In this edition of the Monthly Tax Update for July 2021, we provide the recent updates in legislation along with tax developments in the areas of corporate tax, individual tax and international tax. We also include the ATO’s recent activities, including its publications, class rulings issued in the past month, latest Australian tax cases and other news in this edition.
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Inside you will find
Legislation Update |
OECD and Other Updates |
ATO Rulings and Activity |
Latest Australian Tax Cases |
Since our last update, the following legislations have received assent: Treasury Laws Amendment (More Flexible Superannuation) Bill 2020 The Treasury Laws Amendment (More Flexible Superannuation) Bill 2020 received assent on 22 June 2021 as Act No 45 of 2021. The Act contains amendments to extend the bring forward rule for non-concessional contributions by enabling individuals aged 65 and 66 to make up to 3 years of non-concessional superannuation contributions from 1 July 2020, remove excess concessional contributions charges and allow recontribution of COVID-19 early release superannuation amounts outside of contribution caps. For more details, please refer here. Treasury Laws Amendment (Your Future, Your Super) Bill 2021 The Treasury Laws Amendment (Your Future, Your Super) Bill 2021 received assent on 22 June 2021 as Act No 46 of 2021. The Act contains measures in the Your Future, Your Super package of reforms announced in the 2020–21 Budget, including:
For further details, please refer here. Treasury Laws Amendment (Self Managed Superannuation Funds) Bill 2020 The Treasury Laws Amendment (Self Managed Superannuation Funds) Bill 2020 received assent on 22 June 2021 as Act No 47 of 2021. The Act increases the maximum number of allowable members in self-managed superannuation funds (SMSFs) from 4 to 6, applicable from 1 July 2021. For further details, please refer here. Private Health Insurance Amendment (Income Thresholds) Bill 2021 The Private Health Insurance Amendment (Income Thresholds) Bill 2021 has received assent as Act No 52 of 2021 on 24 June 2021. According to the explanatory memorandum, pausing income tiers for another two years means $90,000 remains the base tier income threshold for Medicare Levy Surcharge (MLS) liability for a singles policy, and $180,000 remains the base tier income threshold for MLS liability for a family policy for the period from 1 July 2021 to 30 June 2023. The thresholds are used to determine rebate amounts that may apply for consumers with eligible PHI cover, and the Medicare Levy Surcharge income thresholds and rates. Annual indexation will recommence from 1 July 2023 at the current income thresholds. For further details, please refer here. Treasury Laws Amendment (2021 Measures No 3) Bill 2021 The Treasury Laws Amendment (2021 Measures No 3) Bill 2021 has received assent as Act No 61 of 2021 on 29 June 2021. The Act contains amendments to:
For more details, please refer here. Treasury Laws Amendment (COVID-19 Economic Response) Bill 2021 The Treasury Laws Amendment (COVID-19 Economic Response) Bill 2021 has received assent as Act No 71 of 2021 on 30 June 2021. The Bill :
For further details, please refer here. The following new Commonwealth tax legislation has been introduced into Federal Parliament: Treasury Laws Amendment (2021 Measures No 5) Bill 2021 The Treasury Laws Amendment (2021 Measures No 5) Bill 2021 was introduced on 24 June 2021. The Bill proposes a number of amendments including to taxation law as follows:
For more details, please refer here. |
OECD Secretary-General Tax Report to G20 Finance Ministers and Central Bank Governors The OECD Secretary-General has published a report in July to provide an overview of the latest developments in the OECD's international tax agenda, including the recent digital tax developments, as well as the tax policy aspects of climate change, and progress made in support to developing countries in building sustainable tax systems. For more details, please refer here. G7 finance ministers agree on global tax reform The finance ministers of the G7 have reached agreement which requires large multinationals to pay tax in countries in which they operate, as well as the principle of at least 15% global minimum corporation tax, as part of their agreement on historic global tax reform. Members of the G7 (or the Group of 7) include Canada, France, Germany, Italy, Japan, the United Kingdom, the United States, as well as the European Union. Under Pillar One of the G7 agreement - large, profitable multinationals will be required to pay tax in the countries where they operate, and not just where they have their headquarters. These rules would apply to global firms with at least a 10% profit margin — and would see 20% of any profit above the 10% margin reallocated and then subjected to tax in the countries they operate. Under Pillar Two of the G7 agreement - the G7 agreed to the principle of at least 15% global minimum corporation tax operated on a country by country basis, creating a more level playing field and cracking down on tax avoidance. The agreement is to be discussed at the G20 Financial Ministers and Central Bank Governors meeting in July 2021. There is significant detail to be addressed even if a global agreement is