Advice under development – income tax issues
We are developing advice and guidance on the following income tax issues.
See also:
[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
The practice statement will 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
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.
[3712] Environmental protection activities
Title
Draft Taxation Ruling
Income tax: environmental protection activities
Registered
2 April 2015
Purpose
The draft Ruling will provide proposed clarification on whether 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
December 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
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
To be advised
Comments
Draft 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
The draft Ruling will provide a proposed consolidation of 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
Publication 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
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
December 2018
Comments
Draft TR 2016/D3 published on 14 December 2016. A revised draft will soon be circulated to industry stakeholders, with further discussion to be held 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
The final Ruling will 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.
[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
January 2019
[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
June 2019
[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
The draft Determination will set out the Commissioner's proposed view on a receiver's obligation to retain money in respect of post-appointment tax liabilities.
Expected completion
December 2018
Comments
When finalised, this Ruling will replace Draft TD 2012/D7.
[3796] Consolidation – tax offsets
Title
Draft Taxation Determination
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
The draft Determination will replace ATO ID 2015/6 and provide proposed advice 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
The draft Ruling will set out proposed views 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:
[3840] Deductibility of seismic data expenses under section 40–25 of the 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
The final Ruling will clarify deductions for mining industry service providers who license seismic data on a non-exclusive basis.
Expected completion
To be advised
Comments
Draft TR 2017/D11 published on 20 December 2017. The ATO is currently considering submissions received.
[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 draft 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
Draft LCR 2017/D6 published on 21 July 2017. This work is on hold as the Treasury Laws Amendment (2017 Enterprise Incentives No. 1) Bill 2017 is before the Senate and has not been passed.
[3877] What constitutes ‘use’ for the purposes of section 40–80 of the ITAA 1997?
Title
Final 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
The final Determination will 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
To be advised
Comments
Draft TD 2018/D2 published on 13 June 2018. Comments and submissions received during the consultation process are being considered.
[3885] Trust splitting
Title
Final Taxation Determination
Income tax: will a trust split arrangement of the type described in this Determination cause a new trust to be settled over some but not all assets of the original trust with the result that CGT event E1 in subsection 104–55(1) of the Income Tax Assessment Act 1997 happens?
Registered
13 September 2017
Purpose
The final Determination will provide the Commissioner's 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
To be advised
Comments
Draft TD 2018/D3 published on 11 July 2018. Comments period closed on 10 August 2018. We are considering comments and issues raised during consultation.
See also:
[3886] Taxpayer alerts
Title
Law Administration Practice Statement
Taxpayer alerts
Registered
13 September 2017
Purpose
The proposed practice statement will replace PS LA 2008/15 with updated guidance to staff on the process for initiating and issuing a Taxpayer Alert.
Expected completion
November 2018
Comments
A draft of the replacement practice statement was sent to members of the National Tax Liaison Group for limited consultation. We have considered the feedback received and are finalising the practice statement.
[3887] Infrastructure privatisation framework
Issue
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
Draft guidance was issued for consultation on 31 January 2017. Further updates are on hold.
Comment
Publication is delayed pending the enactment of the legislation that will give effect to the package of measures on stapled structures and other associated issues as announced by the TreasurerExternal Link on 27 March 2018. A review of standard Public Private Partnerships is also underway.
[3888] Carrying on a business
Title
Final Taxation Ruling
Income tax: 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
The final Ruling will provide advice on when a company carries on a business, including targeted examples explaining the Commissioner’s view on whether a company carries on business in common factual scenarios.
Expected completion
January 2019
Comments
Draft 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
The draft Determination will provide proposed clarification of the expenses taken into account in determining whether a company meets the early stage limb of the early stage innovation company tests.
Expected completion
December 2018
[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 provide the Commissioner's proposed 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
February 2019
[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
The draft Determination will provide proposed clarification of 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
June 2019
[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
The draft Ruling will provide proposed clarification of the appropriate treatment of labour and other costs associated with the building and construction of capital assets.
Expected completion
To be advised
[3911] 'In Australia' requirement deductible gift recipients
Title
Final Taxation Ruling
Income tax: ‘in Australia’ requirement for certain deductible gift recipients and income tax exempt entities.
Registered
March 2018
Purpose
The final Ruling will provide the Commissioner's 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
Comments
Draft TR 2018/D1 published on 4 July 2018. Comments period closed on 10 August 2018. We are considering comments and issues raised during consultation.
[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 proposed 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: ATO compliance approach to the exit allocable cost amount calculation at step 4 for certain resident liabilities under lease premium or loan/lease occupancy agreements.
Registered
May 2018
Purpose
The draft Guideline will provide proposed 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
November 2018
[3920] Consolidation churning measure
Title
Final Law Companion Ruling
Consolidation: churning of joining entities by foreign-owned groups
Registered
November 2017
Purpose
The final Ruling will provide advice 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
November 2018
Comments
Draft LCR 2018/D3 published on 9 May 2018. The final Ruling is currently being developed.
