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The Monthly Tax Review – September 2016

Copyright Taxpayers Australia Limited T/A Tax & Super Australia, September 2016

(Incorporating Superannuation Australia Pty Ltd)

Published by Tax & Super Australia 1405 Burke Road Kew East, Vic 3102 ABN 96 075 950 284 Reg No: A0033789T P: 03 8851 4555 F: 03 8851 4588 E: [email protected] www.taxandsuperaustralia.com.au © Taxpayers Australia Limited T/A Tax & Super Australia– September 2016 All information provided in this publication is of a general nature only and is not personal financial or investment advice. It does not take into account your particular objectives and circumstances. No person should act on the basis of this information without first obtaining and following the advice of a suitably qualified professional advisor. To the fullest extent permitted by law, no person involved in producing, distributing or providing the information in this publication (including Tax and Super Australia, each of its directors, councillors, employees and contractors and the editors or authors of the information) will be liable in any way for any loss or damage suffered by any person through the use of or access to this information. The Copyright is owned exclusively by Tax & Super Australia (ABN 96 075 950 284). NOTICE FORBIDDING UNAUTHORISED REPRODUCTION So long as no alterations are made unless approved, you are invited to reprint Editorials provided acknowledgment is given that the Association is the source. No other item covered by copyright may be reproduced or copied in any form (graphic, electronic or mechanical, or recorded on film or magnetic media) or placed in any computer or information transmission or retrieval system unless permission in writing is obtained from Tax & Super Australia. Permission to reproduce items covered by copyright will only be extended to members financial at time of request. Permission may be obtained by email to [email protected], by phone 1300 657 572 or by contacting Member Services for an Application to Reproduce Copyright Material Form. Each issue has been researched, authored, reviewed and produced by Tax & Super Australia staff Technical Reviewer: Letty Tsoi

mailto:[email protected]

http://www.taxandsuperaustralia.com.au/

Contents

CONTENTS

Headlines 6

Cases ............................................................................................................................................... 6

PBKQ and Commissioner of Taxation [2016] AATA 681 ......................................................... 6

Legislation........................................................................................................................................ 10

Legislation passed in the first sitting of the 45th

Parliament ................................................ 10

- Budget Savings (Omnibus) Bill 2016 ............................................................................. 10 - Excise Tariff Amendment (Tobacco) Bill 2016 .............................................................. 10 - Customs Tariff Amendment (Tobacco) Bill 2016 .......................................................... 10

Draft taxation legislation introduced into Parliament ......................................................... 13

- Treasury Laws Amendment (Income Tax Relief) Bill 2016 ............................................ 13 - Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016 ......................................... 13 - Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill 2016 ............. 13

Superannuation reforms – first tranche of draft legislation ................................................ 18

PAYG withholding variation for foreign resident capital gains withholding

payments – deceased estates and legal personal representatives ...................................... 22

New single touch payroll reporting regime .......................................................................... 23

Tax Bulletin Board ............................................................................................................................... 30

Cases ............................................................................................................................................. 30

Reany and Commissioner of Taxation [2016] AATA 672 ...................................................... 30

RSPG and Commissioner of Taxation [2016] AATA 687 ....................................................... 30

ATO Legal Database ......................................................................................................................... 31

PCG 2016/14 Discount to the valuation of housing fringe benefits provided by

retirement village operators ................................................................................................ 31

PCG 2016/15 Effects of the Addendum to Taxation Ruling 2002/14 ................................... 31

PAYG withholding variation: Donations to deductible gift holders ..................................... 32

Taxpayer Alert: Cross-border round robin arrangements TA 2016/10 ................................ 32

ATO Announcements ...................................................................................................................... 33

Get invalid and invalid carer tax offset claims right ............................................................. 33

SMSFs: ATO insights and perspectives ................................................................................. 33

Setting up email notifications for portal mail ...................................................................... 33

Foreign exchange rates – 1/7/16 to 30/6/17 ....................................................................... 33

AUSKey for Chrome and Firebox browsers .......................................................................... 34

Automatic exchange of information – guidance material ................................................... 34

General interest charge (GIC) and Shortfall interest charge (SIC) rates ............................... 34

Proposed changes to penalties – the ‘one chance’ initiative ............................................... 35

SMSF June 2016 quarterly statistical report ........................................................................ 36

Heavy penalties for tax exploitation promoters .................................................................. 36

Claiming the small business income tax offset .................................................................... 36

SMSF – active electronic service address ............................................................................. 37

Rulings & Determinations .................................................................................................................... 38

Bill status at 21 September 2016 ......................................................................................................... 41

Cases at 21 September 2016 ................................................................................................................ 55

Tax and Super Australia | Monthly Tax Review – September 2016 edition | of 56

Contents

WELCOME TO THE MONTHLY TAX REVIEW

SEPTEMBER 2016 The Monthly Tax Review (MTR) is a compilation of key case law, regulator updates and industry insights for you to easily stay abreast of the ever changing tax landscape.

This edition covers the period from Thursday, 25 August 2016 to Wednesday, 21 September 2016 (inclusive).

To aid your navigation, we have linked all resources and source materials within the MTR. If you require more in depth understanding of an issue, just click through to the additional materials including legislation.

Structure

We have structured the MTR under the following sections:

Headlines

This section includes an in-depth analysis of tax and super matters that have occurred over the past month that will be important to you and your clients. These are must read items!

Tax Bulletin Board

The Bulletin Board contains a snapshot of salient items which have happened during the month that are of relevance to you (which you may have missed).

New tax rates and tables, recently enacted law or messages from regulators are some of the things you will find in this section.

State of Play

The section includes a summary on the status of all tax and super related legislation before Parliament and newly issued ATO pronouncements such as tax rulings and determinations. All references are linked to source if you require further information.

Our traffic light system

We understand that some of you just want to know the progress of a particular development and whether you can rely or depend on it with certainty.

Our traffic light system will help you determine whether the tax development has been finalised, is being progressed, still at early discussion stage or will not proceed. If you only want to know if a measure has passed or an ATO pronouncement has been finalised – then just “Read the Green”.

What the traffic lights mean

GREEN

You can rely with certainty!

For legislation: The Bill containing the relevant tax or superannuation measures has passed through both Houses of the Australian Parliament or has received Royal Assent (ie. enacted as law).

For case law: The decision has been delivered by the relevant Court or the Administrative Appeals Tribunal.

For ATO pronouncements: This has been issued in final form and can be relied upon by taxpayers as the Commissioner of Taxation’s position on, or interpretation of, an issue.

AMBER

Watch this space!

For legislation: The Bill containing the relevant tax or superannuation measures has been introduced and is currently progressing through the Parliament. The measures have not yet been enacted. There is scope for the Bill to be amended or to not pass through Parliament altogether.

For ATO pronouncements: This has been issued in draft form and is currently under consultation. It can still be relied on by taxpayers as the Commissioner’s position on, or interpretation of, an issue until such time as the pronouncement is issued in final form or is otherwise withdrawn.


Contents

RED

Information only

For legislation: The relevant tax or superannuation measure has been released in exposure draft form and is currently subject to consultation. The exposure draft may be amended before being tabled in Parliament as a bill. In some cases, the exposure draft and the measures contained in it may be scrapped altogether.

For regulator updates or Treasury papers: This has been issued in draft form or has been issued in final form as a recommendations paper. There is no certainty that the recommendations will be implemented.

Glossary

Terminology Acronym or abbreviation

Income Tax Assessment Act 1997 ITAA97

Income Tax Assessment Act 1936 ITAA36

A New Tax System (Goods and Services Tax) Act 1999

GST Act

Fringe Benefits Tax Assessment Act 1986 FBTAA

Taxation Administration Act 1953 TAA

Goods and Services Tax GST

Fringe Benefits Tax FBT

Pay As You Go PAYG

Commissioner of Taxation Commissioner

Australian Taxation Office ATO

Tax Practitioners Board TPB

Administrative Appeals Tribunal AAT

Federal Court of Australia Federal Court

Full Court of the Federal Court of Australia Full Court

High Court of Australia High Court

We hope you enjoy this month’s issue.

Warm regards,

The Team at Tax and Super Australia


Headlines

Headlines CASES

GREEN

Related party service fee deduction denied – not a Phillips arrangement PBKQ and Commissioner of Taxation (Taxation) [2016] AATA 681

Overview The AAT held that a corporate taxpayer could not deduct part of a ‘service charge’ that it purportedly paid to a related company. The arrangement could not be characterised as a Phillips arrangement (TR 2006/2). The AAT required the underlying expenses comprising the service fee to be considered for deductibility on their own merits.

What is the case about? The taxpayer is a private company, Service Recipient Pty Ltd (Recipient). It paid a related company, Service Provider Pty Ltd (Provider), a service charge (the Service Charge) for services provided. The two companies have a common shareholder and director (Mr Smith).

Provider holds a Public Practice Certificate issued by CPA Australia. An arrangement was set up to mitigate the risk of Provider not complying with its Public Practice Certificate obligations. The arrangement broadly operates as follows:

Provider undertakes public accounting services which are covered by the Public Practice Certificate for its clients

Recipient does non-accounting work for Provider’s clients on its behalf and invoices Provider for these services (this case is not concerned with these payments)

Provider directly manages the relationship with the clients and invoices Recipient for all reasonable costs incurred by it in providing these services (these payments are the subject of this case).

The Service Charge that the taxpayer paid to Provider covered the following services:

1. Provision of office accommodation 2. Billing and customer administration 3. Professional staff hire 4. Marketing and promotional 5. Client management expenses.

Recipient (the

taxpayer)

Provider

Service Charge $

services provided

Mr Smith (shareholder and director)

http://www.austlii.edu.au/au/cases/cth/AATA/2016/681.html


Headlines

Provider ‘re-charged’ to Recipient, by way of journal entries, certain discrete expenses that it had incurred in provided the services. The parties did not prepare estimates or statements or issue any invoices. Any amounts that were purportedly owed by Recipient were by reference to general ledger statements which were then ‘settled’ by other journal entries in loan accounts.

The taxpayer claimed deductions for the Service Charge based on Taxation Ruling TR 2006/2: Income tax: deductibility of service fees paid to associated entities: Phillips arrangements (see below for discussion).

The Commissioner denied part of the deduction. According to the Commissioner, Recipient is not entitled to claim a deduction for expenses that would not have been deductible had it incurred the expenses directly, rather than via a service arrangement with a related company. Specifically:

the workers’ compensation expenses had been disallowed because the taxpayer had not satisfactorily substantiated them

the client entertainment expenses had been disallowed because expenses of that nature are, in general, not deductible.

The Commissioner allowed a deduction for the part of the Service Charge which related to other underlying expenses.

The taxpayer argued that the Service Charge was necessarily incurred in carrying on its business and that it was unnecessary to focus on the discrete expenses that made up the Service Charge. On this basis, the taxpayer also submitted that it did not have to substantiate the discrete expenses. The Commissioner disagreed with the taxpayer’s characterisation of the Service Charge.

The taxpayer’s objection in relation to the disallowed amount was denied.

What is the issue? The substantive issue before the AAT was whether the Service Charge was deductible in full.

What the AAT concluded The AAT upheld the Commissioner’s decision.

The AAT concluded that the taxpayer is not entitled to deduct the part of the Service Charge that had been disallowed by the Commissioner. The reasons are broadly outlined as follows.

Insufficient evidence that the Service Charge was incurred

There was insufficient evidence to show that the taxpayer incurred a service charge in carrying on its business. There was no evidence to prove that the services were provided by Provider to Recipient, that any Service Charge was charged by Provider or that any Service Charge was incurred by Recipient. There were no invoices or payments made. There was also insufficient evidence about the activities of Recipient and the relevance of the Service Charge to its business.

That is, the taxpayer’s entire case rested on the description of the Services in the Services Agreement but there was no supporting evidence.

Important! The Service Charge was reflected in journal entries and loan accounts, but journal entries are not evidence of payment or of expenses having been incurred.

TR 2006/2 was irrelevant

The AAT held that TR 2006/2 was not of any direct relevance or assistance to the taxpayer’s case.

https://www.ato.gov.au/law/view/document?src=hs&pit=99991231235958&arc=false&start=11&pageSize=10&total=88&num=3&docid=TXR%2FTR20062%2FNAT%2FATO%2F00001&dc=false&tm=and-basic-TR%202006%2F2


Headlines

In the Phillips case that is central to the ruling, the Full Court held that the services provided were essential to the conduct of the taxpayer’s accountancy practice and, therefore, the charges were deductible. It was crucially important that the rates charged were found to be ‘realistic and not in excess of commercial rates’.

