In this edition of the Monthly Tax Update for October 2021, we provide the recent updates in legislation along with tax developments in the areas of corporate tax, individual tax and international tax. We have a special update on COVID-19 stimulus packages.
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Inside you will find
| Legislation Update |
| Other Updates |
| ATO Rulings and Activity |
| Latest Australian Tax Cases |
Covid-19 Stimulus Packages Updates
| COVID-19 Disaster Payment In a joint media release on 29 September 2021, Treasurer Josh Frydenberg says the COVID-19 Disaster Payment will be phased out as a state or territory reaches certain vaccination targets. The payment will begin to transition once a state or territory reaches 70% full vaccination of its population (16 years and older), in line with the movement into Phase B of the National Plan agreed to at National Cabinet. Once a state or territory reaches 70% full vaccination, the automatic renewal of the temporary payment will end and individuals will have to reapply each week that a Commonwealth Hotspot remains in place to confirm their eligibility. Further, where a Commonwealth Hotspot remains in place and a state or territory reaches 80% full vaccination of its population (16 years and older), the temporary payment will step down over a period of 2 weeks before ending. In the first week after a state or territory has reached 80% vaccination, there will be a flat payment of $450 for those who have lost more than 8 hours of work, while those on income support will receive $100. In the second week, the payment will be bought into line with JobSeeker at $320 for the week for those who have lost more than 8 hours of work, while the payment will end for those on income support. For those who have not already returned to the workforce following the end of the temporary payment as the economy opens up, the social security system will support eligible individuals back into work. The Pandemic Leave Disaster Payment will remain until 30 June 2022. Further details on the media release here. New JobKeeper reporting obligations As a result of recent legislative amendments to the Corporations Act 2001 (Cth) (Treasury Laws Amendment (2021 Measures No. 2) Act 2021) listed entities are required to provide a notice disclosing certain information to their market operator regarding JobKeeper payments received by the listed entity and any of its subsidiaries. The notices will be released publicly by the relevant market operator, as well as be compiled into a consolidated report to be issued by ASIC. Under the amended legislations, for each relevant financial year, the listed entity must disclose:
The disclosure must be made within 60 days of lodging a financial report for the relevant year with Australia Securities and Investments Commission (ASIC), or where the financial report for the relevant year has already been lodged with ASIC, within 60 days of commencement of the relevant legislation (which was 14 September 2021). Further details here.
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OECD and Other UpdatesTreasury, Reserve Bank, APRA, ASIC release corporate plans Treasury, the Reserve Bank of Australia (RBA), the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) have all released corporate plans for the 2021-22 financial year. Further information on the corporate plans can be assessed on the respective website, as below:
Committee report on tax treatment of Employee Share Schemes The House of Representatives Standing Committee on Tax and Revenue has presented its report on the tax treatment of Employee Share Schemes (ESS). The report makes 18 recommendations to support the uptake and use of ESS in Australia. The Committee’s overarching recommendation is that ESS be treated as capital for tax purposes, and that a tax liability would arise on the disposal of the assets granted, using the current capital gains tax regime. Other recommendations by the Committee include:
More details available here. Draft legislation for Corporate Collective Investment Vehicles regime The government has released for public consultation revised exposure draft legislation (with explanatory materials) that implements the tax and regulatory components of the Corporate Collective Investment Vehicle (CCIV) regime. A CCIV is an investment vehicle with a corporate structure, designed to be an alternative to a trust-based managed investment scheme. A single CCIV can offer multiple products and investment strategies within the same vehicle. The proposed new draft legislation includes:
Interested parties are invited to submit responses until 24 September 2021. For more details, please refer here.
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 | ATO Rulings and ActivityATO focus on undeclared foreign income – income disguised as gifts or loans The Australian Taxation Office (ATO) has issued Taxpayer Alert 2021/2 which relates to arrangements of concern that involve an Australian tax resident who attempts to evade taxation on foreign assessable income by disguising funds received from overseas as a gift or loan. The ATO will undertake reviews, audits and actively engaging with taxpayers who have entered into arrangements where taxpayers are aware of their residency status, but attempt to avoid or evade tax on their foreign assessable income by concealing the character of funds upon their repatriation to Australia by disguising the funds received as a gift, or a loan, from a related overseas entity. Taxpayer Alert TA 2021/2 describes the features of relevant arrangements that the ATO is concerned. A number of examples are also included in the Taxpayer Alert (TA). More information is available in our full report here. ATO focus on income from shares In the recent media release from the ATO, the ATO has reminded that share investors who reinvest their dividends or distributions are generally required to still declare this income in their tax returns, despite not having received any money. The ATO reiterated that data collected from ASIC, brokers and share registries are analysed to identify taxpayers that are not fully disclosing income or incorrectly claiming losses. With the onset of micro-investment platforms and exchange traded funds, first-time share investors are advised to check the data that is prefilled in their tax returns, to ensure all relevant information is included so as to avoid tax refund delays. Exchange traded funds also provide investors with a distribution statement showing capital gains and losses which are to be included in tax returns. In order to deduct capital losses from shares, the share must have been sold, as deductions are not available for “paper losses” where only the value of the share has fallen but the investor still holds the share. Share investors should also keep good records of their trades and expenses incurred. For more details, please refer here. Draft guidance on administrative penalties for electronic sales suppression tools The Australian Taxation Office (ATO) has issued a draft guidance (Draft Law Administrative Practice Statement PS LA 2021/D2) which provides a provisional guidance to ATO staff on the application and remission of the administrative penalties for producing, supplying, possessing and incorrectly keeping records using an electronic sales suppression tools (ESSTs). ESSTs are hardware or software tools designed and used to manipulate sales records, understate income and assist in avoiding tax obligations. The production, supply, possession and use of ESSTs contributes to the black economy and undermines the integrity of the tax system. More information is available in our full report here.
