Advice under development – income tax issues
Effect of COVID-19 on our work
Our public advice and guidance program is currently focused on:
- supporting the community with a range of tax and super issues arising from the impacts of COVID-19 on the community, and
- providing practical guidance on the tax and super aspects of the government’s economic response.
This is affecting the delivery of other advice and guidance products. We have considered the relative priority of the issues listed on this program. We will provide updates if we further revise our scheduling.
If you are concerned about the delay in the delivery of particular pieces of public advice and guidance, email us at publicguidance@ato.gov.au
See also:
[3688] Promoter penalty laws
Title
Law Administration Practice Statement
Administration of the promoter penalty laws
Registered
24 July 2014
Purpose
This Practice statement will provide guidance to staff on the relevant administrative processes when applying the promoter penalty laws in:
- Division 290 of Schedule 1 to the Taxation Administration Act 1953, and
- section 68B of the Superannuation Industry (Supervision) Act 1993 dealing with the promotion of illegal early release superannuation schemes.
Expected completion
June 2020
Contact
Ross Gillott, Integrated Compliance
Phone: (03) 9285 1827
Ross.Gillott@ato.gov.au
Thomas Rice, Private Wealth
Phone: (08) 8208 1260
Thomas.Rice@ato.gov.au
[3702] Capital allowances – composite items
Title
Final Taxation Ruling
Income tax: composite items and identifying the depreciating asset for the purposes of working out capital allowances
Registered
17 November 2014
Purpose
The final Ruling will consolidate current ATO views into a taxation ruling.
Expected completion
To be advised
Comments
Draft TR 2017/D1 published on 18 January 2017. The publication of this Ruling is delayed due to ongoing consideration of comments received.
Contact
PAGPW&IC@ato.gov.au
[3712] Environmental protection activities
Title
Final Taxation Ruling
Income tax: deductions for expenditure on environmental protection activities
Registered
2 April 2015
Purpose
The final Ruling will set out the Commissioner's view on whether a taxpayer is able to deduct expenditure they incur in an income year for the sole or dominant purpose of carrying on environmental protection activities.
Expected completion
June 2020
Comments
Draft TR 2019/D3 published on 17 April 2019. Comments closed on 17 May 2019.
Contact
PAGPW&IC@ato.gov.au
[3718] Corporate limited partnership ‘credits’
Title
Final Taxation Ruling
Income tax: when does a corporate limited partnership ‘credit’ an amount to a partner in that partnership?
Registered
23 April 2015
Purpose
The final Ruling will clarify when an amount is credited within the meaning of section 94M of the Income Tax Assessment Act 1936.
Expected completion
May 2020
Comments
Draft TR 2017/D4 published on 17 May 2017.
Contact
Jo Torrens, Tax Counsel Network
Phone: (02) 9374 2035
Jo.Torrens@ato.gov.au
[3734] Deductibility of legal expenses
Title
Draft Taxation Ruling
Income tax: deductibility of legal expenses under section 8-1 of the Income Tax Assessment Act 1997
Registered
14 December 2015
Purpose
The draft Ruling will consolidate current ATO views into one product using a principles–based approach to assist taxpayers to determine the deductibility of their legal expenses.
Expected completion
To be advised
Comments
We are considering not proceeding with this proposed draft ruling. In attempting to cover the very broad range of circumstances in which legal expenses arise, the advice would mostly consist of high level observations on well-established principles on deductibility and be too general to be helpful., We invited feedback on this proposal, particularly on how the scope of issues addressed could be narrowed (for example, observations on where issues with legal expenses repeatedly arise) or where the ATO does not have existing advice or guidance.
Contact
PAGPW&IC@ato.gov.au
[3755] Withholding provisions relating to natural resource income
Title
Final Taxation Ruling
Income tax: application of section 6CA of the Income Tax Assessment Act 1936 and Australia’s tax treaties and the payer’s withholding obligations
Registered
8 April 2016
Purpose
The final Ruling will provide certainty on the application of section 6CA of the ITAA 1936, section 12–325 of Schedule 1 to the Taxation Administration Act 1953 and their interactions with Australia’s tax treaties.
Expected completion
To be advised
Comments
Draft TR 2016/D3 published on 14 December 2016. Publication of the final Ruling is on hold while the ATO seeks advice on the operation of the relevant provisions.