Phillips is not authority for the proposition that the entire amount of an omnibus service fee will be deductible. Rather, Phillips is more concerned with the issue of whether the profit component of the service fee may be deductible. Further, the question of whether expenditure made under a service arrangement is deductible depends on what the expenditure was calculated to achieve from a practical and business point of view.

The AAT concluded that the taxpayer’s reliance on TR 2006/2 was misplaced. It could not rely on the ruling to argue that the entire Service Charge should be deductible.

TR 2006/2: Service fees paid to associated entities TR 2006/2 considers the operation of s8-1 of the ITAA97 and Part IVA of the ITAA36 in relation to service arrangements between associated entities.

What is a Phillips arrangement?

The Phillips arrangement is sourced from the case Federal Commissioner of Taxation v Phillips [1978] FCA 28; (1978) 36 FLR 399. While service arrangements may vary widely in the precise steps used, they essentially involve a taxpayer incurring a deduction for fees and charges in the conduct of its business for the acquisition of staff, clerical and administrative services, premises, plant and/or equipment from an associated entity. These arrangements are called Phillips arrangements.

An arrangement which exhibits all or most of the features set out below is a service arrangement covered by the ruling:

(a) the taxpayer, being an individual or an entity, carries on a business, alone or in partnership, for the supply of professional or other services to clients;

(b) there is a trust that is controlled, or a company that is owned and/or controlled, by the taxpayer and/or associates of the taxpayer (the service entity);

(c) the taxpayer, alone or in partnership, enters into an agreement with the service entity whereby the taxpayer agrees to pay certain fees and charges to the service entity in return for the service entity supplying the taxpayer with a range of services which may include: staff hire and recruitment services, clerical and administrative services, premises, plant and/or equipment;

(d) typically, the service fees and charges are calculated by way of a mark-up on some or all of the costs of the service entity (although a fixed charge may be agreed by the parties up-front);

(e) the taxpayer claims a deduction for the service fees and charges as expenditure incurred by it in the conduct of its business;

(f) the service arrangement either gives rise to profits in the service entity, for both accounting and tax purposes, or would give rise to profits in the service entity but for remuneration or service fees paid to associates of the taxpayer or the taxpayer's partners; and

(g) the profits derived by the service entity are either retained by the service entity (usually where the service entity is a company) or distributed, directly or indirectly, to the taxpayer (and its partners in the case of a partnership) and/or to associates of the taxpayer (and associates of its partners in the case of a partnership).

What was the outcome of the Phillips case?

In Phillips the taxpayer was a partner with a firm of accountants. It entered into a service arrangement with a unit trust in line with the arrangement described above.

The Federal Court decided that the service fees were fully deductible. Crucial to this decision was a finding that the services were realistic and not in excess of commercial rates. The services were essential to the conduct of the firm’s business. The arrangement provided an obvious commercial explanation for the expenditure.


Headlines

The Court noted that the fact that the charges were commercially realistic raised at least the presumption that they were a real and genuine cost of earning the firm’s income. If the expenditure was grossly excessive, it would raise the presumption that it was not wholly payable for the services and equipment provided, but was for some other purpose.

Deductibility of expenditure under a service arrangement

The ATO holds the view that the Phillips case is not authority for the proposition that all expenditure made under a service arrangement between related parties and calculated using the particular mark-ups adopted in that case will always be deductible under s8-1 of the ITAA97. The deductibility depends on what the expenditure was calculated to achieve from a practical and business point of view. It is a question of fact.

Ordinarily, where the benefits conferred by a service arrangement provide an objective commercial explanation for the whole of the expenditure made under the service arrangement, then the service arrangement alone will suffice to characterise the expenditure as expenditure that satisfies the positive limbs of s8-1.

According to the ruling, a service arrangement may not suffice to provide an objective commercial explanation for the whole of the expenditure if:

(a) the service fees and charges are disproportionate or grossly excessive in relation to the benefits conferred by the service arrangement;

(b) the service fees and charges guarantee the service entity a certain profit outcome without reasonable commercial explanation; or

(c) the service fees and charges generate profits in the service entity without any clear evidence that the service entity has added any value or performed any substantive functions. For example, this might occur where there is no clear separation between the service entity's business activities and those of the taxpayer.

If the service arrangement does not provide an objective commercial explanation for the expenditure, a broader examination of all of the circumstances surrounding the expenditure will be required. A broader examination of the matter may determine that the expenditure under a service arrangement was, in whole or in part, incurred in connection with:

the taxpayer's income earning activities or business; and/or

the pursuit of an advantage independent of the taxpayer's income earning activities or business (an independent advantage).

The AAT decision in the present case does not refer to the mark-up (if any) incorporated into the Service Charge. The commerciality of the fees was not of itself a specific issue in the case. However, the emphasis on commercial rates and profit element of service fees in both the Phillips judgment and the ruling indicates why it is crucial to be able to substantiate the amounts comprising any purported service fee. In the present case, the taxpayer could not produce evidence that the amounts were commercially realistic nor even incurred, apart from some accounting entries.

Source PBKQ and Commissioner of Taxation (Taxation) [2016] AATA 681

Resources TR 2006/2

Federal Commissioner of Taxation v Phillips [1978] FCA 28; (1978) 36 FLR 399


https://www.ato.gov.au/law/view/document?src=hs&pit=99991231235958&arc=false&start=11&pageSize=10&total=88&num=3&docid=TXR%2FTR20062%2FNAT%2FATO%2F00001&dc=false&tm=and-basic-TR%202006%2F2

http://www.austlii.edu.au/au/cases/cth/FCA/1978/28.html


Headlines

LEGISLATION

GREEN

Legislation passed in the first sitting of the 45th Parliament Budget Savings (Omnibus) Bill 2016

Excise Tariff Amendment (Tobacco) Bill 2016

Customs Tariff Amendment (Tobacco) Bill 2016

Overview The Budget Savings (Omnibus) Bill 2016 (the Omnibus Bill) passed both Houses of Parliament on 15 September. It has received Royal Assent. The Omnibus Bill introduces various measures, including some relating to taxation. The Omnibus Bill as passed incorporates amendments made by Parliament to the original bill.

The Excise Tariff Amendment (Tobacco) Bill 2016 and the Customs Tariff Amendment (Tobacco) Bill 2016 were introduced together to increase the rate of excise duty and customs duty on tobacco and tobacco products.

Private health insurance thresholds – pausing indexation Previously, legislation had been passed to pause income thresholds for the Medicare Levy Surcharge (MLS) and the Private Health Insurance Rebate at the 2014-15 rates for three years, from 2015-16 to 2017-18.

In the 2016-17 Budget, the Government announced that it would continue to pause the thresholds at 2014-15 rates for an additional three years – that is, from 2018-19 to 2020-21. The Omnibus Bill introduces this measure.

Resource

See the June 2016 edition of The Taxpayer for an analysis of the extended pausing of the indexation.

Higher education – thresholds and rates The Omnibus Bill introduced three measures that affect higher education.

Minimum repayment thresholds and rates

A taxpayer with a Higher Education Loan Program (HELP) debt is only required to start repaying that debt when their ‘repayment income’ (taxable income adjusted by certain amounts) exceeds a minimum compulsory repayment threshold.

The threshold is usually adjusted each year. It is $54,869 for 2016-17 ($54,126 for 2015-16). Like marginal tax rates, the repayment rate for HELP debt progressively increases as repayment income increases. The repayment rate is 4.0% for the lowest repayment income band and 8.0% for the highest band.

The Omnibus Bill establishes a significant change to the minimum repayment threshold and repayment rates. From 2018-19, the new minimum repayment income threshold will be $51,957 and the lowest repayment rate will be 2%.

These amendments will have flow-through effects for other government loan schemes, including the Trade Support, Student Start-Up, and Student Financial Supplement Scheme loan schemes.

http://www.aph.gov.au/Parliamentary_Business/Bills_LEGislation/Bills_Search_Results/Result?bId=r5707

http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;page=0;query=BillId%3Ar5698%20Recstruct%3Abillhome

http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;page=0;query=BillId%3Ar5705%20Recstruct%3Abillhome


Headlines

Higher education loan indexation factor

Higher education loan and grant amounts (including but not limited to HELP debts) are indexed on 1 January each year. Currently, the indexation factor is called the Higher Education Grants Index (HEGI). This indexation rate is calculated as 75% of 90% of the Professional, Scientific and Technical Services Labour Price Index and 25% of the Consumer Price Index (CPI).

From 1 January 2018, the HEGI will be replaced with the CPI.

HECS-HELP benefit

The HECS-HELP benefit provides an incentive for graduates of particular courses to take up related occupations or work in specified locations by reducing the person’s HELP repayments. The HECS-HELP benefit may be available to a graduate in one of the following fields if they meet specific criteria:

mathematics, statistics or science

education, nursing or midwifery

early childhood education.

The HECS-HELP benefit will be removed from 1 July 2017 due to its ineffectiveness in achieving its policy aims.

Fringe benefits and income testing The Omnibus Bill changes the statutory definition of ‘adjusted fringe benefits total’ so that the gross rather than adjusted net value of reportable fringe benefits is used.

There are exceptions in relation to fringe benefits received by individuals working for public benevolent institutions, health promotion charities and some hospitals and public ambulance services.

The changes take effect on 1 January 2017.

The amendments will have implications for:

income tests for various family assistance payments – family tax benefit, stillborn baby payment and child care benefit

the parental income test for youth allowance

determining entitlement to a low income superannuation contribution payment, a net medical expenses offset, and the dependant (invalid and carer) tax offset

determining the amount of a zone tax offset and an overseas forces tax offset.

Family tax benefit and parental leave thresholds The Omnibus Bill pauses the indexation of certain family tax benefit (FTB) Part A and Part B income thresholds, and the paid parental leave income limit, until 1 July 2020.

The FTB Part A supplement will have an income limit of $80,000 (the adjusted taxable income of the individual and their partner if any).

Pension means testing for aged care residents The pension income and assets test exemptions that were previously available to pensioners in aged care who rent out their former home and pay their aged care have now been removed.

The removal of the income test exemption will ensure that net rental income earned on the former principal residence is treated the same way under the pension income test as it is under the aged care means test, regardless of how the resident chooses to pay their aged care accommodation costs.


Headlines

The indefinite assets test exemption of the former principal residence from the pension assets test, where the property is rented and aged care accommodation costs are paid on a periodic basis, has also been removed.

The changes commence on 1 January 2017.

Reducing the R&D tax offset rates The rates of the research and development (R&D) tax offset have been reduced by 1.5% for the first $100 million of eligible expenditure.

The higher (refundable) rate has been reduced from 45% to 43.5% and the lower (non-refundable) rate has been reduced from 40% to 38.5%.

The reductions apply from 1 July 2016.

Note: The explanatory memorandum to the Omnibus Bill makes it clear that the 1.5% reduction is a savings measure to assist in budget repair. Interestingly, it was only in December 2015 that the Government launched its National Innovation and Science Agenda and announced its commitment to encouraging Australian research, ideas and innovation. Reducing the financial incentives and assistance for R&D would appear to contradict the innovation agenda. However, the explanatory memorandum also says that affected stakeholder bodies raised no concerns about the draft legislation during the consultation period.

New single touch payroll reporting regime The Omnibus Bill implements the new single touch payroll (STP) reporting framework.

See the ‘Single touch payroll’ headline item that follows for more information.

Increasing excise duty on tobacco The Excise Tariff Amendment (Tobacco) Bill 2016 and the Customs Tariff Amendment (Tobacco) Bill 2016 were introduced together to increase the rate of excise duty and customs duty on tobacco and tobacco products. They passed both Houses of Parliament on 14 September 2016.

The amendments increase the rate of excise duty and excise-equivalent customs duty on tobacco and tobacco products through four annual increases of 12.5%, commencing on 1 September 2017.


Headlines

AMBER

Draft taxation legislation introduced into Parliament Treasury Laws Amendment (Income Tax Relief) Bill 2016

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill 2016

Overview The following bills were introduced into Parliament on 1 September:

• the Treasury Laws Amendment (Income Tax Relief) Bill 2016 to increase the 32.5% personal tax threshold from $80,000 to $87,000

• the Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016 to: o progressively reduce the tax rate for all companies to 25% by 2026-27 o progressively increase the tax discount for unincorporated small businesses to 16% by o increase the small business entity threshold from $2 million to $10 million

• the Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill 2016 to: o establish a Remedial Power for the Commissioner to allow for a more timely resolution of

certain unforeseen or unintended outcomes in the taxation and superannuation laws o allow primary producers to access income tax averaging 10 income years after choosing to

opt out, instead of that choice being permanent.

