19 to 2019-20 income years under Category C of the Schedule, with the ATO noting a significant increase in taxpayers making disclosures and an upward trend in low-risk disclosures. For more details, please refer here. CBC reporting lodgment deferral In its media release on 18 November 2021, the ATO says the lodgment deferral is available for Country-by-Country (CBC) reporting entities that have a CBC reporting obligation due by 31 December 2021. December balancers will now have until 4 February 2022 to lodge their CBC reporting statements, including:
Lodgments can only be made electronically through Online services for business or Online services for agents using the file transfer facility, or by SBR using SBR-enabled software. The ATO will not accept lodgments via email. The ATO reminded that the lodgment deferral does not change the due date for payment and penalties may apply where statements are not lodged by 4 February 2022. For more details, please refer here. ATO updated guidance on simplified transfer pricing The ATO has updated the Practical Compliance Guideline PCG 2017/2 on simplified transfer pricing record-keeping options. The update provides the maximum interest rate for low-level inbound loans and the minimum interest rate for low-level outbound loans for the 2022 income year. The new interest rate for both options is 1.83%. For further details, please refer here. Loss carry back claims The ATO has noted errors with claims for the loss carry back (LCB) refundable tax offset in income tax returns lodged by taxpayers to date. In particular, ATI has noted errors or omissions in certain labels on the company tax return, which can prevent or delay the processing of claims. These include the following labels:
Accordingly, the ATO has shared its LCB tax offset tool which is designed to help prevent errors and help complete the LCB labels in company tax returns correctly. The ATO stated that the LCB tax offset tool will help taxpayers to work out if they are eligible to claim the refundable tax offset. The tool also calculates the maximum amount can be claimed if eligible. For more details, please refer here. Small business CGT concessions eligibility The ATO has found that some larger businesses are mistakenly claiming small business capital gains tax (CGT) concessions when they are not entitled to. The ATO will be sending letters to tax advisers and their clients who have claimed one or more of the small business CGT concessions in recent income tax returns asking that the claims be checked to ensure eligibility. To avoid administrative time in correcting mistakes and ensure eligibility, tax advisers can contact the ATO for an early engagement discussion to obtain advice on a client’s small business complex transaction. Tax advisers can also seek a pre-lodgment compliance agreement for their client’s commercial deals and restructure events, or apply for a private ruling for certainty on their client’s application of the small business CGT concessions. For more details, please refer here. ATO guidance on COVID-19 vaccination incentives and rewards The ATO has released a fact sheet which details the tax implications for employers that may be providing incentives or rewards to employees who receive their COVID-19 vaccinations. The ATO has summarized its views of the consequences of providing different kinds of incentives or rewards, including pay as you go withholding, super guarantee, and fringe benefit tax. It covers cash rewards, paid leave, and non-cash benefits including vouchers and prize draws. For more details, please refer here. ATO data matching program – Medicare Exemption Statement The has provided notice that, as part of its data matching program, it will acquire Medicare Exemption Statement (MES) data from Services Australia for the 2021 financial year up to and including the 2023 financial year. The data items include:
The MES data will help the ATO compare taxpayers’ claims made in their income tax returns for the Medicare levy and Medicare levy surcharge. For more details, please refer here. Remission of additional superannuation guarantee charge The ATO has released an updated law administration practice statement (PS LA 2021/3) outlining the ATO’s revised decision-making principles for the remission of additional superannuation guarantee charge (also known as Part 7 penalty) that may be imposed where an employer is liable for super guarantee charge. The new released Practice Statement replaces PS LA 2020/4, which previously set out the ATO’s approach for quarters ending on 31 March 2018 or earlier. PS LA 2021/3 provides an approach to remission that recognises the full range of compliance behaviours in super guarantee matters, and differentiates between those who have a good compliance history and those who repeatedly pay late or fail to pay. For more details, please refer here. GST: adjustable beds, pressure management mattresses and pressure management overlays The ATO has released a taxation determination which explains when the supply of an adjustable bed, a pressure management mattress and a pressure management overlay is GST-free. The ATO is issuing this Determination because the market for these products has developed and in some cases there is now uncertainty whether the products meet the criteria to be GST-free. This Determination does not cover hospital-type beds, as these are GST-free under table item 61 of Schedule 3. For more details, please refer here. Class rulings issued:
Product rulings issued:
|
Latest Australian Tax Cases
|
Download the full PDF Report here
If you would like more information or would like to discuss this tax update, please contact:
Managing Director Cameron Allen +61 3 9939 4488 cameron.allen@aa.tax |