Advice under development – income tax issues
Effect of COVID-19 on our work
Our public advice and guidance program continues to have a focus on COVID-19 related issues. Income tax issues on which we are currently preparing COVID-19 related guidance include the following:
However, we have returned to our ongoing program of work and are updating the status of issues listed on the Program.
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:
[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
Purpose
The final Ruling will consolidate current ATO views into a taxation ruling.
Expected completion
August 2021
Comments
Draft TR 2017/D1 published on 18 January 2017. Finalisation of the Ruling has been delayed due to other priority work, however, this has been reassessed and will progress as a priority, recognising the community’s need for certainty when considering the temporary full expensing measure.
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?
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.
Contact
Jo Torrens, Tax Counsel Network
Phone: (02) 9374 2035
Jo.Torrens@ato.gov.au
[3756] Deduction for work-related travel expenses
Title
Final Taxation Ruling
Income tax and fringe benefits tax: deductibility of employees’ accommodation and food and drink expenses
Purpose
The final Ruling will provide our view on when an employee can deduct accommodation and food and drink expenses under section 8-1 of the Income Tax Assessment Act 1997.
Expected completion
July 2021
Comments
Draft TR 2021/D1 published on 17 February 2021. Comments period closed on 19 March 2021.
This draft Ruling partially replaces draft TR 2017/D6 which published on 28 June 2017.
Contact
Kim Hall, Individuals and Intermediaries
Phone: (07) 3149 5412
Kim.Hall@ato.gov.au
Title
Final Practical Compliance Guideline
Determining if allowances or benefits provided to an employee relate to travelling on work or living at a location – ATO compliance approach
Purpose
The final Guideline will outline the Commissioner’s compliance approach for determining if employees are travelling on work or living at a location away from their normal residence.
Expected completion
To be advised
Comments
Draft PCG 2021/D1 published on 17 February 2021. Comments period closed on 19 March 2021.
This draft Guideline has been published in conjunction with the final taxation ruling on employee’s transport expenses (TR 2021/1) and a draft taxation ruling dealing with accommodation and meal expenses (TR 2021/D1).
Together, these three publications replace draft TR 2017/D6 and draft TR 2019/D7 which deal with employee travel and transport expenses.
Contact
PAGSEO@ato.gov.au
[3767] Personal services income – meaning of personal services business
Title
Final Taxation Ruling
Income tax: the meaning of personal services income and what is a personal services business
Purpose
The final Ruling will provide a 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
August 2021
Comments
Draft TR 2021/D2 published on 11 March 2021. Comments received are currently being considered to inform the content of the final Ruling.
Contact
Deb Masterton, Small Business
Phone: (03) 6221 0671
Deb.Masterton@ato.gov.au
[3887] Infrastructure privatisation framework
Title
Privatisation and Infrastructure – Australian Federal Tax Framework
Purpose
The intended guidance will set out the ATO’s overall position in relation to a range of infrastructure-related tax issues.
Expected completion
Mid 2021
Comments
Draft guidance was issued for consultation on 31 January 2017. Further updates are 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?
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. Comments period 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?
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
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
July 2021
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
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
October 2021
Contact
Erc Pepicelli, Private Wealth
Phone: (08) 7422 2179
Erc.Pepicelli@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
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
To be advised
Contact
Tom Rengers, Private Wealth
Phone: (07) 3213 6955
Tom.Rengers@ato.gov.au
[3929] Research and development – expenditure not at risk
Title
Final Taxation Ruling
Income tax: research and development tax offsets – the ‘at-risk’ rule
Purpose
The final 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
Comments
Draft TR 2021/D3 published on 25 June 2021. Comments period closes on 23 July 2021. This product has been drafted with the benefit of the feedback received following publication of Draft Taxation Determination TD 2020/D1 Income tax: notional deductions for research and development activities subsidised by JobKeeper payments. Both products will be finalised following public consultation on this product.
Contact
PAGCentre@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
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 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
Finalisation is delayed pending enactment of the 2020–21 Budget Measure ‘Privileges and Immunities – clarify income tax exemptions available to individuals engaged by the International Monetary Fund and the World Bank Group’.
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?
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
[3990] Misappropriated or stolen funds
Title
Addendum to Taxation Ruling 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
September 2021
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
Final Practical Compliance Guideline
Allocation of professional firm profits – ATO compliance approach
Purpose
This final 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
July 2021
Comments
Draft PCG 2021/D2 published on 1 March 2021. Comments period closed on 16 April 2021. Feedback from public consultation is being considered.
Contact
ProfessionalPdts@ato.gov.au
See also:
[4000] Royalties and software
Title
Final 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 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
Comments
Draft TR 2021/D4 published on 25 June 2021. Comments period closes on 30 July 2021.
Contact
PGIPAGUnit@ato.gov.au
[4003] Car expenses – reimbursements from employer
Title
Draft Taxation Determination
Income tax: do car expense deductions need to be reduced by the amount of any reimbursements received from your employer?
Purpose
This draft Determination will outline the Commissioner's preliminary view on the implications for an employee who receives a reimbursement for car expenses from their employer, where they are using a car they own or lease, to undertake work-related travel.
Expected completion
December 2021
Contact
Simon Weiss, Tax Counsel Network
Phone: (02) 6216 1943
Simon.Weiss@ato.gov.au
[4005] Expenses associated with vacant land
Title
Draft Taxation Ruling
Expenses associated with vacant land
Purpose
This draft Ruling will provide preliminary guidance in relation to the application of section 26-102 of the Income Tax Assessment Act 1997.