Important! Senate inquiry

On 15 September 2016, the Senate referred the provisions of the Treasury Laws Amendment (Income Tax Relief) Bill 2016 and the Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016 to the Economics Legislation Committee for inquiry and report on 10 October 2016.

Increasing the 32.5% personal tax threshold to $87,000 The Treasury Laws Amendment (Income Tax Relief) Bill 2016 was introduced into the House of Representatives on 1 September. The bill increases the third personal income tax threshold from $80,000 to $87,000.

This measure is a modest attempt at addressing the growing problem of bracket creep for middle income earners, a starting point. It was announced in the 2016-17 Federal Budget and received bipartisan support.

http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r5683


http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;page=0;query=BillId%3Ar5685%20Recstruct%3Abillhome?mkt_tok=eyJpIjoiWVRNMU5XWTBOamhsTmpoaiIsInQiOiI5TmZkMUMzVmVodTNJS2RrYlRjTlBnNTdXYXdlR3REaUpqbU02QXU2bDRVell3RWcwMnhId1VVT1dBTmNYcmxkdGtUbkVVTUJkMSs0bEM1RFg5WlNnaUdYY2dlc0s0ZVY0YmVLQ2FGa2Rldz0ifQ%3D%3D


Headlines

Current and proposed personal income tax rates 2016-17

2016-17: current law 2016-17: proposed law (bipartisan support)

Thresholds Marginal

rates Tax payable Thresholds

Marginal rates

Tax payable

0 – $18,200 0% Nil 0 – $18,200 0% Nil

$18,201 – $37,000

19% $0.19 for each $1 over $18,200

$18,201 – $37,000

19% $0.19 for each $1 over $18,200

$37,001 – $80,000

32.5% $3,572 + $0.325 for each $1 over $37,000

$37,001 – $87,000

32.5% $3,572 + $0.325 for each $1 over $37,000

$80,001 – $180,000

37% $17,547 plus $0.37 for each $1 over $80,000

$87,001 – $180,000


$180,001 and over (not including the TBRL^)


$180,001 and over (not including the TBRL^)


$180,001 and over (including the 2% TBRL^)


$180,001 and over (including the 2% TBRL^)


^ Temporary Budget Repair Levy (2% on taxable income exceeding $180,000).

The above table does not take into account the Medicare levy (2%).

Resources

See the June 2016 edition of The Taxpayer for an analysis of the proposed change in the tax threshold.

See the February 2016 edition of The Taxpayer for a discussion of the bracket creep problem.

Reducing the company tax rate to 25% – 10-year plan The Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016 introduces a progressive reduction in the corporate tax rate until a rate of 25% applies to all companies by 2026-27.

The measure was first announced in the 2016-17 Federal Budget.

Corporate tax rate reduction

The rate will firstly be reduced to 27.5% for all companies by 2022-3 (see (A)), and then it will be reduced progressively to 25% in 2026-27 (see (B)).

(A) The initial 27.5% rate will be implemented progressively from 2016-17 to 2022-23 based on the company’s annual aggregated turnover:

Annual aggregated turnover threshold Income year in which the 27.5% rate will apply Less than $10 million 2016-17 $25 million 2017-18 $50 million 2018-19

$100 million 2019-20 $250 million 2020-21 $500 million 2021-22 $1 billion 2022-23


Headlines

(B) Once all companies are at a rate of 27.5%, the rate will be progressively reduced to 25% in 2026-27:

Income year Tax rate 2022-23 27.5% 2023-24 27.5% 2024-25 27% 2025-26 26% 2026-27 25%

Special types of companies

There will be flow-on effects for the tax rates of certain types of companies:

retirement savings account (RSA) providers

companies that become pooled development funds (PDFs) during the 2016-17 income year

non-profit companies

recognised medium credit unions

life insurance companies; and

public trading trusts.

Franking credits

Dividends will be frankable in line with the rate of tax paid by the company.

Example from the explanatory memorandum

In the 2015-16 income year, Company A has an aggregated turnover of $18 million. In the 2016-17 income year, its aggregated turnover increased to $20 million.

Therefore, for the 2016-17 income year, Company A will have:

a corporate tax rate of 30 per cent (having regard to its aggregated turnover of $20 million in the 2016-17 income year);

a corporate tax rate for imputation purposes of 30 per cent (based on aggregated turnover of $18 million in the 2015-16 income year); and

a corporate tax gross-up rate of 2.33 — that is, (100% — 30%)/30%.

As a result, if Company A makes a distribution of $100 in the 2016-17 income year, the maximum franking credit that can be attached to the distribution is $42.86 — that is, $100/2.33.

In the 2017-18 income year, Company A will work out its corporate tax rate for imputation purposes based on its aggregated turnover for the 2016-17 income year — that is, $20 million. Therefore, for the 2017-18 income year, Company A will have:

a corporate tax rate for imputation purposes of 27.5 per cent; and

a corporate tax gross-up rate of 2.64 — that is, (100% — 27.5%)/27.5%.

As a result, if Company A makes a distribution of $100 in the 2017-18 income year, the maximum franking credit that can be attached to the distribution is $37.88 — that is, $100/2.64.

Resource

See the June 2016 edition of The Taxpayer for an analysis of the proposed change.

Increasing the unincorporated small business tax discount to 16% – 10-year plan The Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016 progressively increases the small business income tax offset to 16% in 2026-27.


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The offset is currently 5% of an eligible individual’s basic income tax liability that relates to their total net small business income, capped at $1,000.

The offset will remain capped at $1,000 even as the rate is increased.

Proposed increase from 2016-17

5% 8% 10% 13% 16% 2014-

15 2015-

16 2016-

17 2017-

18 2018-

19 2019-

20 2020-

21 2021-

22 2022-

23 2023-

24 2024-

25 2025-

26 2026-27 and

later

Resource


Increasing the small business entity threshold to $10 million The Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016 increases the small business aggregated turnover threshold for most small business tax concessions from $2 million to $10 million.

There will be several concessions with a threshold lower than $10 million. The legislation imposes a $5 million threshold for the unincorporated small business income tax offset, while the threshold for the small business CGT concessions remains at $2 million.

Proposed aggregated turnover thresholds

Small business concession Aggregated turnover threshold

• Immediate deductibility for small business start-up expenses • Simpler depreciation rules • Simplified trading stock rules • Roll-over for restructures of small businesses • Deductions for certain prepaid business expenses immediately • Accounting for GST on a cash basis • Annual apportionment of input tax credits for acquisitions and

importations that are partly creditable • Paying GST by quarterly instalments • FBT car-parking exemption • PAYG instalments based on gross domestic product (GDP)-adjusted

notional tax

$10 million

• Unincorporated small business income tax offset $5 million

• Small business CGT concessions $2 million

The new thresholds apply from the 2016-17 income year. For the FBT exemption for car-parking, the new threshold applies from the FBT year commencing on 1 April 2017.

Example from the explanatory memorandum

Yvonne is a sole trader with an aggregated turnover under Division 328 of $3 million.

As her aggregated turnover is less than $10 million, she is a small business entity and can access the small business tax concessions for which that is an eligibility requirement (such as the simplified trading stock rules).

She is also a small business entity for the purposes of Subdivision 328-F because her aggregated turnover is less than $5 million. This means she can is eligible for the small business income tax offset.


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However, she is not a CGT small business entity because her aggregated turnover is not less than $2 million. This means she is not eligible for the small business CGT concessions in Division 152 unless she meets an alternative eligibility criterion (such as the maximum net asset value test).

Resource


The Commissioner’s Remedial Power The Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill 2016 establishes a Remedial Power for the Commissioner. Under this power, the Commissioner may make, by disallowable legislative instrument, modifications to the operation of a taxation law to ensure the law can be administered to achieve its intended purpose or object.

This purpose of the Remedial Power is to allow for a more timely resolution of certain unforeseen or unintended outcomes in the taxation and superannuation laws.

The power can only be validly exercised where:

the modification is not inconsistent with the intended purpose or object of the provision

the Commissioner considers the modification to be reasonable, having regard to both the intended purpose or object of the relevant provision and whether the costs of complying with the provision are disproportionate to achieving the intended purpose or object; and

the Department of the Treasury or the Department of Finance advises the Commissioner that any impact on the Commonwealth budget would be negligible.

Before exercising the power, the Commissioner must be satisfied that any appropriate and reasonably practicable consultation has been undertaken. The Commissioner must also consult with a technical advisory group and the Board of Taxation prior to an exercise of the power.

A taxpayer must not apply the modification if it would produce a less favourable result.

The Remedial Power will commence on the day after Royal Assent. From that day, the Commissioner will be able to make legislative instruments to modify the operation of a taxation law.

Primary producer income averaging The Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill 2016 proposes to allow primary producers to access income tax averaging 10 income years after choosing to opt out, instead of that choice being permanent.

This assists primary producers as averaging only recommences when it is to their benefit (they receive a tax offset) and they can still opt out if averaging no longer suits their circumstances.

The amendment will apply from 2016-17.


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RED

Superannuation reforms – first tranche of draft legislation Superannuation reform package

Overview The Government has released for consultation its first tranche of draft legislation in relation to its proposed superannuation reforms.

What is the exposure draft legislation about? The Treasury has released the following exposure draft legislation and associated explanatory memoranda (EMs) for public consultation:

(i) Superannuation (Objective) Bill 2016

(ii) Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016

(iii) Treasury Laws Amendment (Fair and Sustainable Superannuation) Regulation 2016

The draft legislation seeks to implement the following measures announced in the 2016-17 Budget:

the objective of superannuation

tax deductions for personal superannuation contributions

improve superannuation balances of low income spouses

introduce a Low Income Superannuation Tax Offset (LISTO)

harmonising contribution rules for those aged 65-74.

Consultation closed on 16 September.

Important! In a late breaking change, on 15 September the Government announced that it has decided not to proceed with the harmonisation of contribution rules for those aged 65 to 74.

Tax deductions for personal superannuation contributions The proposed amendments remove the restriction in the income tax law on individuals deducting personal contributions to superannuation. Currently, personal contributions are only deductible if less than 10% of the sum of the individual's:

assessable income

reportable fringe benefits total; and

reportable employer superannuation contributions

was attributable to employment or similar activities of the individual.

Removal of the maximum earnings as an employee condition will allow a deduction to the taxpayer for making personal superannuation contributions to a complying superannuation fund irrespective of the taxpayer’s employment circumstances. This will enable employees to claim a deduction for personal superannuation contributions without needing to enter into salary sacrifice arrangements. Note however that salary sacrifice agreements will continue to be relevant because they reduce the PAYG withholding amounts from salary and wages hence increasing the employee’s take-home pay.

https://consult.treasury.gov.au/retirement-income-policy-division/superannuation-reform-package/


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Contractors and self-employed individuals, who are essentially providing labour, will also be able to claim a deduction for personal superannuation contributions. This is a significant improvement over the current state of affairs where contractors are disadvantaged in terms of choosing how much of their pre-tax pay is going into superannuation.

Certain contributions to defined benefit as well as untaxed superannuation funds will not entitle the contributing taxpayer to a deduction.

Tax offset for spouse contributions A tax offset is available to a resident individual if they make a contribution to a complying superannuation fund on behalf of their spouse where, amongst other things, the total of the spouse's:

assessable income

reportable fringe benefits total; and

reportable employer superannuation contributions

for the year is less than a set threshold amount (currently at $13,800). The amount of the non-refundable offset that an individual is entitled to for an income year cannot exceed $540 (18% of $3,000), even if an individual has multiple spouses during different times in an income year.

The amendments propose to increase the set threshold amount from the current $13,800 to $40,000.

The amount of the offset is calculated by taking 18% of the lesser of:

$3,000 less the amount by which total spouse income exceeds $37,000 (currently $10,800); and

the sum of the spouse contributions made by the individual in the income year.

Example (adapted from example 3.5 in the EM)

Eloise and Leon are Australian residents who are married. In the 2017-18 income year, Leon works part-time and has a total of $39,000 of assessable income, reportable fringe benefits amounts and reportable employer superannuation contributions.

Eloise makes a contribution of $3,000 on behalf of Leon to his complying superannuation fund during the 2017-18 income year.

Eloise’s tax offset for spouse contributions is calculated as follows:

Amount of the offset = 18 % of the lesser of:

spouse contributions; and

$3000 – (the amount by which total spouse income exceeds $37,000).

Spouse contributions = $3000

$3,000 – (the amount by which total spouse income exceeds $37,000) = $3,000 – ($39,000 – $37,000) = $1,000.

$1,000 is less than $3,000 and therefore the amount of the offset available to Eloise in 2017-18 is

$1,000 x 18% = $180.

