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  • Advice under development – income tax issues

    We are developing advice and guidance on the following income tax issues.

    See also:

    [3599] Employee remuneration trust arrangements

    Title
    Final Taxation Ruling
    Income tax: employee remuneration trust arrangements

    Registered
    14 November 2012

    Purpose
    To provide advice on how the taxation laws apply to an employee remuneration trust arrangement.

    Expected completion
    May 2018

    Comments
    Draft Taxation Ruling TR 2017/D5 published on 8 June 2017, and replaces TR 2014/D1

    [3688] Promoter penalty laws

    Title
    Law administration practice statement
    Administration of the promoter penalty laws (Division 290 of Schedule 1 to the Taxation Administration Act 1953)

    Registered
    24 July 2014

    Purpose
    To provide guidance to staff on the relevant administrative processes when applying the promoter penalty laws.

    Expected completion
    To be advised

    [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
    To consolidate current ATO views into a taxation ruling.

    Expected completion
    To be advised

    Comments
    TR 2017/D1 published on 18 January 2017. The publication of this Ruling is delayed due to ongoing internal review processes and the consideration of comments received.

    [3712] Environmental protection activities

    Title
    Draft Taxation Ruling
    Income tax: environmental protection activities

    Registered
    2 April 2015

    Purpose
    To clarify if a taxpayer is able to deduct expenditure incurred in an income year for the sole or dominant purpose of carrying on environmental protection activities.

    Expected completion
    June 2018

    [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
    To clarify when an amount is credited within the meaning of section 94M.

    Expected completion
    To be advised

    Comments
    TR 2017/D4 published on 17 May 2017. The draft is currently undergoing internal review and may require additional consultation.

    [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
    To 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
    June 2018

    Comments
    The publication of this Ruling is delayed due to ongoing internal review processes.

    See also:

    [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
    To provide certainty as to 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
    31 July 2018

    Comments
    TR 2016/D3 published on 14 December 2016. We are continuing our consultation with industry on the draft prior to finalisation.

    [3756] Deduction for work related travel expenses

    Title
    Final Taxation Ruling
    Income tax and fringe benefits tax: when are deductions allowed for employees' travel expenses?

    Registered
    14 April 2016

    Purpose
    To clarify whether deductions are available for work-related travel expenses.

    Expected completion
    To be advised

    Comments
    TR 2017/D6 published on 28 June 2017.

    [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
    To consolidate 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
    June 2018

    [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
    To consolidate TR 2003/6 Income tax: deductions that relate to personal services and TR 2003/10 Income tax: attribution of personal services income

    Expected completion
    November 2018

    [3777] Receiver’s obligation to retain money in respect of post-appointment tax liabilities

    Title
    Draft Taxation Determination
    Income tax: what is a receiver’s obligation to retain money in respect of post-appointment tax liabilities under section 254 of the Income Tax Assessment Act 1936?

    Registered
    11 August 2016

    Purpose
    To provide certainty on a receiver's obligation to retain money in respect of post-appointment tax liabilities.

    Expected completion
    To be advised

    Comments
    When finalised, this Ruling will replace TD 2012/D7.

    [3780] Trust vesting

    Title
    Final Taxation Ruling
    Income tax: Trust vesting – amending the vesting date and consequences of a trust vesting

    Registered
    August 2016

    Purpose
    To give our view of the trust law and tax law consequences of various issues concerning the vesting of a trust.

    Expected completion
    To be advised

    Comments
    TR 2017/D10 published on 13 December 2017.

    See also:  

    [3796] Consolidation – tax offsets

    Issue
    How does the head company of a consolidated group (or MEC group) satisfy the requirements of section 65-40 of the Income Tax Assessment Act 1997 when it seeks to apply a carried forward tax offset:

    • that remained unused by an entity at the time it joins the head company’s consolidated group, or
    • that remained unused by an entity, including the head company, where the consolidated group was formed.

    Registered
    27 May 2016

    Purpose
    To replace ATO ID 2015/6 and provide guidance more generally on how a joining entity's non-refundable carried forward tax offsets may be accessed and utilised by the head company of the joined consolidated group.

    Expected completion
    To be advised

    [3814] Meaning of ‘alteration, extension or improvement’ in Division 43 of the Income Tax Assessment Act 1997

    Title
    Draft Taxation Ruling
    Income tax: the meaning of the phrase ‘alteration, extension or improvement’ as it appears in Division 43 of the Income Tax Assessment Act 1997.