Expanding STP Phase 2 In the 2019–20 Budget, the Government announced that Single Touch Payroll (STP) would be expanded to include additional information. The expansion of STP, also known as STP Phase 2, will reduce reporting burden for employers who need to report information about their employees to multiple government agencies. It will also help Services Australia’s customers, who may be your employees, get the right payment at the right time. The mandatory start date for Phase 2 reporting is 1 January 2022. More information is available in our full report here.
The ATO has finalised Taxation Determination TD 2021/7, a guidance on calculating a taxpayer’s aggregated turnover under s 328-115 of ITAA 1997 where a connected entity or affiliate has a different accounting period. Taxation Determination TD 2021/7 provides that when working out a taxpayer’s aggregated turnover, the relevant annual turnovers of connected entities and affiliates are determined by reference to the taxpayer’s income year. The taxpayer should calculate its aggregated turnover based on its income year, whether that ends on 30 June or some other date. (for example, where the taxpayer has a substituted accounting period approved by the Commissioner). The determination finalises draft TD 2021/D1 and applies both before and after its date of issue. Please refer here for the relevant guidance for further details. Class rulings listed: Class Ruling CR 2021/59 New South Wales Minerals Council Ltd — access arrangements under the Mining Act 1992 (NSW) between holders of exploration licences and assessment leases and landholders on whose land prospecting operations are undertaken. The ruling applies to entities that enter into the scheme from 8 September 2021 to 8 September 2025. Class Ruling CR 2021/60 Macquarie Bank Ltd — Macquarie Bank Capital Notes 3. The ruling applies from 1 July 2021 to 30 June 2032. Class Ruling CR 2021/61 Metcash Ltd — offmarket share buyback. The ruling applies from 1 July 2021 to 30 June 2022. Class Ruling CR 2021/62 Quest Payment Systems Pty Ltd — evidence of a deduction for donations made to a deductible gift recipient via the use of an electronic donation collection device. The ruling applies from 1 July 2021 to 30 June 2026 and will continue to apply after 30 June 2026 to all entities within the specified class who enter the scheme during the term of the ruling. Class Ruling CR 2021/63 Rox Resources Ltd — demerger of Cannon Resources Ltd. The ruling applies from 1 July 2021 to 30 June 2022. Class Ruling CR 2021/64 Suncorp Group Ltd — Suncorp Capital Notes 4. The ruling applies from 1 July 2021 to 30 June 2031. Class Ruling CR 2021/65 Westpac Banking Corporation — Westpac Capital Notes 8. The ruling applies from 1 July 2021 to 30 June 2032. Class Ruling CR 2021/66 Edith Cowan University — early retirement scheme 2021. The ruling applies from 30 September 2021 to 31 January 2022. Class Ruling CR 2021/67 Primewest (HICT) Pty Ltd — return of capital. The ruling applies from 1 July 2020 to 30 June 2021 Class Ruling CR 2021/68 FAR Ltd — return of capital. The ruling applies from 1 July 2021 to 30 June 2022, and Class Ruling CR 2021/69 Latitude Group Holdings Ltd — Latitude Capital Notes. The ruling applies from 1 July 2021 to 30 June 2027. Addendum to Class Ruling CR 2007/15A2 Fringe benefits tax: employer clients of Community Sector Banking Pty Ltd who are subject to the provisions of s 57A of the Fringe Benefits Tax Assessment Act 1986 that make use of a CSB Salary Benefit Card Account facility. It amends CR 2007/15 to change the name of the company in CR 2007/15 from Community Sector Banking Pty Ltd to Bendigo and Adelaide Bank Ltd, in view of Bendigo and Adelaide Bank Ltd acquiring Community Sector Banking Pty Ltd from 3 March 2020. Addendum to Class Ruling CR 2016/29A1 Fringe benefits tax: employer clients of Community Sector Banking Pty Ltd who are subject to the provisions of either s 57A or 65J of the Fringe Benefits Tax Assessment Act 1986 that make use of a B-Entertained MasterCard debit card facility. It amends CR 2016/29 to:
Addendum to Class Ruling CR 2017/38A1 Fringe benefits tax: employer clients of Community Sector Banking Pty Ltd who are subject to the provisions of either s 57A or 65J of the Fringe Benefits Tax Assessment Act 1986 that make use of a B-Maximised MasterCard credit card facility. It amends CR 2017/38 to:
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| Managing Director Cameron Allen +61 3 9939 4488 cameron.allen@aa.tax |