Importantly, the amendments prevent a taxpayer from receiving the spouse super contributions offset if the spouse’s non-concessional contributions exceeded the non-concessional contribution cap in the relevant financial year.

Low income superannuation tax offset The proposed low income superannuation tax offset (LISTO) is essentially a continuation of the current low income superannuation contribution (LISC) which is scheduled to cease after 30 June 2017. The LISTO is equal to 15% of the total eligible concessional contributions for the year. The maximum LISTO payable will be $500 per year for each eligible individual. There is no age test for the LISTO.


Headlines

The LISTO seeks to effectively return the tax paid on concessional contributions by a low income earner’s superannuation fund or retirement savings account provider. Low income earners are individuals with an adjusted taxable income of $37,000 or less. Individuals who have an adjusted taxable income of more than $37,000 will not be eligible for the LISTO.

The eligibility conditions for the LISTO are the same as for the current LISC:

at least one concessional contribution has been made by or for the taxpayer during the financial year

the taxpayer has adjusted taxable income for that financial year that does not exceed $37,000 and at least 10% of the individual’s income for the income year is from business or employment.

Objective of the superannuation system The Superannuation (Objective) Bill 2016 provides that:

[t]he primary objective of the superannuation system is to provide income in retirement to substitute or supplement the age pension.

Its purpose is not to allow for tax minimisation or estate planning, as noted in the EM.

Subsidiary objectives of the superannuation system are stated in the EM but not in the Superannuation (Objective) Bill 2016:

to facilitate consumption smoothing over the course of an individual’s life

to manage risks in retirement

to be invested in the best interests of superannuation fund members

to alleviate fiscal pressures on Government from the retirement income system; and

to be simple, efficient and provide safeguards. Under the proposed reforms, a statement of compatibility with the primary objective of the superannuation

system must be prepared for every Bill or regulation that relates to superannuation.

LATE ANNOUNCEMENT: Changes to proposed reforms On 15 September, after the consultation period for the exposure draft legislation commenced, the Treasurer, Scott Morrison, and the Minister for Revenue and Financial Services, Kelly O’Dwyer, jointly announced changes to the Government’s Budget proposals, following extensive consultation.

Scrapped: the proposed $500,000 lifetime cap on superannuation contributions

One of the most contentious Budget announcements was a proposed $500,000 lifetime non-concessional cap.

The Government has decided to scrap the proposed $500,000 cap.

Instead, a new non-concessional contributions cap of $100,000 per year will apply from 1 July 2017. The current cap is $180,000 per year. The three year bring forward rule continues to apply the same way as it did before.

Non-concessional contributions – balances not exceeding $1.6 million

The Ministers also announced that only individuals whose superannuation balance is $1.6 million or less will be able to make non-concessional superannuation contributions, from 1 July 2017.

Removal of the ‘work test’

The Government will not proceed with the harmonisation of contribution rules for those aged 65 to 74.


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The proposed amendment was going to remove the gainful employment test and simplify the acceptance of contributions rules in regulation 7.04. The table in this regulation was proposed to be changed to the following:

Item If the member is ... the fund may accept ... 1 under 75 contributions that are made in respect of the member

2 75 or older contributions that are made in respect of the member that are:

(a) mandated employer contributions; or

(b) contributions received on or before the day that is 28 days after the end of the month in which the member turns 75

The current rules, including the ‘work test’, will now continue to apply.

Catch-up concessional contributions

Finally, the commencement date of the proposed catch-up concessional superannuation contributions will be deferred by 12 months to 1 July 2018.

Source Superannuation reform package

Resources Superannuation Reforms

Media release by Minister for Revenue and Financial Services

https://consult.treasury.gov.au/retirement-income-policy-division/superannuation-reform-package/

http://treasury.gov.au/SuperReforms

http://sjm.ministers.treasury.gov.au/media-release/096-2016/


Headlines

GREEN

PAYG withholding variation for foreign resident capital gains withholding payments – deceased estates and legal personal representatives PAYG Withholding variation for foreign resident capital gains withholding payments – deceased estates and

legal personal representatives

The ATO has registered legislative instrument PAYG Withholding variation for foreign resident capital gains withholding payments – deceased estates and legal personal representatives which removes the need for the legal personal representatives, beneficiaries or surviving joint tenants to make an application for a variation in relation to the new foreign resident CGT withholding requirements.

The instrument commences on 7 September 2016.

https://www.legislation.gov.au/Details/F2016L01396

https://www.legislation.gov.au/Details/F2016L01396


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GREEN

New single touch payroll reporting regime Budget Savings (Omnibus) Bill 2016

Single Touch Payroll: ATO consultation paper

Overview Legislation has been passed to implement the new single touch payroll (STP) reporting regime.

The ATO has also released a consultation paper which outlines how the Commissioner intends to apply the new law.

Background: what is single touch payroll?

The new law

The Budget Savings (Omnibus) Bill 2016 introduces a new reporting framework called single touch payroll (STP). The bill passed both Houses of Parliament on 15 September and has received Royal Assent.

Under STP, ‘substantial employers’ will automatically provide payroll and superannuation information to the ATO at the time it is created, in line with payroll cycles. Entities that report under STP will not have to comply with various existing reporting obligations.

Substantial employers will be required to comply with STP reporting from 1 July 2018. The ATO will be conducting a pilot in the first half of 2017 to demonstrate the deregulation benefits for businesses, with a focus on small businesses.

The new STP rules can be found in Division 389 of Schedule 1 to the TAA.

The below is a high level summary of the STP framework under the new law. For detailed rules and examples, please refer to the explanatory memorandum to the bill.

The ATO consultation paper

The ATO has released a consultation paper outlining how the Commissioner intends to apply the new STP regime.

The paper contains five consultation questions on the ATO’s proposed administrative approach. The ATO requested feedback on these issues, including the form and channel that would be most appropriate for the guidance. Consultation closed on 30 September.

Topics covered in the consultation paper include:

who will be required to report

when the Commissioner may consider granting an exemption

amounts required to be reported

relief from current obligations; and

the Commissioner’s approach to penalties.

The ATO’s comments and questions from the consultation paper are set out in the shaded boxes below.

http://www.aph.gov.au/Parliamentary_Business/Bills_LEGislation/Bills_Search_Results/Result?bId=r5707

https://www.ato.gov.au/General/Consultation/What-we-are-consulting-about/Papers-for-comment/Single-Touch-Payroll--ATO-consultation-paper/


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Which employers are required to use STP? Substantial employers

Substantial employers are required to report using STP. A substantial employer is an entity with 20 or more employees.

Important!

The number of employees is calculated using a headcount rather than a full-time equivalency. The casual nature of a person’s employment or the fact that an employee is based overseas does not matter.

The term ‘employee’ has its ordinary (common law) meaning which means that contractors will not be included in the headcount.

Refer to paragraphs 24 to 60 of SGR 2005/1 for the Commissioner’s view on who is an employee within the ordinary meaning of the term.

Wholly-owned groups

The total number of employees employed by all member companies of a wholly-owned group must be included. If the total group headcount is at least 20, then all companies within the group are substantial employers and they must all report under STP.

Note: the term ‘wholly-owned group’ used in the STP legislation is defined. Under s995-1 and s975-500 of the ITAA97, a wholly-owned group is defined only by reference to companies. This would mean that if a unit trust is part of a wholly-owned economic group, its employees would not be aggregated with those of other group members.

Voluntary entry into STP

Entities that are not substantial employers will remain subject to the currently existing reporting obligations after STP is implemented. They may voluntarily choose to report under STP. They are also allowed to opt out of voluntary STP reporting and return to non-STP arrangements.

Implementation timing The law applies from 1 July 2018. However, any employer may choose to report under STP from 1 July 2017.

Entities that are substantial employers on 1 April 2018 will be required to report until STP when it comes into effect on 1 July 2018. Entities that become substantial employers on 1 April in a subsequent year will be required to report under STP from the 1 July of the same calendar year. this means that an employer will have a minimum of 3 months to organise its systems and procedures.

Once an entity becomes a substantial employer, it must continue to report under STP in subsequent years even if its employee headcount falls below 20 unless the Commissioner grants an exemption.

If an entity that becomes a substantial employer is not ready to report under STP from its start time (ie. the following 1 July), the Commissioner has the power to either:

defer the start date within an income year; or

exempt the employer on a class or individual basis (see below).

If an employer is granted a deferral to commence STP reporting part-way through a year, its first STP report must contain year-to-date information.


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Are there any exemptions for substantial employers? The law gives the Commissioner the power to grant a substantial employer an exemption from STP reporting. An exemption may be made on a class of entity basis or on an individual basis. An entity that receives an exemption will still have to report under the current obligations.

The exemption may be limited – for example, the entity may be exempt from reporting only in relation to specific items (eg. superannuation) or in relation to part of a year.

Individual employer exemption

The Commissioner may, in writing, exempt a particular entity from reporting under STP for one or more income years. The Commissioner may make an exemption on his own initiative or on application by an entity.

The ATO will consult on the circumstances under which an individual exemption may be granted. For example, the Commissioner may provide an exemption to an employer that becomes a substantial employer on 1 April as a result of temporarily employing 20 or more individuals (eg. during harvest period).

The Commissioner will not unreasonably refuse an application. However, the Commissioner is unlikely to grant an exemption to a substantial employer that is likely to continue to employ at least 20 people and has the capacity to report under STP. In such cases, a temporary exemption or a limited exemption may be granted instead.

Class exemption

The Commissioner may, by legislative instrument, exempt a class of entities from reporting under STP for one or more income years.

The ATO will consult on the circumstances under which a class exemption will be provided. For example, the Commissioner will have regard to the common circumstances in which people may find it difficult to report electronically. These include:

remote locations where there is no or unreliable internet connection

cultural or religious reasons

impacts of a natural disaster.

Example from the EM

Assume that the Commissioner grants an exemption on a class basis for all substantial employers operating in remote locations where there is no or unreliable internet connection.

Anne operates a grocery store where she employs 25 employees in a remote location covered by the Commissioner’s exemption. Whilst Anne is a substantial employer, she would not have to report under STP.

Anne would not need to apply to the Commissioner for an exemption, as her business is covered by the class exemption.

However, Anne would be subject to her existing obligations to report in accordance with Subdivision 16-C. This means she will continue to report her PAYG withholding liability using her current process, give payment summaries to her employees and give a payment summary annual report to the Commissioner.

Consultation Question 1: In what circumstances should the Commissioner grant an exemption on a class basis?

Consultation Question 2: In what circumstances should the Commissioner grant an exemption to a particular employer?


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What information must be reported under STP – and when? The following information is required to be reported to the Commissioner.

Ordinary time earnings and salary or wages

Ordinary time earnings^ and salary or wages^ of an employee* must be reported on or before the day the amount is paid.

^ Within the meaning of the SGAA.

* Within the extended definition in s12 of the SGAA, but disregarding subsection (3) which covers contractors. This exclusion recognises that contractors are generally not included in an employer’s payroll system and so requiring entities to report in relation to these entities would impose a significant compliance burden.

WARNING! The SGAA definition of ‘employee’ (excluding contractors) is broader than the ordinary meaning of the term. As a result, employers may have to report salary or wages or ordinary time earnings of individuals (‘employees’ under SGAA) that were not included in the original headcount used to determine whether an employer is a substantial employer (common law ‘employees’).

Withholding amounts and associated withholding payments

These amounts must be reported on or before the day by which the amount is required to be withheld – generally, when the employer makes the payment to their employee.

Superannuation contribution information

Information relating to contributions to a complying superannuation fund or a Retirement Savings Account in respect of an employee must be reported on or before the day on which the contribution is paid.

Contributions made on behalf of an employer by an approved clearing house must also be reported.

Employers may already use SuperStream-compliant software packages, clearing houses or intermediaries to produce contribution transaction reports. The Commissioner envisages that the information in these reports would satisfy STP obligations. While this may involve providing the ATO with more information than is required under STP, an employer may wish to report in this way to minimise compliance costs.

Timing

STP reporting of payments is due ‘on or before’ the date the amount is required to be withheld, which is usually at the time the employer makes the payment to the employee.

In order to leverage off the employer’s payroll processes, the ATO suggests that the employer lodges the STP report at the same time it prepares pay slips and a payment file for the financial institution to pay employees. This may mean that the report is lodged before the day the employees receive their pay.

What about ad hoc payments?

Whilst employers generally make payments to employees on a regular payment cycle, there may be some circumstances when employers make irregular or ad hoc payments, such as employment termination payments or casual salary or wages. As these dates may not correspond with the employer’s regular payment cycle due dates, a separate report would need to be sent to the Commissioner. However, in these circumstances, the Commissioner could defer the due date for reporting these ad hoc payment reports until the next regular reporting date. The ATO is expected to provide guidance on this matter.