    Registered
    6 September 2016

    Purpose
    To assist taxpayers in determining whether there is an extension, alteration or improvement for the purposes of the capital works deductions. This in turn may have implications for the deductibility of those expenses under another provision of the ITAA 1997.

    Expected completion
    To be advised

    Comments
    Follow-up consultation was undertaken in December 2016 with stakeholders in response to comments that were provided during the initial consultation.

    See also:

    [3830] Commercial transactions – payments or loans made by private companies to an interposed entity

    Title
    Final Taxation Determination
    Income Tax: Division 7A: can section 109T of the Income Tax Assessment Act 1936 apply to a payment or loan made by a private company to another entity (the ‘first interposed entity’) where that payment or loan is an ordinary commercial transaction?

    Registered
    April 2017

    Purpose
    To reflect the views in ATO ID 2011/104.

    Expected completion
    June 2018

    Comments
    TD 2017/D3 published on 28 June 2017. Targeted consultation has now ended. We are considering comments and issues raised during consultation in finalising the Taxation Determination.

    [3840] Deductibility of seismic data under section 40-25 of the Income Tax Assessment Act 1997 (ITAA 1997)

    Title
    Final Taxation Ruling
    Income tax: capital allowances expenditure incurred by a service provider in collecting and processing multi-client seismic data

    Registered
    18 January 2017

    Purpose
    To clarify deductions for mining industry service providers who license seismic data on a non-exclusive basis.

    Expected completion
    29 June 2018

    Comments
    TR 2017/D11 published on 20 December 2017. The time period for comments closed on 16 February 2018. The ATO is currently considering submissions received in relation to the draft and from targeted consultation meetings.

    [3846] Business continuity test – carrying on a similar business

    Title
    Final Law Companion Ruling
    The business continuity test – carrying on a similar business

    Registered
    July 2017

    Purpose
    LCR 2017/D6 provides guidance on what ‘carrying on a similar business’ means for the purposes of the new 'similar business test' introduced by the Treasury Laws Amendment (2017 Enterprise Incentives No. 1) Bill 2017. Under this new test, a company will be able to utilise tax losses made from carrying on a business against income derived from carrying on a similar business following a change in ownership or control.

    Expected completion
    To be advised

    Comments
    LCR 2017/D6 published on 21 July 2017.

    [3849] Deductibility of interest expenses incurred – beneficiaries of discretionary trusts

    Title
    Final Taxation Determination
    Income tax: deductibility of interest expenses incurred by a beneficiary of a discretionary trust on borrowings on-lent interest free to the trustee

    Registered
    March 2017

    Purpose
    To confirm our view about when the beneficiary of a discretionary trust can deduct interest expenses incurred in relation to amounts borrowed and on-lent to the trustee

    Expected completion
    May 2018

    Comments
    TD 2017/D4 published on 13 December 2017. We are considering comments and issues raised during consultation in finalising the Taxation Determination.

    [3857] Treatment of payments for use of an individual's 'public fame' or 'image'

    Title
    Final Practical Compliance Guideline
    Taxation treatment of payments for use and exploitation of a professional sportsperson's 'public fame' or 'image'

    Registered
    18 April 2016

    Purpose
    To set out a ‘Safe Harbour’ for apportioning single payments for, in combination, the provision of a professional sportsperson’s services and the use or exploitation of their ‘public fame’ or ‘image’ under licence.

    Expected completion
    June 2018

    Comments
    PCG 2017/D11 published on 19 July 2017. Work is currently underway to review and update the PCG in light of comments received.

    [3875] Deceased estates

    Title
    Final Practical Compliance Guideline
    Income tax: liability of a legal personal representative of a deceased person

    Registered
    28 June 2017

    Purpose
    To assist in providing certainty to Legal Personal Representatives (LPR) of smaller deceased estates when making distributions to beneficiaries as regards to later tax claims on the estate that could make them personally liable. The Guidance is intended to give the LPR’s an understanding of what they can do to ensure that the Commissioner of Taxation will not seek to obtain estate taxation liability amounts of the estate from the LPR after they have distributed estate assets.

    Expected completion
    June 2018

    Comments
    PCG 2017/D12 published on 5 July 2017. We are working with relevant internal stakeholders (including Tax Counsel Network and Operational Policy, Assurance and Law) on analysing feedback and consulting with feedback providers and relevant parties.