Contact
Jason Hill, Public Groups and International
Phone: (07) 3213 5307
Jason.Hill@ato.gov.au
[3756] Deduction for work-related travel expenses
Title
Deductibility of employee travel expenses
Registered
14 April 2016
Purpose
To clarify when deductions are available for work-related travel expenses.
Expected completion
To be advised
Comments
Draft TR 2017/D6 published on 28 June 2017. A further draft ruling, TR 2019/D7, regarding the deductibility of transport expenses only, published on 13 December 2019. Comments closed on 28 February 2020.
TR 2019/D7 partially replaces TR 2017/D6. A further draft ruling on the deductibility of meals and accommodation will be published during 2020.
Pending the provision of that additional guidance, the ATO will continue to accept that where an employee is away from home overnight for work for 21 days or less, the employee will be treated as travelling for work purposes rather than living away from home and the allowance paid by the employer will be treated as a travel allowance.
Contact
Kim Hall, Individuals and Intermediaries
Phone: (07) 3149 5412
Kim.Hall@ato.gov.au
[3767] Personal services income – meaning of personal services business
Title
Draft Taxation Ruling
Income tax: the meaning of personal services income and what is a personal services business
Registered
22 July 2016
Purpose
The draft Ruling will provide a proposed consolidation of TR 2001/7 Income tax: the meaning of personal services income and TR 2001/8 Income tax: what is a personal services business.
Expected completion
To be advised
Comments
We are undertaking targeted consultation on this draft Ruling prior to formal publication for comment.
Contact
Deb Masterton, Individuals and Intermediaries
Phone: (03) 6221 0671
Deb.Masterton@ato.gov.au
[3768] Personal services income – attribution and deductions
Title
Draft Taxation Ruling
Income tax: attribution of personal services income and deductions relating to that income
Registered
22 July 2016
Purpose
The draft Ruling will provide a proposed consolidation of TR 2003/6 Income tax: deductions that relate to personal services and TR 2003/10 Income tax: attribution of personal services income.
Expected completion
December 2020
Contact
Deb Masterton, Individuals and Intermediaries
Phone: (03) 6221 0671
Deb.Masterton@ato.gov.au
[3887] Infrastructure privatisation framework
Title
Privatisation and Infrastructure – Australian Federal Tax Framework
Registered
2 March 2015
Purpose
The intended guidance will set out the ATO’s overall position in relation to a range of infrastructure-related tax issues.
Expected completion
To be advised
Comments
Draft guidance was issued for consultation on 31 January 2017. Further updates were on hold pending the enactment of the new legislation.
Staged updates have commenced and are planned to be released progressively.
Contact
Gaurav Gupta, Public Groups and International
Phone: (02) 9762 6939
Gaurav.Gupta@ato.gov.au
[3898] Early stage innovation company – expense tests
Title
Final Taxation Determination
Income tax: tax incentives for early stage investors: what is an 'expense' that is 'incurred’ for the early stage test?
Registered
November 2017
Purpose
The final Determination will set out the Commissioner's view on the expenses taken into account in determining whether a company meets the early stage limb of the early stage innovation company tests.
Expected completion
To be advised
Comments
Draft TD 2019/D5 published on 28 August 2019, using a fast-tracked process designed to accelerate finalisation. Comments closed on 11 September 2019.
Contact
Tom Rengers, Private Wealth
Phone: (07) 3213 6955
Tom.Rengers@ato.gov.au
[3899] Division 7A – undue hardship – corporate trustees
Title
Draft Taxation Determination
Income tax: can a corporate trustee be caused to suffer undue hardship due to payment of a debt for the purposes of subsection 109G(4) of the Income Tax Assessment Act 1936?
Registered
December 2017
Purpose
The draft Determination will set out the Commissioner's preliminary view on whether a corporate trustee could suffer undue hardship on payment of a debt owed to a company for the purposes of subsection 109G(4) of the Income Tax Assessment Act 1936.
Expected completion
To be advised
Contact
Geoff Gibbons, Tax Counsel Network
Phone: (03) 6221 0281
Geoff.Gibbons@ato.gov.au
[3905] Construction of capital assets
Title
Final Taxation Ruling
Income tax: application of paragraph 8-1(2)(a) of the Income Tax Assessment Act 1997 to labour costs related to the construction or creation of capital assets
Registered
January 2018
Purpose
The final Ruling will provide clarification of the appropriate treatment of labour and other costs associated with the building and construction of capital assets.