Consultation Question 3: In what circumstances should the Commissioner exercise his discretion to allow an employer to defer the reporting of a payment to an employee? For example, should fortnightly payers be able to report all payments on a fortnightly basis?


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Summary table: withholding payments reported under STP

Reference Description Payment summary

Subdivision 12-B - Payments for work and services

Section 12-35 A payment of salary etc. to an employee INB or FEI

Section 12-40 A payment of remuneration to the director of a company INB

Section 12-45 A payment of salary etc. to an office holder (e.g. a member of the Defence Force)

INB

Section 12-47 A payment to a religious practitioner INB

Section 12-50 A return to work payment to an individual INB

Subdivision 12-C - Payments for retirement or because of termination of employment

Paragraph 12-85(b) A payment for termination of employment EMP

Section 12-90 An unused leave payment INB

Subdivision 12-D - Benefit and compensation payments

Paragraph 12-110(1)(ca)

A payment of parental leave pay INB

Paragraph 12-110(1)(cb)

A payment of dad and partner pay INB

Subdivision 12-FC - Seasonal Labour Mobility Program

Section 12-319A A payment of salary, wages etc. to an employee under the Seasonal Labour Mobility Program

INB

Legend:

INB = PAYG payment summary – individual non-business (NAT 0046) FEI = PAYG payment summary – foreign employment (NAT 73297) EMP = PAYG payment summary – employment termination payment (NAT 70868)

The ATO will consult on information specifications which detail the information that should be reported.

What are the software requirements? Currently the ATO anticipates that STP will require substantial employers to report using Standard Business Reporting (SBR)-enabled software. SBR-enabled software allows employers to automatically report information that is already produced as part of their payroll processes to the Commissioner at the time the relevant process is undertaken.

Tip! Affected employers must ensure that their software is SBR-compliant by 1 July 2018. The timing and availability of the relevant software update will depend on the business’s software provider. The Commissioner would treat reports lodged in a different manner to STP as a failure to lodge in the approved form. However, the flexibility of the approved form provisions will allow the Commissioner to update the way STP information is reported in the future, as the need arises.

Are there penalties for non-compliance? The established administrative penalty regime will apply where an employer does not comply with STP requirements. However, the STP legislation provides for specific types of penalty relief.

Transitional relief for failure to lodge

As a transitional measure, employers will not be subject to administrative penalties for the first 12 months, unless the Commissioner has previously issued a warning notice in relation to an earlier missed STP report.

The ATO anticipates that warning notices will be rare in the first 12 months of STP reporting. In the first instance, it will make contact to provide support to help in the transition.


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The Commissioner will not set a minimum number of late lodgments before a warning notice is given. The Commissioner will only give a warning notice where it is considered appropriate, having regard to an employer’s circumstances and behaviour.

Ongoing grace period for correcting false or misleading statements

The law allows the Commissioner to provide an ongoing grace period for correcting false or misleading statements in relation to STP reports without penalty.

The Commissioner has discretionary power in relation to the following:

how the corrections are made – for example, in a subsequent STP report

determine, by legislative instrument, the timeframe for reporting entities to correct errors and specify that different timeframes may apply to different classes of entities (eg. depending on size of withholder and size of correction)

determine a different period for a particular entity – for example, reducing the grace period if it appears the entity is misusing the grace period.

Important! The grace period is only available for correcting statements related to the financial year in which the statement is made. Regardless of any grace period specified by the Commissioner, any corrections will need to be made within 14 days after the end of the financial year to which the report relates.

Consultation Question 4: What materiality thresholds should be specified in the legislative instrument about correcting errors? For example, what are appropriate time limits to correct errors and error value limits for small, medium and large withholders?

Consultation Question 5: When should the Commissioner give an employer a warning notice about failing to lodge STP reports on time?

How does STP affect other reporting requirements? An employer that has met its STP reporting obligations for an income year will not need to comply with the following obligations:

Notification of withholding amounts

Annual payment summaries

Payment summaries for payments for termination of employment

Annual reports to the Commissioner; and

Part-year payment summaries.

No more payment summaries?

The ATO will be able to make the information currently recorded on an annual payment summary progressively available throughout the income year to employees on ATO Online.

The information collected through STP reporting will enable the ATO to pre-fill employees’ income tax return.

Employers may still choose to provide an annual payment summary if requested to do so by an employee.

Employers must provide payment summaries in relation to amounts that are not reported through STP. These include reportable employer superannuation contribution (RESC) and reportable fringe benefit (RFB) amounts. It is not mandatory to report these amounts through STP. However if an employer chooses to report them by 14 July, it would not need to provide an annual payment summary covering these amounts.


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Payment of PAYGW liability The new law has not changed due dates for payment of PAYGW liabilities. However, to further align reporting and payment of PAYGW to payroll processes, there will be an option to pay at the same time as lodging STP reports. For most employers, the due date of PAYGW liabilities is aligned to their BAS due date.

The ATO will undertake consultation and a co-design process with employers and their representatives to determine the best way to optimise employers’ reporting obligations. A pilot will be conducted to test solutions for small business employers.

The ATO does not expect system changes (if any) that would be required to implement the outcome of the consultation and co-design process will be implemented by 1 July 2017. Accordingly, current PAYGW payment processes are likely to remain in place at 1 July 2017.

How will super choice and TFN declarations be streamlined? STP will allow the ATO and employers to provide individuals with the option to complete superannuation standard choice forms and TFN declarations through ATO Online, available on myGov. This will reduce employer compliance costs and errors associated with re-keying information.

An employee may make a valid choice of superannuation fund by providing the relevant information to the Commissioner. The Commissioner may disclose an employee’s TFN and protected information to their employer.

An employee may make an effective TFN declaration by providing the declaration to the Commissioner. The Commissioner may make available to the employer the information in the employee’s TFN declaration. The employer will not be required to send the declaration to the ATO, nor will they be required to notify the Commissioner where no TFN declaration is provided to them by their employee. However, if an employee chooses not to provide their TFN, the obligation will remain on the employer to notify the Commissioner.


Bulletin Board

Bulletin Board CASES

GREEN

Travel expenses for transporting bulky tools denied Reany and Commissioner of Taxation (Taxation) [2016] AATA 672

The AAT denied the taxpayer’s claim for work-related travel expenses relating to the transport of bulky tools.

The travel expenses were of a private nature. The taxpayer was not required by his employer to carry his bulky tools and equipment from home to work. It was a personal choice to transport his tools out of security concerns.

GREEN

Retirement village is not commercial residential premises RSPG and Commissioner of Taxation (Taxation) [2016] AATA 687

The AAT disallowed the taxpayer’s claim for input tax credits in respect of the construction of a retirement village.

A key issue was whether an entire retirement village can be characterised as “commercial residential premises”.

The taxpayer submitted that the similarity with a hostel or boarding house is close enough to bring the “normal retirement village” within the definition of commercial residential premises.

On the contrary, the AAT found that there were fundamental differences between a retirement village and a hostel or a boarding house. The distinguishing features include:

the nature of the rights or interests which the retirement village residents acquired, and

the security and relative permanency of occupation of the retirement village units.




Bulletin Board

ATO LEGAL DATABASE

GREEN

Housing fringe benefits provided by retirement village operators PCG 2016/14 Discount to the valuation of housing fringe benefits provided by retirement village operators

PCG 2016/14 sets out the acceptable discount to the valuation of housing fringe benefits provided to live-in-managers in a retirement village.

The starting point for calculating the taxable value of most housing fringe benefits is the statutory annual value of the recipient’s current housing right as defined in subsection 26(2) of the FBTAA.

The statutory annual value of the recipient’s current housing right is largely dependent on the market value of the right to occupy or use the accommodation.

After consultation with retirement industry participants, the ATO has determined that a retirement village operator can apply a valuation discount of 10% to work out the statutory annual value of a live-in-manager's annual current housing right.

GREEN

Retirement village operators making capital growth payments PCG 2016/15 Effects of the Addendum to Taxation Ruling 2002/14

PCG 2016/15 sets out some of the effects of the Addendum to TR 2002/14A2 for retirement village operators making capital growth payments before, on or after, 26 November 2014.

On 26 November 2014, the ATO issued an addendum to TR 2002/14 to replace the view that capital growth payments are capital. As a result of several AAT decisions, the ATO is now of the view that when a retirement village operator makes a capital growth payment to an outgoing resident, the payment is deductible to the retirement village operator under s8-1 of the ITAA97.

https://www.ato.gov.au/law/view/document?DocID=COG/PCG201614/NAT/ATO/00001

https://www.ato.gov.au/law/view/document?DocID=COG/PCG201615/NAT/ATO/00001


Bulletin Board

AMBER

PAYG withholding variation: Donations to deductible gift recipients Draft Variation 49

Draft Variation 49 proposes to replace PAYG Withholding Variation: Donations to deductible gift recipients (F2016L00439) which is due to expire on 1 November 2016 to continue to allow a payer to reduce a withholding payment by the amount they pay to a deductible gift recipient on a payee’s behalf.

This is particularly applicable to donations made on behalf of employees from their wages and salaries under workplace giving programs.

GREEN

Taxpayer Alert: Cross-border round robin arrangements TA 2016/10

The ATO is reviewing cross-border round robin type arrangements that involve the following:

an Australian entity funds an overseas entity or operations

the funds are subsequently provided back to the Australian entity or its Australian associate

the funds are provided back in a manner which purportedly generates Australian tax deductions while not generating corresponding Australian assessable income.

https://www.ato.gov.au/law/view/view.htm?docid=%22PYV%2FVariaD049%2F00001%22

https://www.ato.gov.au/law/view/document?src=hs&pit=99991231235958&arc=false&start=1&pageSize=10&total=1&num=0&docid=TPA%2FTA201610%2FNAT%2FATO%2F00001&dc=false&tm=and-basic-TA%202016%2F10


Bulletin Board

ATO ANNOUNCEMENTS

GREEN

Get invalid and invalid carer tax offset claims right Get invalid and invalid carer tax offset claims right

The ATO has reminded tax professionals to make sure they get their claims for the invalid and invalid carer tax offset right. Specifically:

claims can only be made for specific family members

the invalid or invalid carer must have received the relevant pension or allowance; and

adjusted taxable income tests apply for taxpayer clients and the family member they maintained.

GREEN

SMSFs – ATO insights and perspectives SMSFs: ATO insights and perspectives

The ATO has provided a report on SMSF compliance outcomes in 2015-16 and focus areas for 2016-17. The report includes the following topics:

compliance outcomes in 2015-16

focus areas for 2016-17

regulatory issues identified in auditor contravention reports

emerging issue – SMSFs directly or indirectly involved in related business ventures.

GREEN

Setting up email notifications for portal mail Setting up email notifications for portal mail

The ATO recommends tax professionals to set up an email notification for both their practice inbox and personal inbox so they don't miss any portal messages.

GREEN

Foreign exchange rates 1 July 2016 to 30 June 2017

The Tax Office has released the foreign currency exchange rates for the month of August 2016.

https://www.ato.gov.au/Tax-professionals/Newsroom/Income-tax/Get-invalid-and-invalid-carer-tax-offset-claims-right/

https://www.ato.gov.au/Media-centre/Speeches/Other/SMSFs--ATO-insights-and-perspectives/

https://www.ato.gov.au/tax-professionals/tp/setting-up-email-notifications-for-portal-mail/

https://www.ato.gov.au/Tax-professionals/TP/1-July-2016-to-30-June-2017/


Bulletin Board

GREEN

AUSKey for Chrome and Firefox browsers AUSkey for Chrome and Firefox browsers

The ATO has advised that AUSKey is incompatible with certain browsers, including Google Chrome and Mozilla Firefox. To fix this issue, Windows users can now install a “browser extension” to access the Portals or other government services that require an AUSKey.

Chrome and Firefox browser extensions for Mac AUSKey users are currently under development and expected to be available later in the year.

GREEN

Automatic exchange of information – guidance material Automatic exchange of information - guidance material

The ATO has released a guideline to explain Australia’s participation in Automatic Exchange of Information (AEOI) regimes, concerning the automatic exchange of financial account information with foreign jurisdictions, commencing 1 July 2017.