forthcoming later this year, including detail on implementation, template legislation and a multilateral convention. For more details, please refer here. Addressing the tax challenges arising from the digitalisation of the economy 130 member jurisdictions of the G20/OECD Inclusive Framework on BEPS recently joined an agreement to address the tax challenges arising from the digitalisation of the economy. Since then, Peru has joined, bringing the total to 131. The two-pillar package will provide much-needed support to governments needing to raise necessary revenues to repair their budgets and their balance sheets while investing in essential public services, infrastructure and the measures necessary to help optimise the strength and the quality of the post-COVID recovery. For more details, please refer here. |
Extension of STP reporting exemption The ATO has issued draft legislative instrument STP 2021/D1 Draft Taxation Administration – Single Touch Payroll – 2021-22 year Withholding Payer Number Exemption 2021, which proposes to exempt entities that do not have an Australian Business Number (ABN) but instead have a withholding payer number (WPN) from reporting under Single Touch Payroll (STP) for the 2021-22 income year. For further details, please refer here. Taxation Ruling TR 2021/2 - car parking benefits The ATO has issued Taxation Ruling TR 2021/2 which sets out the ATO’s view of when the provision of car parking is a car parking benefit for Fringe Benefits Tax (FBT) purposes. Specifically, TR 2021/2 provides guidance on the term ‘in the vicinity of’, when a car park should be considered a commercial car parking facility and how to determine the lowest representative fee charged. For more details, please refer here. ATO fact sheet on Seasonal Worker Program The ATO has provided updated guidance on the taxation arrangements of seasonal workers who have changed from a Temporary Work (International Relations) subclass 403 visa (subclass 403 visa) to a different temporary visa and the obligations of their approved employers in the seasonal worker program (SWP). For more details, please refer here. Draft guidance on R&D “at risk rule” The ATO has issued a draft Taxation Ruling TR 2021/D3 on the “at risk rule” for expenditure on research and development (R&D) activity. The Ruling sets out the Commissioner’s view on whether expenditure is at risk for the purposes of the R&D tax offset. The at risk rule in s 355-405 of ITAA 1997 denies or reduces a notional deduction for the R&D tax offset if, at the time an entity incurs the expenditure, the R&D entity or one of its associates had received (or could reasonably be expected to receive) consideration as a result of that expenditure, regardless of the results of the activities on which the expenditure was incurred. Comments can be made on the draft Ruling by 23 July 2021. For further details, please refer here. Draft guidance on software royalties On 25 June 2021, the ATO released draft Taxation Ruling TR 2021/D4 which deals with the circumstances in which receipts from the licensing and distribution of software will be royalties as defined under Australian domestic tax law. Draft Taxation Ruling TR 2021/D4 provides guidance on when receipts in relation to packaged software, digital distribution of software and cloud computing arrangements will be royalties within the meaning of s 6(1) of ITAA 1936. For further details, please refer here. Guideline on corporate tax residency updated Foreign incorporated companies will have more time to revise their governance arrangements to bring them in line with the ATO's view on “central management and control” for the purposes of determining their Australian tax residency status. The guidance in Practical Compliance Guideline PCG 2018/9 assists foreign-incorporated companies to apply the principles in Taxation Ruling TR 2018/5. For more details, please refer here. Data matching programs for cryptocurrency The ATO has provided notice that it will conduct a data matching program in respect of cryptocurrency. Under this program, the ATO will access account identification and transaction data from cryptocurrency designated service providers for the 2020-21 to 2022-23 income years. The data will be used by the ATO to identify taxpayers that have failed to report a disposal of cryptocurrency in their income tax return or have not complied with other taxation obligations. For more details, please refer here. Data matching programs for novated leases The ATO has provided notice that it will acquire novated lease data from McMillan Shakespeare Group, Smartgroup Corporation, SG Fleet Group, Eclipx Group, LeasePlan, Toyota Fleet Management, LeasePLUS and Orix Australia for the 2018–19 to 2022–23 income years. The data will be used by the ATO to conduct an information and education campaign, identify cases for administrative action, allow the ATO to provide tailored messages to taxpayers and generate insights to assist taxpayers when interacting with ATO systems. A protocol document describing the program has been developed in consultation with the Office of the Australian Information Commissioner. For more details, please refer here. Class rulings issued:
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Managing Director Cameron Allen +61 3 9939 4488 cameron.allen@aa.tax |