Expected completion
To be advised
Comments
We have received a number of submissions on the draft Ruling TR 2019/D6 which we are considering in detail. The ATO does however maintain its view that labour costs covered by the draft Ruling can be prevented from being deductible under paragraph 8-1(2)(a) of the Income Tax Assessment Act 1997 where they are on capital account and there is no presumption that labour costs are always on revenue account. Taxpayers should be mindful of this when they submit their tax returns. We recognise that determining the capital/revenue distinction can, in some circumstances be difficult, and we will continue to work through the feedback received prior to finalising the Ruling. In the meantime, if you have any questions or have uncertainties in your position, you can ask us for private advice or other guidance that explains how the law applies to your particular circumstances.
Contact
PGIPAGUnit@ato.gov.au
[3917] Employee share schemes – what constitutes a ‘genuine disposal restriction’
Title
Draft Taxation Determination
Income tax: employee share schemes – when you are genuinely restricted from disposing of a beneficial interest in a right or share
Registered
May 2018
Purpose
The draft Determination will set out the Commissioner’s preliminary view on when an employee is considered to be genuinely restricted from disposing of their beneficial interest in a right or share acquired under an employee share scheme, for the purposes of paragraphs 83A-105(6)(b), 83A-115(4)(b), 83A-115(7)(d) and 83A-120(4)(c) of the Income Tax Assessment Act 1997.
Expected completion
June 2020
Contact
Maria Noia, Private Wealth
Phone: (03) 9945 5843
Maria.Noia@ato.gov.au
Emma Butler, Tax Counsel Network
Phone: (03) 8601 9869
Emma.Butler@ato.gov.au
[3922] Research and development building exclusion
Title
Draft Taxation Ruling
Income tax: research and development tax offset: expenditure incurred to acquire or construct a building
Registered
10 May 2018
Purpose
The draft Ruling will set out the Commissioner's preliminary view on when expenditure incurred to acquire or construct a building cannot be notionally deducted for the purposes of the research and development tax offset under paragraph 355–225(1)(a) of the Income Tax Assessment Act 1997.
Expected completion
July 2020
Contact
Tom Rengers, Private Wealth
Phone: (07) 3213 6955
Tom.Rengers@ato.gov.au
[3929] Research and development – expenditure not at risk
Title
Draft Taxation Ruling
Research and development – expenditure not at risk
Registered
July 2018
Purpose
The proposed draft Ruling will explain the scope and operation of section 355-405 of the Income Tax Assessment Act 1997 which limits claims to R&D expenditure that is ‘at risk’. We are aware of some ongoing uncertainty about the application of the ‘at risk’ requirement to various scenarios where the R&D activities are carried out in the context of commercial contracts for the supply of goods or services. The advice will address these scenarios, other concerns with the operation of the provisions and bring together existing advice and guidance on these issues.
Expected completion
To be advised
Contact
PAGCentre@ato.gov.au
[3952] Restructuring for demerger relief
Title
Final Taxation Determination
Income tax: what is a 'restructuring' for the purposes of subsection 125-70(1) of the Income Tax Assessment Act 1997?
Registered
November 2018
Purpose
The final Determination will provide the Commissioner's view on how to establish the scope of a 'restructuring', which sets the factual parameters for the application of the conditions in subsection 125-70(1) that must be satisfied to qualify as a demerger.
Expected completion
April 2020
Comment
Draft TD 2019/D1 published on 20 March 2019. Comments period closed on 30 April 2019.
Contact
Japheth Gill, Public Groups and International
Phone: (02) 9374 2337
PGIPAGUnit@ato.gov.au
[3957] Taxation privileges and immunities of international organisations and persons connected with them
Title
Final Taxation Ruling
Income tax: income of international organisations and persons connected with them that is exempt from income tax
Registered
November 2018
Purpose
The final Ruling will update the ATO view in TR 92/14 Income tax: taxation privileges and immunities of prescribed International Organisations and their staff following the recent High Court decisions in Macoun v Commissioner of Taxation [2015] HCA 44 and Commissioner of Taxation v Jayasinghe [2017] HCA 26.
Expected completion
To be advised
Comments
Draft TR 2019/D1 published on 27 March 2019. Comments period closed on 28 May 2019.
Contact
Simon Weiss, Tax Counsel Network
Phone: (02) 6216 1943
Simon.Weiss@ato.gov.au
[3962] Commercial debt forgiveness – for reasons of natural love and affection
Title
Final Taxation Determination
Income tax: commercial debt forgiveness - does the exclusion for debts forgiven for reasons of natural love and affection require that the creditor be a natural person?