GREEN

General interest charge (GIC) and Shortfall interest charge (SIC) rates General interest charge (GIC) rates

Shortfall interest charge (SIC) rates

The ATO has released the GIC and SIC rates for the October – December 2016 quarter:

GIC annual rate: 8.76%

GIC daily rate: 0.02393443%

SIC annual rate: 4.76%

SIC daily rate: 0.01300546%

https://www.ato.gov.au/Tax-professionals/Newsroom/Digital-interaction-with-us/AUSkey-for-chrome-and-firefox-browsers/

https://www.ato.gov.au/general/international-tax-agreements/in-detail/international-arrangements/automatic-exchange-of-information---guidance-material/

https://www.ato.gov.au/Rates/General-interest-charge-%28GIC%29-rates/

https://www.ato.gov.au/Rates/Shortfall-interest-charge-%28SIC%29-rates/


Bulletin Board

RED

Proposed changes to penalties – the ‘one chance’ initiative Consultation paper – proposed changes to penalties

The ATO has released a consultation paper on proposed changes to penalties for small business and individuals.

The paper proposes that:

for certain small business and individual clients, the ATO will not apply penalties for false or misleading statements for failure to take reasonable care for errors made in income tax returns and activity statements, and

the ATO will not apply failure to lodge on time penalties for late lodgment of income tax returns and activity statements.

These penalties represent the majority of penalties imposed on small businesses and individuals.

This will apply to the first error and late lodgment subject to penalty. The ‘one chance’ timeframe will be refreshed after a set period of time. The ATO will inform small business and individual taxpayers in writing that a penalty has not been applied.

The ATO is of the view that this proposed approach is within the Commissioner’s exercise of his general powers of administration and therefore does not require a change in the law.

The ATO expects the following parameters to apply (reproduced from the paper):

The parameters are subject to community consultation. Closing dates for comments is 24 October 2016.

http://lets-talk.ato.gov.au/penaltyconsultation?tool=news_feed&anchor=tool_tab#tool_tab


Bulletin Board

GREEN

SMSF June 2016 quarterly statistical report SMSF June 2016 quarterly statistical report

The ATO has released the SMSF June 2016 quarterly statistical report. It provides high level statistics on the population of SMSFs and members, estimates of local assets and of various asset classes held by SMSFs, as well as fund and member demographics.

GREEN

Heavy penalties for tax exploitation promoters Heavy penalties for tax exploitation promoters

The ATO has reminded tax professionals about the heavy penalties that can be applied to promoters of a tax exploitation scheme. In Commissioner of Taxation v Ludekens (No 2) [2016] FCA 755 the Federal Court imposed a total penalty of $180,000 on two promoters.

GREEN

Claiming the small business income tax offset Claiming the small business income tax offset

The small business income tax offset commenced in 2015-16. The ATO has issued guidance on the new tax return labels in the Individual tax return 2016 used to calculate the offset:

15A – Net small business income

13D – Partnership share of net small business income less deductions attributable to that share

13E – Trust share of net small business income, less deductions attributable to that share.

These labels are used only for the purposes of the offset and not for calculating taxable income.

The ATO advises the following tips:

Include net income not gross income for sole traders at label 15A

Include the share of individual’s net small business income, not gross income, at labels 13D or 13E

A share of net small business income from a partnership or a trust should be reduced by any deductions that relate to this share, such as decline in value for water facilities or prior year deferred non-commercial losses of partners claimed this year.

https://www.ato.gov.au/Super/Self-managed-super-funds/In-detail/News/SMSF-June-2016-quarterly-statistical-report/

https://www.ato.gov.au/Tax-professionals/Newsroom/Your-practice/Heavy-penalties-for-tax-exploitation-promoters/

https://www.ato.gov.au/Tax-professionals/TP/Claiming-the-small-business-income-tax-offset/


Bulletin Board

GREEN

SMSF – active electronic service address SMSFs – Make sure your SMSF has an active electronic service address

The ATO issued a notice that all self-managed super funds now need to be able to receive SuperStream-compliant contributions. In order to do this, an SMSF needs an active electronic service address, usually obtained from an SMSF messaging provider.

The extended SuperStream implementation date for businesses with fewer than 19 employees is 31 October 2016. Larger businesses were required to become SuperStream compliant earlier.

SMSF members will need to provide the following to their employers in order to receive SuperStream compliant contributions:

SMSF Australian business number (ABN)

SMSF bank account details

SMSF’s active electronic service address.

https://www.ato.gov.au/Super/Self-managed-super-funds/In-detail/News/SMSFs---Make-sure-your-SMSF-has-an-active-electronic-service-address/


Rulings & Determinations

State of Play

Rulings & Determinations SUMMARY OF TAX RULINGS

TAX RULINGS ISSUED

RULING (Click heading for link) DESCRIPTION Date of Issue

Class Rulings

CR 2016/61 Income tax: APN Champion Retail Fund - cancellation of units 31 August 2016

CR 2016/62 Income tax: 'The Utilities Management Early Retirement Scheme 2016' 14 September 2016

CR 2016/63 Income tax: return of capital: Intrepid Mines Limited 14 September 2016

CR 2016/64 Goods and services tax: liquidation - Great Southern Plantation and Gunns Plantations Limited Woodlot Schemes

14 September 2016

CR 2016/65 Income tax: the 'Western Sydney University Early Voluntary Retirement Scheme 2016' 21 September 2016

ATO ID 2003/1024 (Withdrawn)

Capital gains tax: creation of trust - shares in a company in administration 26 August 2016

PCG 2016/14 Discount to the valuation of housing fringe benefits provided by retirement village operators 26 August 2016

PCG 2016/15 Effects of the Addendum to Taxation Ruling 2002/14 26 August 2016

[2016] AATA 638 Carr v. Commissioner of Taxation 26 August 2016

[2016] QSC 190 Croft & Anor v. Commissioner of Taxation 29 August 2016

Episode 9 31 August 2016

LCG 2016/3 Small Business Restructure Roll-over: genuine restructure of an ongoing business and related matters 31 August 2016

TD 2012/21A1 - Addendum

Income tax: does CGT event E1 or E2 in sections 104-55 or 104-60 of the Income Tax Assessment Act 1997 happen if the terms of a trust are changed pursuant to a valid exercise of a power contained within the trust's constituent document, or varied with the approval of a relevant court?

31 August 2016

[2016] AATA 662 Zhang and Commissioner of Taxation 1 September 2016

[2016] AATA 681 PBKQ and Commissioner of Taxation 5 September 2016

[2016] AATA 672 Reany and Commissioner of Taxation 5 September 2016

[2016] AATA 684 DTMP and. Commissioner of Taxation 6 September 2016

PCG 2016/11 Fuel tax credits - apportioning taxable fuel used in a heavy vehicle with auxiliary equipment 7 September 2016

WAD 367 of 2013 Commissioner of Taxation v. AP Energy Investments Ltd 7 September 2016

https://www.ato.gov.au/law/view/view.htm?docid=%22CLR%2FCR201661%2FNAT%2FATO%2F00001%22





https://www.ato.gov.au/law/view/view.htm?docid=%22AID%2FAID20031024%2F00001%22


https://www.ato.gov.au/law/view/view.htm?docid=%22COG%2FPCG201614%2FNAT%2FATO%2F00001%22


https://www.ato.gov.au/law/view/pdf/misc-case/rdr_2016aata638.pdf

https://www.ato.gov.au/law/view/pdf/misc-case/rdr_2016qsc190.pdf

https://www.ato.gov.au/law/view/view.htm?docid=%22RTF%2FINOW201602%22

https://www.ato.gov.au/law/view/view.htm?docid=%22COG%2FLCG20163%2FNAT%2FATO%2F00001%22

https://www.ato.gov.au/law/view/view.htm?docid=%22TXD%2FTD201221A1%2FNAT%2FATO%2F00001%22

https://www.ato.gov.au/law/view/view.htm?docid=%22TXD%2FTD201221A1%2FNAT%2FATO%2F00001%22






https://www.ato.gov.au/law/view/view.htm?docid=%22LIT%2FICD%2FWAD367of2013%2F00001%22



Miscellaneous

PS LA 2013/4 (GA) (Withdrawn)

Apportioning taxable fuel used in a vehicle for powering the auxiliary equipment of a vehicle 7 September 2016

TR 2016/1A1 - Addendum

Income tax: effective life of depreciating assets (applicable from 1 July 2016) 7 September 2016

CR 2007/15A1ER1 - Erratum

Fringe benefits tax: employer clients of Community Sector Banking Pty Ltd who are subject to the provisions of section 57A of the Fringe Benefits Tax Assessment Act 1986 that make use of a CSB Salary Benefit Card Account facility

7 September 2016

CR 2007/88A1ER1 - Erratum

Fringe benefits tax: employer clients of Shakespeare & Associates who are subject to the provisions of section 57A of the Fringe Benefits Tax Assessment Act 1986 whose employees make use of a Visa Salary Packaging Card (Meal Entertainment) facility

7 September 2016

FTR 2008/1A7 - Addendum

Fuel tax: vehicle's travel on a public road that is incidental to the vehicle's main use and the road user charge 7 September 2016

FTD 2016/1 Fuel tax: fuel tax credits - fuel used for idling and cabin air-conditioning of a vehicle on a public road 7 September 2016

OPS 2016/5 Taxation Administration Act Withholding Schedules October 2016 Signed on 2 September 2016


Assessability of compensation for loss of earning capacity 9 September 2016


Assessability of an undissected lump sum workers compensation payment 9 September 2016


Assessable income: workers' compensation payments for loss of Army Reserve income 9 September 2016


Assessability of compensation payment received for pain, suffering and medical expenses as a result of personal wrong, injury or illness

9 September 2016

[2016] FCCA 2225 Deputy Commissioner of Taxation v. Florin Burhala 10 August 2016

[2016] AATA 687 RSPG v. Commissioner of Taxation 7 September 2016

[2016] FCCA 2241 Deputy Commissioner of Taxation v. Florin Burhala 10 August 2016

[2016] AATA 450 H J International Trade Group Pty Ltd and Commissioner of Taxation 30 June 2016

PCG 2016/12 Petroleum Resource Rent Tax - deductibility of general project expenditure relating to the overhead component of time written costs

12 September 2016

PCG 2016/13 Petroleum Resource Rent Tax - deductibility of general project expenditure 12 September 2016

TR 2001/13A1 - Addendum

Income tax: Interpreting Australia's Double Tax Agreements 14 September 2016

CR 2014/74A1 - Fringe benefits tax: employer clients of Emerchants Payment Solutions Limited (Emerchants) who are subject 14 September 2016

https://www.ato.gov.au/law/view/view.htm?docid=%22PSR%2FGA20134%2FNAT%2FATO%2F00001%22

https://www.ato.gov.au/law/view/view.htm?docid=%22PSR%2FGA20134%2FNAT%2FATO%2F00001%22

https://www.ato.gov.au/law/view/view.htm?docid=%22TXR%2FTR20161A1%2FNAT%2FATO%2F00001%22


https://www.ato.gov.au/law/view/view.htm?docid=%22CLR%2FCR200715A1ER1%2FNAT%2FATO%2F00001%22




https://www.ato.gov.au/law/view/view.htm?docid=%22RFT%2FFTR20081A7%2FNAT%2FATO%2F00001%22

https://www.ato.gov.au/law/view/view.htm?docid=%22RFT%2FFTR20081A7%2FNAT%2FATO%2F00001%22

https://www.ato.gov.au/law/view/view.htm?docid=%22RFD%2FFTD20161%2FNAT%2FATO%2F00001%22

https://www.ato.gov.au/law/view/view.htm?docid=%22OPS%2FOPS20165%2F00001%22









https://www.ato.gov.au/law/view/pdf/misc-case/rdr_2016fcca2225.pdf


https://www.ato.gov.au/law/view/pdf/misc-case/rdr_2016fcca2241.pdf

https://www.ato.gov.au/law/view.htm?DocID=JUD/*2016*AATA450/00001

https://www.ato.gov.au/law/view.htm?DocID=COG/PCG201612/NAT/ATO/00001

https://www.ato.gov.au/law/view.htm?DocID=COG/PCG201613/NAT/ATO/00001



https://www.ato.gov.au/law/view/view.htm?docid=%22CLR%2FCR201474A1%2FNAT%2FATO%2F00001%22



Addendum to the provisions of either section 57A or section 65J of the Fringe Benefits Tax Assessment Act 1986 and make use of the Emerchants' Meals and Entertainment Card facility

TA 2016/10 Cross-Border Round Robin Financing Arrangements 15 September 2016

TA 2016/11 Restructures in response to the Multinational Anti Avoidance Law (MAAL) involving foreign partnerships 15 September 2016

Draft Variation 49 Donations to deductible gift recipients Signed on 15 September 2016

PS LA 2005/24 Application of General Anti-Avoidance Rules 16 September 2016

CR 2016/43A1 - Addendum

Fringe benefits tax: employer clients of PBI Benefit Solutions Pty Ltd who are subject to the provisions of section 57A of the Fringe Benefits Tax Assessment Act 1986 that make use of the Westpac Entertainment Benefits Card facility

21 September 2016


Refund of deposit: received by a purchaser as an assessable recoupment 23 September 2016


https://www.ato.gov.au/law/view/view.htm?docid=%22TPA%2FTA201610%2FNAT%2FATO%2F00001%22

https://www.ato.gov.au/law/view/view.htm?docid=%22TPA%2FTA201611%2FNAT%2FATO%2F00001%22

https://www.ato.gov.au/law/view/view.htm?docid=%22PYV%2FVariaD049%2F00001%22

https://www.ato.gov.au/law/view/view.htm?docid=%22PSR%2FPS200524%2FNAT%2FATO%2F00001%22






Bill Status at 21 September 2016


Name of Bill Status

Description Introduced: House

Passed: House

Introduced: Senate

Passed: Senate

Royal Assent

Fuel Indexation (Road Funding) Bill 2014

Fuel Indexation (Road Funding) Special Account 2014

19/6/2014 25/6/2014 26/6/2014 Part of a package of four bills to biannually index fuel excise and excise-equivalent fuel duties, the bill establishes the Fuel Indexation (Road Funding) Special Account to make grants of financial assistance to the states and territories for expenditure in relation to road infrastructure investment.