    [3876] Nexus for determining whether a depreciating asset is first used for exploration or prospecting

    Title
    Draft Taxation Determination
    Income tax: what is the relevant nexus for determining whether a depreciating asset is first used for exploration or prospecting for the purposes of section 40-80 of the Income Tax Assessment Act 1997?

    Registered
    13 June 2017

    Purpose
    To outline the relevant nexus for determining a depreciating asset is first used for exploration or prospecting for the purposes of section 40-80 of the Income Tax Assessment Act 1997.

    Expected completion
    June 2018

    [3877] What constitutes ‘use’ for the purposes of section 40-80 of the ITAA 1997?

    Title
    Draft Taxation Determination
    Income tax: what constitutes ‘use’ (and potentially first use) of a mining, quarrying or prospecting right, that is a depreciating asset, for the purposes of subsection 40-80(1) of the Income Tax Assessment Act 1997?

    Registered
    13 June 2017

    Purpose
    To outline what constitutes ‘use’ (and potentially first use) of a mining quarrying and prospecting right for the purposes of section 40-80 of the ITAA 1997.

    Expected completion
    6 June 2018

    [3885] Trust splitting

    Issue
    Draft Taxation Determination
    Income tax: will a trust split arrangement of the type described in this Determination cause CGT event E1 in subsection 104-55(1) of the Income Tax Assessment Act 1997 to happen?

    Registered
    13 September 2017

    Purpose
    To provide our view on the tax implications of arrangements that are commonly referred to as ‘trust splitting’, in particular whether splitting the trust causes capital gains tax event E1 to occur.

    Expected completion
    June 2018

    Comments
    A draft taxation determination was sent to members of the Private Groups Stewardship Group and other key stakeholders on 29 November 2017 for limited consultation. We are considering the feedback received from our consultation with stakeholders in refining the draft taxation determination before publication.

    See also:

    [3886] Taxpayer Alerts

    Title
    Law administration practice statement: Taxpayer Alerts

    Registered
    13 September 2017

    Purpose
    To replace PS LA 2008/15 with updated guidance to staff on the process for initiating and issuing a Taxpayer Alert.

    Expected completion
    May 2018

    Comments
    A draft of the replacement practice statement was sent to members of the National Tax Liaison Group for limited consultation. We are now considering the feedback received in finalising the practice statement.

    [3887] Infrastructure privatisation framework

    Title
    Privatisation and Infrastructure – Australian Federal Tax Framework

    Registered
    2 March 2015

    Purpose
    To set out the ATO’s overall position in relation to a range of infrastructure-related tax issues. It is non-binding guidance and intended as a living document, which will be updated as relevant tax laws are amended and new transactions and issues emerge.

    Expected completion
    To be advised

    Comment
    The publication is delayed pending the outcome of Treasury consultation on stapled structures and also as a consequence of a review of standard Public Private Partnerships.

    See also:

    [3888] Carrying on a business

    Title
    Final Taxation Ruling
    When does a company carry on a business within the meaning of section 23AA of the Income Tax Rates Act 1986?

    Registered
    1 October 2017

    Purpose
    To provide guidance on when a company carries on a business. The draft taxation ruling will contain targeted examples explaining the Commissioner’s view on whether a company carries on business in common factual scenarios.

    Expected completion
    To be advised

    Comments
    TR 2017/D7 published on 18 October 2017.

    See also:

    [3898] Early stage innovation company – expense tests

    Title
    Draft Taxation Determination
    Income tax: Tax incentives for early stage investors: does an expense need to be ‘incurred’ in order to be taken into account under subparagraph 360-40(1)(a)(ii) or paragraph 360-40(1)(b) of the Income Tax Assessment Act 1997?

    Registered
    November 2017

    Purpose
    To clarify the expenses taken into account in determining whether a company meets the early stage limb of the early stage innovation company tests.

    Expected completion
    June 2018

    [3899] Division 7A undue hardship – corporate trustees

    Title
    Draft Taxation Determination
    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
    To provide our 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.

    Where a private company forgives a debt owed to it by a corporate trustee, the forgiveness of debt would potentially be treated as a deemed dividend under Division 7A unless the Commissioner is satisfied of a number of conditions contained in subsection 109G(4) of the ITAA 1936. One of those conditions is that the Commissioner must be satisfied that the debt was forgiven because payment of the debt by the corporate trustee would have caused undue hardship.

