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  • 2017 completed issues

    The following public advice and guidance issues have been completed.

    [3634] Income tax deductions available to superannuation funds

    Purpose
    To ensure the guidance provided in TR 93/17 is relevant to contemporary business and industry practices.

    Outcome
    Addendum to TR 93/17 published on 17 May 2017.
    TR 2013/D7 and IT 2672 were withdrawn on 17 May 2017.

    [3723] Deductions for mining and petroleum exploration

    Purpose
    To outline the ATO view in relation to the tax treatment of mining and petroleum exploration expenditure.

    Outcome
    TR 2017/1 and PCG 2016/17 published on 22 February 2017.

    [3730] Distribution from foreign companies

    Purpose
    To clarify whether the NANE exemption in Subdivision 768-A of the Income Tax Assessment Act 1997 is available for a foreign equity distribution made to an Australian corporate tax entity in connection with a share buyback or cancellation.

    Outcome
    TR 2017/3 was published on 28 June 2017.

    [3735] Foreign hybrid limited partnership

    Purpose
    To clarify whether a foreign resident investing in Australia through a foreign limited partnership can make an election under paragraph 830-10(2)(b) of the ITAA 1997.

    Outcome
    TD 2017/25 published on 18 December 2017.

    [3759] Direct control interests – partnerships

    Purpose
    To confirm that an Australian corporate tax entity that holds its interest in a foreign company via a partnership can have a control interest in a foreign company for the purpose of satisfying the participation test in section 768-15 of the ITAA 1997.

    Outcome
    TD 2017/21 published on 18 October 2017.

    [3760] Direct control interests – trusts

    Purpose
    To confirm that an Australian corporate tax entity that holds its interest in the foreign company via a trust can have a control interest in a foreign company for the purpose of satisfying the participation test in section 768-15 of the ITAA 1997.

    Outcome
    TD 2017/22 published on 18 October 2017.

    [3764] Renounceable rights issues for resident and non-resident shareholders

    Purpose
    To determine the tax consequences for shareholders (including resident and non-resident shareholders) who receive a retail premium.

    Outcome
    TR 2017/4 published on 5 July 2017.

    [3778] Second-hand goods – definition

    Purpose
    To explain the Commissioner's views on the interpretation of paragraph (b) of the definition of second-hand goods.

    Outcome
    Draft GSTR 2017/D1 published on 22 February 2017. The draft Determination concerned paragraph (b) of the definition of “second-hand goods” in the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). However, with effect from 1 April 2017, the Treasury Laws Amendment (GST Integrity) Act 2017 has repealed paragraphs (a) and (b) of the definition of second-hand goods, and introduced a new definition that applies to acquisitions of goods containing valuable metal that occur on or after 1 April 2017. Therefore, the draft Determination, if finalised, would not have any ongoing effect. Accordingly, the draft Determination was withdrawn on 18 October 2017.

    [3783] Thin capitalisation – arm’s length debt test

    Purpose
    To provide administrative guidance for taxpayers in applying the arm’s length debt test under the thin capitalisation rules via adoption of a tax integrity risk framework.

    Outcome
    Existing ATO guidance on this subject is currently under review with a view to development of a holistic suite of guidance products. Once the appropriate products are determined their development will be noted on this Program.

    [3799] Family trust distribution tax – meaning of 'distributes'

    Purpose
    To clarify the operation of the family trust distribution tax rules where distributions, within the meaning of sections 272-45 and 272-60 of Schedule 2F to the ITAA 1936, are made to persons other than a beneficiary.

    Outcome
    TD 2017/20 published on 15 November 2017.

    [3804] Capital gain or loss – residency assumption

    Purpose
    To clarify the taxation treatment of capital gains from non-taxable Australian property assets of a non-resident trust and the income tax consequences for resident beneficiaries.

    Outcome
    TD 2017/23 published on 13 December 2017.

    [3805] Capital gains – discount or capital loss offset

    Purpose
    To clarify the interaction between the CGT provisions and section 99B of the ITAA 1936 where an amount is distributed by the trustee of a non-resident trust that is attributable to capital gains from non-taxable Australian property assets.

    Outcome
    TD 2017/24 published on 13 December 2017.

    [3806] Superannuation Guarantee and advances to former employees

    Purpose
    To convert ATO ID 2015/13, ATO ID 2015/14 and ATO ID 2015/15 to a Superannuation Guarantee Determination

    Outcome
    SGD 2017/1 published on 19 April 2017.