Tax and Superannuation Laws Amendment (2015 Measures

No. 3) Bill 2015

27/05/2015 17/06/2015 18/06/2015 This Bill amends the Income Tax Assessment Act 1997 (ITAA 1997) to:

abolish the seafarer tax offset; and

reduce the rates of the tax offset available under the research and development tax incentive.

Superannuation Legislation Amendment (Trustee Governance) Bill 2015

16/09/2015 20/10/2015 09/11/2015 The Bill proposes to make amendments to the Superannuation Industry (Supervision) Act 1993 (SIS Act) to require trustees of registrable superannuation entities (RSEs) (commonly referred to as RSE licensees) to have a minimum of one-third independent directors and an independent Chair on their boards. The Bill also proposes to restructure the trustee board for the Australian Government's main civilian and military superannuation schemes, the Commonwealth Superannuation Corporation (CSC Board), to comply with the new governance requirements.








http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;page=0;query=BillId%3Ar5548%20Recstruct%3Abillhome;rec=0;resCount=Default





Superannuation Legislation Amendment (Trustee Governance) Bill 2015

16/09/2015 20/10/2015 09/11/2015 This bill amends the: Superannuation Industry (Supervision) Act 1993 to: require trustees of registrable superannuation entity licensees to have a minimum of one-third independent directors and an independent Chair on their boards; and make consequential amendments; and Governance of Australian Government Superannuation Schemes Act 2011 to restructure the board of the Commonwealth Superannuation Corporation by reducing the number of directors from eleven to nine and providing for the majority of the directors to be independent.

Treasury Legislation Amendment (Repeal Day 2015)

Bill 2015

12/11/2015 16/03/2016 16/03/2016 This bill proposes the following amendments:

seeks to simplify the superannuation guarantee (SG) charge. DATE OF EFFECT: 1 July 2016.

enables the Commissioner to pay certain superannuation amounts directly to individuals with a terminal medical condition and to remove the requirement for superannuation funds to lodge a separate biannual lost members statement with the Commissioner. DATE OF EFFECT: 1 July 2016.

amends the Corporations Act 2001 to modify the notification and reporting obligations applying to certain corporations that have property in receivership or property in respect of which a controller is acting. DATE OF EFFECT: will commence on the day after the Bill receives Royal Assent.

repeals several inoperative acts in the Treasury portfolio as well as amending the taxation law to remove a number of inoperative or spent provisions. For example, the Bill would repeal Div 16L of the ITAA 1936 (tax-exempt infrastructure borrowing concession), the Development Allowance Authority Act 1992 and the Infrastructure Certificate Cancellation Tax Act 1994. DATE OF EFFECT: will commence on the day after the Bill receives Royal Assent.

http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;page=0;query=BillId%3Ar5548%20Recstruct%3Abillhome;rec=0








Omnibus Repeal Day (Spring 2015) Bill 2015

12/11/2015 02/12/2015 02/02/2016 This bill proposes to:

repeal redundant provisions related to various "spent social security payments" eg various one-off payments to the aged, older Australians and carers; economic security strategy payments; training and learning bonus; and farmers hardship bonus;

repeal provisions in relation to various spent family assistance payments eg one-off payment to families; economic security strategy payment to families; back to school bonus and single income family bonus; and schoolkids bonus;

repeal the Termination Payments Tax (Assessment and Collection) Act 1997 and the Termination Payments Tax Imposition Act 1997.

Counter-Terrorism Legislation Amendment Bill (No 1) 2015

12/11/2015 The bill proposes a package of amendments to various Acts to strengthen Australia's national security and counter-terrorism legislation. It proposes amendments to the Taxation Administration Act 1953 to allow taxation officers to disclose information to an Australian government agency for the purposes of preventing, detecting, disrupting or investigating conduct related to a matter of security as defined by the Australian Security Intelligence Organisation Act 1979. The amendments would apply in relation to records and disclosures of information made on or after the day the Bill receives Royal Assent, whether the information was obtained before, on or after that commencement.

Corporations Amendment (Crowd-sourced Funding) Bill

2015

03/12/2015 10/02/2016 22/02/2016 The bill amends the: Corporations Act 2001 to: establish a framework to facilitate crowd-sourced funding offers by small unlisted public companies; provide new public companies that are eligible to crowd fund with temporary relief from reporting and corporate governance requirements that would usually apply; and enable the minister to provide that certain financial market and clearing and settlement facility operators are exempt from specified parts of the Australian Market



http://info-anz.thomson.com/t/21008514/140782753/236350/0/

http://info-anz.thomson.com/t/21008514/140782753/236350/0/






Licence and clearing and settlement facility licencing regimes; and Australian Securities and Investments Commission Act 2001 to make consequential amendments.

Social Services Legislation Amendment (Family Payments

Structural Reform and Participation Measures) Bill

(No. 2) 2015

02/12/2015 10/02/2016 22/02/2016 The Bill amends the: A New Tax System (Family Assistance) Act 1999 to: increase family tax benefit (FTB) Part A fortnightly rates by $10.08 for each FTB child in the family up to 19 years of age; restructure family tax benefit Part B by: increasing the standard rate by $1000.10 per year for families with a youngest child aged under one; maintaining certain standard rates for families, single parents who are at least 60 years of age, grandparents and great-grandparents; and introducing a reduced rate of $1000.10 per year for individuals with a youngest child aged 13 to 16 years of age who are not single parents aged 60 or more or grandparents or great-grandparents; and phase out the family tax benefit Part A and Part B supplements; Social Security Act 1991 to increase certain youth allowance and disability support pension fortnightly rates by approximately $10.44 for recipients under 18 years of age; and A New Tax System (Family Assistance) (Administration) Act 1999 to make consequential amendments.








Social Services Legislation Amendment (Budget Repair)

Bill 2015

02/12/2015 08/02/2016 22/02/2016 The Bill amends: the Social Security Act 1991 to: reduce from 26 to six weeks the period during which age pension and other payments with unlimited portability can be paid outside Australia at the means-tested rate from 1 January 2017; and pause for three years the indexation of various income thresholds that apply to certain social security benefits and allowances and the income test free area for parenting payment single; the Social Security Act 1991 and Social Security (Administration) Act 1999 to abolish the pensioner education supplement from 1 January 2016; the Social Security Act 1991, Social Security (Administration) Act 1999 and Veterans’ Entitlements Act 1986 to abolish the education entry payment from 1 January 2016; and seven Acts to make consequential amendments.

Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Bill 2015

02/12/2015 The bill amends: the A New Tax System (Family Assistance) Act 1999 and A New Tax System (Family Assistance) (Administration) Act 1999 to: cease the child care benefit and child care rebate; introduce a child care subsidy (CCS) which is subject to both an income and activity test; introduce various rates of additional child care subsidy (ACCS) that are available in certain circumstances; and make amendments in relation to CCS and ACCS claims, reviews of decisions, provider approvals, and compliance obligations of approved providers of child care services; five Acts to make consequential amendments; A New Tax System (Goods and Services Tax) Act 1999 in relation to GST treatment of new child care funding programs; and A New Tax System (Family Assistance) (Administration) Act 1999 in relation to: circumstances in which applications for approval of a child care service are taken not to have been made; backdating of CCB service approvals; reassessments of child care service conditions of continued approval; and cessation of enrolment advances.









Tax and Superannuation Laws Amendment (2016 Measures

No. 2) Bill 2016

17/03/2016 This bill amends: 1) Commissioner’s remedial power; 2) primary producer income averaging; 3) cars for display by public institutions; and 4) miscellaneous amendments

Superannuation Legislation Amendment (Transparency

Measures) Bill 2016

17/03/2016 The bill amends the portfolio holdings disclosure obligations in the Corporations Act 2001 to require registrable superannuation entities (RSEs) to publish, for each of their investment options, information about the nature and value of financial products or other property that they, or an associated entity, have invested in. Information relating to the first investment in non-associated entities will need to be disclosed (but assets held through non-associated entities will not). RSEs will be required to obtain sufficient information from associated entities (but reporting on parties to contracts and arrangements will be repealed). A number of exemptions will apply, eg for legacy products and a 5% exclusion for commercially sensitive investments. Superannuation funds (with 5 or more members) will be required to publish a choice product dashboard for each of their fund's 10 largest "qualifying choice investment options", instead of for all investment options. Regulations will prescribe the technical rules for how a product dashboard must be displayed on a fund's website (for both MySuper products and choice investment options).

Superannuation Legislation Amendment (Choice of Fund)

Bill 2016

17/03/2016 This bill proposes to extend superannuation choice of fund to employees covered by enterprise agreements and workplace determinations made from 1 July 2016.

Tax Laws Amendment (Tougher Penalties for Country-by-Country Reporting) Bill 2016

02/05/2016 This bill amends the Income Tax Assessment Act 1997 and Taxation Administration Act 1953 to introduce a penalty regime for significant global entities who fail to meet their country-by-country reporting obligations.















Industry Research and Development Amendment (Innovation and Science Australia) Bill 2016

04/05/2016 This bill amends the Industry Research and Development Act 1986 to transition Innovation Australia to become Innovation and Science Australia, an independent body responsible for strategic advice on all industry, innovation, science and research matters; and create a statutory framework to provide legislative authority for Commonwealth spending activities in relation to industry, innovation, science and research programs. Also makes consequential amendments to five Acts.

Budget Savings (Omnibus) Bill 2016

31/08/2016 14/09/2016 14/09/2016 15/09/2016 16/09/2016 This bill amends: the Higher Education Support Act 2003 to establish a minimum repayment threshold for HELP debts of two per cent when a person’s income reaches $51 957 in the 2018-19 financial year; and replace the Higher Education Grants Index with the consumer price index for the purposes of indexing all grants and regulated student contribution amounts; the Higher Education Support Act 2003 and Income Tax Assessment Act 1997 to discontinue the HECS-HELP benefit from 1 July 2017; the Social Security Act 1991, Social Security (Administration) Act 1999, Farm Household Support Act 2014 and Income Tax Assessment Act 1997 to discontinue the job commitment bonus; the Australian Renewable Energy Agency Act 2011 to reduce the agency’s available appropriation; the Private Health Insurance Act 2007 to pause the income thresholds for the Medicare levy surcharge and the government rebate on private health insurance for a further three years from 1 July 2018; the National Health Reform Act 2011 to abolish the National Health Performance Authority; the Aged Care Act 1997 to: increase the secretary’s compliance powers in relation to reviews of care recipient appraisals submitted by aged care providers to receive Commonwealth subsidies; abolish adviser and administrator panel arrangements; and require approved providers to notify the secretary of certain changes to any of its key personnel in certain circumstances; the Age Discrimination Act 2004, Dental