    Expected completion
    July 2018

    [3903] Treaty relief on dividends and interest for dual resident individuals

    Title
    Draft Taxation Determination
    Income tax: treaty relief on Australian sourced dividends and interest derived by a dual resident individual who is deemed a resident solely of a foreign country under a double tax treaty

    Registered
    29 January 2018

    Purpose
    To clarify the calculation of the maximum Australian tax chargeable (and any corresponding amount of tax relief available) under a tax treaty on the dividend and interest income of a dual resident individual whose residency is tie-broken solely to a foreign country for tax treaty purposes.

    Expected completion
    December 2018

    [3905] Capital allowances: construction of capital assets

    Title
    Draft Taxation Ruling
    Income Tax: Capital Allowance: Expenditure incurred in the building and construction of capital assets

    Registered
    17 January 2018

    Purpose
    To clarify the appropriate treatment of labour and other costs associated with the building and construction of capital assets.

    Expected completion
    29 June 2018

    [3911] 'In Australia' requirement deductible gift recipients

    Title
    Draft Taxation Ruling
    Income tax: ‘in Australia’ requirement for certain deductible gift recipients and income tax exempt entities

    Registered
    March 2018

    Purpose
    To provide our view of the legal and practical operation of conditions in Division 30 and Division 50 of the Income Tax Assessment Act 1997 which require that:

    • a body seeking deductible gift recipient status ‘be in Australia’
    • an entity seeking income tax exemption must have a ‘physical presence in Australia, and to that extent, incur its expenditure and pursue its objectives principally in Australia’.

    Expected completion
    To be advised

    [3914] Residential premises deductions – travel expenditure relating to rental investment properties

    Title
    Final Law companion ruling
    Income tax: Residential premises deductions – travel expenditure relating to rental investment properties

    Registered
    August 2017

    Purpose
    To provide guidance on the application of section 26-31 of the Income Tax Assessment Act 1997 which disallows deductions for certain travel expenditure relating to the use of residential premises as residential accommodation.

    Expected completion
    To be advised

    Comments
    LCR 2018/D2 published on 2 May 2018. Comments period closes 1 June 2018.

    [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
    To explain the Commissioner’s view on when an employee is considered to be genuinely restricted from disposing 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
    To be advised

    [3919] Retirement villages – exit ACA calculation

    Title
    Draft Practical Compliance Guideline

    Retirement Villages: treatment of certain liabilities for the purposes of the exit allocable cost amount (ACA) calculation where TR 2002/14 applies.

    Registered
    May 2018

    Purpose
    To provide practical guidance on the treatment of certain liabilities arising under loan/lease or lease premium arrangements on exit of a subsidiary member (that owns or develops a retirement village) of a consolidated group for the purposes of section 711-45 of the Income Tax Assessment Act 1997.

    Expected completion
    To be advised

    [3920] Consolidation churning measure

    Title
    Final Law companion ruling

    Consolidation: churning of joining entities by foreign-owned groups

    Registered
    November 2017

    Purpose
    To provide guidance on the application of section 716-440 of the Income Tax Assessment Act 1997 which addresses the interaction between the non-resident capital gains tax rules and the consolidation regime in respect of certain group restructures.

    Expected completion
    To be advised

    Comments
    LCR 2018/D3 published on 9 May 2018. Comments period closes on 8 June 2018.

    [3921] Effective life review of assets

    Title
    Final Taxation ruling
    Income tax: effective life of depreciating assets (applicable from 1 July 2018)

    Registered
    May 2018

    Purpose
    To add new effective life determinations to the Commissioner’s Schedule for the assets used in the following industries:

    • butter manufacturing
    • gas, oil and mining support services (excluding offshore services)
    • fruit and vegetable processing
    • ice cream manufacturing
    • scientific testing and analysis services
    • spirit manufacturing.

    This Ruling replaces Taxation Ruling TR 2017/2 and applies from 1 July 2018. It outlines the methodology used by the Commissioner of Taxation in making a determination of the effective life of depreciating assets under section 40-100 of the Income Tax Assessment Act 1997.

    Expected completion
    27 June 2018

    See also:

    [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
    To provide guidance 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 Income Tax Assessment Act 1997.

    Expected completion
    December 2018

    Last modified: 14 May 2018QC 50315