Registered
February 2019
Purpose
The final Determination will set out the Commissioner's view on whether an entity that is not a natural person can forgive a debt for reasons of natural love and affection.
Expected completion
To be advised
Comments
Draft TD 2019/D9 published on 2 October 2019. Comments closed on 1 November 2019. We have considered the comments received on TD 2019/D9. While we maintain our view in TD 2019/D9 on the status of the creditor, we are considering expanding the final Determination to include our position on the status of the debtor and how the exemption applies to partnerships.
Contact
Karen Rooke, Tax Counsel Network
Phone: (02) 9374 1059
Karen.Rooke@ato.gov.au
[3974] Foreign income tax offset – inclusion of capital gains
Title
Final Taxation Determination
Income tax: can capital gains be included under subparagraph 770-75(4)(a)(ii) of the Income Tax Assessment Act 1997 when calculating the foreign income tax offset limit?
Registered
May 2019
Purpose
This Determination will provide the Commissioner's view that capital gains are not captured when calculating the foreign income tax offset limit.
Expected completion
To be advised
Comments
Draft TD 2019/D10 published on 11 October 2019. The comments period has been extended and closes on 22 November 2019.
Contact
Renae Ali, Tax Counsel Network
Phone: (03) 9285 1660
Renae.Ali@ato.gov.au
[3988] Hybrid instruments - market value
Title
Discussion paper
Buy-back or redemption of certain hybrid securities - methodologies for determining market value for investors holding their securities on capital account
Purpose
This discussion paper will seek feedback on a potential practical compliance approach for determining the market value of certain hybrid securities when they are bought back or redeemed (as relevant) from an investor holding their hybrid securities on capital account.
Expected completion
To be advised
Comments
This discussion paper was published on 12 February 2020. The comments period closed on 11 March 2020. Following this comment period, and depending on feedback received, a practical approach to determining market value may be developed as a draft or final practical compliance.
Contact
Katherine Leung, Public Groups and International
Phone: (02) 9374 2400
Katherine.Leung@ato.gov.au
[3990] Misappropriated or stolen funds
Title
Ruling addendum
TR 93/25 Income tax: assessability of proceeds from illegal activities, treatment of amounts recovered and deductibility of fines and penalties
Purpose
This Addendum will modernise TR 93/25 to take into account changes in legislation and case law.
Expected completion
December 2020
Comments
Publication has been delayed to allow for further consideration on the scoping of the product.
Contact
Simon Weiss, Tax Counsel Network
Phone: (02) 6216 1943
Simon.Weiss@ato.gov.au
[3991] Professional firms - allocation of profit guidelines and Everett assignment
Title
Draft Practical Compliance Guideline
Allocation of professional firm profits - ATO compliance approach
Purpose
This draft Guideline will explain how the ATO intends to apply compliance resources when considering the allocation of professional firm profit or income in the assessable income of individual professional practitioners. It will also assist individual practitioners to self-assess their risk against risk assessment factors. When finalised, this Guideline will replace the professional firm guidelines that were suspended in December 2017.
Expected completion
To be advised
Contact
ProfessionalPdts@ato.gov.au
See also
[3999] Compensation payments made by financial institutions
Title
Compensation payments made by financial institutions
Purpose
Guidance is being prepared to advise the GST and income tax consequences for financial institutions which are making compensation payments as a consequence of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
Expected completion
To be advised
Contact
Katherine Leung, Public Groups and International
Phone: (02) 9374 2400
Katherine.Leung@ato.gov.au
See also
[4000] Royalties and software
Title
Draft Taxation Ruling
Income tax: royalties: character of receipts in respect of software
Purpose
Current advice on the development and marketing of software is provided in TR 93/12 Income tax: computer software. There is a need to provide updated guidance on modern forms of software distribution including digital channels and cloud computing. This draft Ruling will provide the Commissioner’s view on the circumstances in which amounts in respect of the licensing and distribution of software will be royalties as defined in subsection 6(1) of the Income Tax Assessment Act 1936.
Expected completion
To be advised
Contact
Elena Stamatovska, Tax Counsel Network
Phone: (03) 8601 9955
Elena.Stamatovska@ato.gov.au
We are developing advice and guidance on the following income tax issues.