Benefits Act 2008 and Human Services (Medicare) Act 1973 to close the Child Dental Benefits Schedule from 31 December 2016 and establish the Child and Adult Public Dental Scheme from 1 January 2017; the Social Security Act 1991, Social Security Legislation Amendment (Newly Arrived Resident’s Waiting Periods and Other Measures) Act 1997 and Farm Household Support Act 2014 to remove the exemption from the 104 week newly arrived resident’s waiting period for new migrants who are family members of Australian citizens or long-term permanent residents; the Social Security Act 1991, Social Security (Administration) Act 1999 and Student Assistance Act 1973 to cease the student start-up scholarship payment from 1 July 2017; five Acts to apply an interest charge to outstanding debts owed by former recipients of social welfare payments who have failed to enter into, or have not complied with, an acceptable repayment arrangement; five Acts to enable the making of departure prohibition orders to prevent certain social welfare debtors from leaving the country; the A New Tax System (Family Assistance) (Administration) Act 1999, Paid Parental Leave Act 2010, Social Security Act 1991 and Student Assistance Act 1973 to remove the six-year limit on welfare debt recovery; the Social Security Act 1991 and Veterans’ Entitlements Act 1986 to provide that parental leave payments and dad and partner pay payments are included in the income test for income support payments; the A New Tax System (Family Assistance) Act 1999, Income Tax Assessment Act 1936 and Social Security Act 1991 to change the way fringe benefits are treated under the income tests for family assistance and youth income support payments and for related purposes; the Social Security (Administration) Act 1999 to align carer allowance and carer payment start day provisions; the A New Tax System (Family Assistance) Act 1999 and Paid Parental Leave Act 2010 to pause



indexation for family tax benefit (FTB) Part A, the primary earner income limit for FTB Part B and the Paid Parental Leave income limit for a further three years from 1 July 2017; Social Security Act 1991 and Veterans’ Entitlements Act 1986 to remove the pension income and assets test exemptions currently available to pensioners in aged care who rent out their former home and pay their aged care accommodation costs by periodic payments; the A New Tax System (Family Assistance) Act 1999 and Social Security Act 1991 to remove the exemption from the income test for FTB Part A recipients and the exemption from the parental income test for certain dependent young people receiving youth allowance and ABSTUDY living allowance; the Social Security Act 1991 to provide that certain persons cannot be paid social security payments when they are in psychiatric confinement because they have been charged with a serious offence; six Acts to prevent new recipients of welfare payments or concession cards from being paid the energy supplement from 20 March 2017; the Income Tax Assessment Act 1997 to reduce the refundable and non-refundable rates of the tax offset available under the research and development tax incentive for the first $100 million of eligible expenditure; six Acts to require larger entities to provide payroll and superannuation information at the time it is created through the single touch payroll reporting framework; and the Military Rehabilitation and Compensation Act 2004 to create a single appeal path for the review of original determinations made by the Military Rehabilitation and Compensation Commission.



Excise Tariff Amendment (Tobacco) Bill 2016

31/08/2016 13/09/2016 13/09/2016 14/09/2016 23/09/2016 This bill amends the Excise Tariff Act 1921 to increase the rate of excise duty on tobacco and tobacco products through a series of four annual increases of 12.5 per cent, commencing on 1 September 2017.

Customs Tariff Amendment (Tobacco) Bill 2016

31/08/2016 13/09/2016 13/09/2016 14/09/2016 23/09/2016 This bill amends the Customs Tariff Act 1995 to increase the rate of excise-equivalent customs duty on tobacco and tobacco products through a series of four annual increases of 12.5 per cent, commencing on 1 September 2017.

Treasury Laws Amendment (Income Tax Relief) Bill 2016

01/09/2016 This bill amends the Income Tax Rates Act 1986 to increase the third personal income tax threshold so that the rate of tax payable on taxable incomes from $80 001 to $87 000 for individuals is 32.5 per cent.

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

01/09/2016 This bill amends the: Income Tax Rates Act 1986 to reduce the corporate tax rate for small businesses with an aggregated turnover of less than $10 million to 27.5 per cent for the 2016-17 financial year and progressively extend that lower rate to all corporate tax entities by the 2023-24 financial year; and further reduce the corporate tax rate in stages so that by the 2026 27 financial year, the corporate tax rate for all entities will be 25 per cent; Income Tax Assessment Act 1997 to increase the small business income tax offset to 16 per cent of an eligible individual’s basic income tax liability that relates to their total net small business income from the 2026-27 financial year; and enable small businesses with an aggregated turnover of less than $10 million to access most small business tax concessions, and small businesses with an aggregated turnover of less than $5 million to access the small business income tax offset; and Income Tax Assessment Act 1936 and Income Tax Assessment Act 1997 to make consequential amendments.

International Tax Agreements Amendment Bill 2016

01/09/2016 This bill amends the International Tax Agreements Act 1953 to give legislative effect to the Agreement between Australia and the Federal Republic of Germany for the Elimination of Double Taxation with respect to Taxes on













Income and on Capital and the Prevention of Fiscal Evasion and Avoidance and its Protocol, signed at Berlin on 12 November 2015; and the International Tax Agreements Act 1953 and Taxation (Interest on Overpayments and Early Payments) Act 1983 to make consequential amendments.

Social Services Legislation Amendment (Budget Repair) Bill 2016

01/09/2016 This bill amends: the Social Security Act 1991 to reduce from 26 to six weeks the period during which age pension and other payments with unlimited portability can be paid outside Australia at the means-tested rate; and pause for three years the indexation of various income thresholds that apply to certain social security benefits and allowances and the income test free area for parenting payment single; the Social Security Act 1991 and Social Security (Administration) Act 1999 to abolish the pensioner education supplement; the Social Security Act 1991, Social Security (Administration) Act 1999 and Veterans’ Entitlements Act 1986 to abolish the education entry payment; and seven Acts to make consequential amendments.

Social Services Legislation Amendment (Youth Employment) Bill 2016

01/09/2016 This bill amends the Social Security Act 1991 to: extend and simplify the ordinary waiting period for all working age payments; extend youth allowance (other) to 22 to 24 year olds in lieu of newstart allowance and sickness allowance; and provide for a four-week waiting period for certain persons aged under 25 years applying for youth allowance (other) or special benefit and require these job seekers to complete certain pre-benefit activities; and the Farm Household Support Act 2014 to make consequential amendments.









Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill 2016

01/09/2016 This bill introduced with the Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Bill 2016, the bill amends the: A New Tax System (Family Assistance) Act 1999 to: increase family tax benefit (FTB) Part A fortnightly rates by $10.08 for each FTB child in the family up to 19 years of age; restructure FTB Part B by: increasing the standard rate by $1000.10 per year for families with a youngest child aged under one; maintaining certain standard rates for families, single parents who are at least 60 years of age, grandparents and great-grandparents; introducing a reduced rate of $1000.10 per year for individuals with a youngest child aged 13 to 16 years of age who are not single parents aged 60 or more or grandparents or great-grandparents; and removing the entitlement for single parent families who are not single parents aged 60 or more or grandparents or great-grandparents from the start of the calendar year their youngest child turns 17 years of age; and phase out the FTB Part A and Part B end-of-year supplements; Social Security Act 1991 to increase certain youth allowance and disability support pension fortnightly rates by approximately $7.48 for recipients under 18 years of age; and A New Tax System (Family Assistance) (Administration) Act 1999 to make consequential amendments.

Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill 2016

14/09/2016 This bill contains the following amendments: 1. REMEDIAL POWER: proposes to establish a Remedial Power for the Commissioner of Taxation to allow for a more timely resolution of certain unforeseen or unintended outcomes in the taxation and superannuation laws. The power allows the Commissioner to make, by disallowable legislative instrument, one or more modifications to the operation of a taxation law to ensure the law can be administered to achieve its intended purpose or object. The power can only be validly exercised where:











the modification is not inconsistent with the intended purpose or object of the provision;

the Commissioner considers the modification to be reasonable, having regard to both the intended purpose or object of the relevant provision and whether the costs of complying with the provision are disproportionate to achieving the intended purpose or object; and

the Department of the Treasury or the Department of Finance advises the Commissioner that any impact on the Commonwealth budget would be negligible.

Date of effect: This measure would commence on the day after Royal Assent. This would allow the Commissioner to make legislative instruments from that date to modify the operation of a taxation law.

2. PRIMARY PRODUCER AVERAGING: the Bill proposes to amend the ITAA 1997 to allow primary producers to access income tax averaging 10 income years after choosing to opt out, instead of that choice being permanent. Date of effect: This change would apply to the 2016-17 income year and later income years. 3. LCT RELIEF: the Bill would amend the A New Tax System (Luxury Car Tax) Act 1999 to provide relief from luxury car tax (LCT) to certain public institutions that import or acquire luxury cars for the sole purpose of public display. The changes would apply to public museums, galleries, and libraries that are registered for goods and services tax and that have been endorsed as deductible gift recipients. Date of effect: These amendments would apply to luxury cars that are imported or acquired from the day after the Bill receives Royal Assent. 4. MISC AMENDMENTS: The Bill proposes to make a number of miscellaneous amendments to the taxation, superannuation and other laws. These amendments include style and formatting changes, the repeal of



redundant provisions, the correction of anomalous outcomes and corrections to previous amending Acts. Date of effect: Various.

Social Services Legislation Amendment (Simplifying Student Payments) Bill 2016

14/09/2016 This bill proposes to simplify means testing for student payments by:

removing the exemption from the assets test for Youth Allowance and AUSTUDY payment recipients who are partnered to certain income support recipients;

extending the social security means test rules used to assess interests in trusts and companies to independent Youth Allowance and AUSTUDY payment recipients;

aligning the social security benefit income test treatment of gift payments from immediate family members with existing pension rules; and

harmonising the family tax benefit income test with the Youth Allowance parental income test by including tax free pensions and benefits as income for the parental income test.

Higher Education Support Legislation Amendment (2016 Measures No. 1) Bill 2016

15/09/2016 This bill proposes to amend the Higher Education Support Act 2003 to allow the Secretary to the Department of Education and Training to be notified of Tax File Numbers (TFNs) for the purpose of administering student assistance under VET FEE-HELP. The Bill also includes provisions providing for the Secretary to require the Tax Commissioner to provide TFNs of students that had previously met the TFN requirements for HELP assistance. The Bill would also authorise the use and disclosure of information related to the administration of HELP debts, including TFNs, to assist in future administration of the HELP program. The Bill would also amend the ITAA 1936 to ensure that Commonwealth officers are able to use and disclose TFNs under the Higher Education Support Act 2003 for the purposes of administering VET FEE-HELP.








Cases at 21 September 2016

Cases at 21 September 2016 CASE DATE CATEGORY

HIGH COURT

FULL FEDERAL COURT

FEDERAL COURT DATE CATEGORY

Deputy Commissioner of Taxation v VFS Employment Services Pty Ltd, in the matter of VFS Employment Services Pty Ltd [2016] FCA 1054

30 August 2016 Corporations – winding up – whether leave should be granted nunc pro tunc to allow voluntary winding up of company – s 490(1) of Corporations Act 2001 (Cth) – application granted

ADMINISTRATIVE APPEALS TRIBUNAL DATE CATEGORY

Carr and Commissioner of Taxation (Taxation) [2016] AATA 638 25 August 2016 Taxation – default assessments – whether assessments excessive – whether taxpayer discharged burden of proving assessment excessive – limited evidence of actual taxable income – decision affirmed

Zhang and Commissioner of Taxation (Taxation) [2016] AATA 662 31 August 2016 Taxation and revenue – income tax – unexplained deposits to bank accounts – some deposits now explained – reduction in assessments – Commissioner's opinion that the taxpayer had evaded tax – Tribunal satisfied on the balance of probabilities that evasion was not present – some amended assessments therefore out of time – administrative penalties reduced from 50 per cent to 25 per cent – objection decisions set aside

Reany and Commissioner of Taxation (Taxation) [2016] AATA 672 1 September 2016 Income tax - whether deductions claimed for certain work related travel expenses deductible – whether applicant required by employer to transport of bulky tools and equipment from home to work – whether secure storage provided to the applicant by his employer at his workplace - work related travel expenses “private” in nature - decision under review affirmed in part

PBKQ and Commissioner of Taxation (Taxation) [2016] AATA 681 5 September 2016 Taxation and revenue - income tax – default assessment – deductibility of service charge – objection decision relating to tax set aside and remitted to Commissioner – administrative penalty – failure to provide document as required – question of remission – objection decision relating to penalty affirmed

DTMP and Commissioner of Taxation (Taxation) [2016] AATA 684 6 September 2016 Income tax – expansion of grounds of objection - prejudice to the Commissioner – grounds expansion declined - procedural request for further hearing – procedural request declined Cases of behaviour - avoidance of expending too many Commonwealth resources in line by line calculations - adjustment of revised amount to accommodate certain claims - decision under review set aside and remitted










Cases at 21 September 2016

RSPG and Commissioner of Taxation (Taxation) [2016] AATA 687 7 September 2016 Taxation – GST – input taxed supplies – creditable acquisitions – where applicant built a new retirement village – whether construction costs could be claimed as input tax credits – apportionment – where applicant proposed an apportionment methodology – whether proposed apportionment methodology reflects a fair and reasonable apportionment of acquisitions – whether applicant was engaged in the supply of residential premises – objection decision affirmed


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