[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 provide proposed advice 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
[3925] Ancillary funds – exercising the discretion to reduce the minimum annual distribution rate
Title
Law Administration Practice Statement
Administration of the Commissioner’s discretion to reduce the minimum annual distribution rate for ancillary funds
Registered
June 2018
Purpose
The practice statement will provide process guidance to staff when considering the exercise of the Commissioner’s discretion to reduce the minimum annual distribution rate under the amended Private Ancillary Fund Guidelines 2009 and the Public Ancillary Fund Guidelines 2011.
Expected completion
December 2018
[3929] Research and development – expenditure not at risk
Title
Research and development – expenditure not at risk
Registered
July 2018
Purpose
The proposed advice 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
[3934] Pension tax bonuses
Title
Draft Practical Compliance Guideline
ATO compliance approach to non-inclusion of pension tax bonuses in members’ opening account balances when members transfer to pension phase
Registered
September 2018
Purpose
The draft Guideline will provide a transitional compliance approach for large APRA-regulated superannuation funds in respect of pension tax bonuses not included in members’ opening account balances on commencement of a pension.
Expected completion
To be advised
[3935] Enterprise tax plan
Title
Final Practical Compliance Guideline
Enterprise Tax Plan: small business company tax rate change: compliance and administrative approaches for the 2015-16, 2016-17 and 2017-18 income years
Registered
July 2018
Purpose
The final Guideline will provide compliance and administrative approaches for corporate tax entities that have faced practical difficulties in determining their corporate tax rate and corporate tax rate for imputation purposes in the 2015-16, 2016-17 and 2017-18 income years.
Expected completion
December 2018
Comments
Draft PCG 2018/D5 published on 25 July 2018.
[3936] Disposal of dwellings acquired from a deceased estate
Title
Final Practical Compliance Guideline
The Commissioner's discretion to extend the two year period to dispose of dwellings acquired from a deceased estate
Registered
August 2018
Purpose
The final Guideline will outline the factors we will consider when deciding whether to allow a longer period for trustees or beneficiaries of deceased estates to sell a dwelling acquired from the estate. The Guideline will also set out a ‘safe harbour’ compliance approach.
Expected completion
December 2018
Comments
Draft PCG 2018/D6 published on 22 August 2018.
[3937] Base rate entities and base rate entity passive income
Title
Final Law Companion Ruling
Base rate entities and base rate entity passive income
Registered
August 2018
Purpose
The final Ruling will provide advice on the general scheme of the new law in relation to base rate entities, what constitutes base rate entity passive income and how to calculate a corporate tax entity’s corporate tax rate for imputation purposes.
Expected completion
February 2019
Comments
Draft LCR 2018/D7 published on 24 August 2018.
[3939] Corporate collective investment vehicles
Title
Draft Practical Compliance Guideline
Tax treatment of corporate collective investment vehicles (CCIVs)
Registered
August 2018
Purpose
To provide guidance on the proposed new law in relation to CCIVs, including the:
- introduction of CCIVs and their tax treatment
- establishment and reporting obligations for CCIVs to the ATO
- information for potential Australian and foreign investors (and their intermediaries) on tax obligations when investing in a CCIV.
Expected completion date
September 2019
[3942] Section 100A reimbursement agreements
Title
Draft Taxation Ruling
Income tax: section 100A: reimbursement agreements – purpose and ordinary dealing exclusions
Registered
October 2018
Purpose
The draft Ruling will provide the Commissioner’s preliminary views on the exclusions from a ‘reimbursement agreement’ for:
- agreements not entered into with a purpose of eliminating or reducing someone’s income tax, and
- agreements entered into in the course of ordinary family or commercial dealings.
Expected completion
February 2019
[3943] Deductibility of work-related expenses
Title
Draft Taxation Ruling
Income tax: deductibility of work-related expenses
Registered
October 2018
Purpose
The draft Ruling will provide proposed guidance on when an employee can deduct a work-related expense under section 8-1 of the Income Tax Assessment Act 1997.
Expected completion
To be advised
[3945 Government grants
Title
Addendum to Taxation Ruling TR 2006/3
Income tax: government payments to industry to assist entities (including individuals) to continue commence or cease business
Registered
October 2018
Purpose
The Addendum will provide greater clarity to our existing view, including by the insertion of a case study as an example.
Expected completion
December 2018
[3949] Collection and recovery of disputed debts
Title
Law Administration Practice Statement
Collection and recovery of disputed debts
Purpose
The Practice statement is a rewrite of PS LA 2011/4 Collection and recovery of disputed debts and will further clarify the Commissioner's approach to debt collection and recovery.
Expected completion
March 2019
[3952] Corporate restructuring
Title
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
Provide guidance 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
December 2018
We are developing advice and guidance on the following income tax issues.