Expected completion
July 2021
Comments
Publishing of the draft Ruling has been impacted by the need to reprioritise work during 2020 as a result of COVID-19. Further, as the draft was released for targeted consultation in late December 2020, stakeholders were given an extended period to provide comments. Feedback on the draft Ruling has raised a number of issues, which we are carefully considering before releasing a draft for public comment.
Contact
Michelle Gainford, Individuals and Intermediaries
Phone: (02) 6058 7954
Michelle.Gainford@ato.gov.au
See also:
[4007] Research and development activities subsidised by JobKeeper payments
Title
Final Taxation Determination
Income tax: notional deductions for research and development activities subsidised by JobKeeper payments
Purpose
The final Determination will set out the Commissioner’s view on how the ‘at risk rule’ applies to JobKeeper payments received by a research and development entity.
Expected completion
Late 2021
Comments
Draft TD 2020/D1 published on 27 July 2020. Comments period closed on 24 August 2020. Extensive feedback was received on the draft Determination and covered issues relevant to the broader application of the R&D ‘at risk’ rules. Draft Taxation Ruling TR 2021/D3 Income tax: notional deductions for research and development activities subsidised by JobKeeper payments, published on 25 June 2021, has been developed with the benefit of that feedback.
Draft TD 2020/D1 reflects the Commissioner’s current view on the application of the R&D ‘at risk’ rules to JobKeeper payments. Finalisation of this product will occur following consultation of TR 2021/D3 to ensure both products take into account any further feedback received during consultation of the broader Ruling.
Contact
Elliott Wilson, Tax Counsel Network
Phone: (08) 8208 1336
Elliott.Wilson2@ato.gov.au
[4016] Residual value of a leased asset – meaning of ‘term of lease’
Title
Draft Addendum to Taxation Determination TD 93/142
Income tax: in calculating the residual value of a leased item, may a lower residual value than those outlined in IT 28 be adopted in light of the more generous depreciation rates?
Purpose
This draft Addendum sets out proposed clarification of the operation of the tables in this Determination, which are used to calculate the minimum residual value of a leased asset, such as a car.
Expected completion
Mid 2021
Contact
Sean Bielanowski
Phone: (07) 3213 5729
Sean.Bielanowski@ato.gov.au
Bernard Mosslar
Phone: (07) 3213 5586
Bernard.Mossler@ato.gov.au
See also:
[4017] Corporate loss carry back tax offset – loss carry back choice
Title
Draft Taxation Determination
Income tax: corporate loss carry back tax offset – can a taxpayer revisit or recast a loss carry back choice?
Purpose
This draft Determination will set out the Commissioner’s preliminary view on the application of the loss carry back choice.
The rules in Division 160 of the Income Tax Assessment Act 1997 do not include a specific provision to enable a corporate tax entity to revisit a choice after it has been made. The Commissioner is considering whether there is any ability to revoke, amend or make additional choices after making an initial loss carry back choice.
Expected completion
To be advised
Comments
An exposure draft Bill has been released by Treasury for consultation which proposes to allow a loss carry back choice to be amended. Comments period closed 25 May 2021. See Miscellaneous amendments to Treasury portfolio laws 2021External Link for more information. We are currently considering whether further guidance is still required on this topic based on the proposed amendment.
Contact
Matt Miller, Tax Counsel Network
Phone: (07) 3213 6658
Matthew.Miller@ato.gov.au
[4020] Aggregated turnover issues for large business
Title
Aggregated turnover – guidance for large businesses, including how to calculate aggregated turnover where connected entities or affiliates have a different accounting period
Purpose
The intended guidance will set out the ATO’s position on specific aggregated turnover issues relevant to large businesses.
Expected completion
Mid 2021
Contact
PGIPAGUnit@ato.gov.au
Title
Final Taxation Determination
Income tax: when working out your aggregated turnover, are the relevant annual turnovers of entities connected with you, or entities that are affiliates of yours, determined by reference to your income year?
Purpose
The final Determination will set out the Commissioner’s view on how the aggregation rules apply where a connected entity or affiliate has a different accounting period to the entity calculating its aggregated turnover.
Expected completion
August 2021
Comments
Draft TD 2021/D1 published on 11 June 2021. Comments period closes on 9 July 2021.
Contact
Sharon Murray, Public Groups and International
Phone: (03) 9285 1837
Sharon.Murray@ato.gov.au
[4022] Temporary full expensing
Title
Final Law Companion Ruling
Temporary full expensing
Purpose
The final Ruling will complement existing ato.gov content with more detailed guidance on the application of the temporary full expensing rules. It addresses specific issues raised from external stakeholders since introduction of the measure, including how the temporary full expensing rules interact with the Instant Asset Write-Off and Backing Business Investment provisions, as well as consolidation interaction issues.
Expected completion
To be advised
Comments
Draft LCR 2021/D1 published on 9 June 2021. Comments period closes on 23 July 2021.
Contact
Grahame Hager, Tax Counsel Network
Phone: (02) 9374 8762
Grahame.Hager@ato.gov.au
[4024] Early engagement service
Title
Federal Budget announced ATO early engagement service
Purpose
The Federal Budget announced a new ATO early engagement service to encourage and support new business investments into Australia. We are currently developing web guidance which will provide details about the new program, including its scope and eligibility requirements.
Expected completion
Mid 2021
Comments
Service offering commenced 1 July 2021. Consultation was completed in early June.
Contact
Christopher Ferguson, Public Groups and International
Phone: (03) 9285 1613
Christopher.Ferguson@ato.gov.au
We are developing advice and guidance on the following income tax issues.