    [3808] Internal derivatives by multinational banks

    Purpose
    To extend the Commissioner’s practical approach to applying the arm’s length principles adopted in taxation rulings TR 2001/11 and TR 2005/11 to internal derivatives of multinational banks.
    It sets out the circumstances in which internal derivatives that represent arm’s length dealings can be used as an appropriate proxy for the purposes of allocating or attributing a bank’s income (gains), expenses (losses) or profit for the purposes of Subdivision 815-C of the Income Tax Assessment Act 1997. It also provides guidance on the Commissioner’s compliance expectations for banks seeking to rely on it.

    Outcome
    PCG 2017/8 published on 26 May 2017.

    [3812] Fixed trusts

    Purpose
    Outlines the factors the Commissioner will consider when deciding whether to exercise the discretion in subsection 272-5(3) of Schedule 2F to the Income Tax Assessment Act 1936 to treat an entitlement as being a fixed entitlement, which results in a trust being treated as a fixed trust under the trust loss provisions.

    Outcome
    PCG 2016/16 published on 13 September 2017. See also finalised consultation matter [201747].

    [3813] Non-share dividends paid by Authorised Deposit-taking Institutions

    Purpose
    To assist taxpayers in assessing the extent to which their facts, circumstances and associated tax treatment are perceived by the Commissioner as presenting a risk of non-compliance in relation to the application of paragraphs 215-10(1)(c) and (d) of the Income Tax Assessment Act 1997.

    Outcome
    PCG 2017/10 published on 5 June 2017.

    [3818] Australian consumers

    Purpose
    To provide guidance on whether supplies made by non-residents are to Australian consumers and therefore connected with Australia under paragraph 9-25(5)(d) of the A New Tax System (Goods and Services Tax) Act 1999.

    Outcome
    GSTR 2017/1 published on 7 June 2017.

    [3822] Distributions of net small business income

    Purpose
    To clarify entitlement to the small business income tax offset for a share of net small business income distributed via an interposed entity to an individual.

    Outcome
    This issue has been withdrawn.
    After further review of this issue there is no uncertainty in the law as enacted and as such, a Taxation Ruling is not required. We will confirm the ATO view in an article in the Tax Professionals newsletter in the coming weeks. ATO view is already published on the website at Small business income tax offset: Partnership and trust distributions.

    [3826] Offshore hubs

    Purpose
    To set out our compliance approach to transfer pricing issues related to the location and relocation of certain business activities and operating risks into a centralised operating model.

    Outcome
    PCG 2017/1 published on 16 January 2017.

    [3827] Superannuation reform

    Purpose
    To provide public advice and guidance to complement the Superannuation Reform package.

    Outcome
    LCG 2016/8 published on 8 March 2017.

    LCG 2016/9 published on 10 March 2017.

    LCG 2016/10 published on 6 April 2017.

    LCG 2016/11 published on 28 February 2017.

    LCG 2016/12 published on 20 March 2017.

    PCG 2017/5 published on 27 April 2017.

    LCG 2017/1 published on 28 April 2017.

    [3828] GST cross-border supplies – supplies of online advertising

    Purpose
    To explain the Commissioner’s views on when certain types of online advertising are ‘done’ in Australia.

    Outcome
    This issue has been withdrawn as it will now be addressed as part of an addendum to GSTR 2000/31. Refer to GST issue [3870].

    [3836] Employee share scheme arrangements – tax treatment of dividend equivalent payments

    Purpose
    To provide advice on how the law applies to certain cash payments (‘dividend equivalent payments’) made by a trustee to an employee who is participating in an employee share scheme.

    Outcome
    TD 2017/26 published on 20 December 2017.

    [3847] Cross-border related party financing arrangements and related transactions

    Purpose
    To set out the ATO compliance approach in respect of the taxation outcomes associated with a ‘financing arrangement’ (as defined in section 995-1 of the ITAA 1997’), or a related transaction or contract, entered into with a cross border related party.

    Outcome
    PCG 2017/4 published on 18 December 2017.

    [3850] GST – what is a particular?

    Purpose
    To explain the Commissioner’s views on what is a particular for the purposes of subsection 155-70(1) of Schedule 1 to the Taxation Administration Act 1953 and in relation to amending an assessment of a net amount.

    Outcome
    This issue has been withdrawn.

    After further review, we consider that the ATO view of what is a 'particular' is sufficiently explained in TR 2011/5 at paragraphs 154-171. The principles discussed at these paragraphs, whilst in the context of section 14ZV of the Taxation Administration Act 1953, also apply to amending assessed net fuel amounts.

    [3851] Fuel tax – what is a particular?

    Purpose
    To explain the Commissioner’s views on what is a 'particular' for the purposes of section 155-70 of Schedule 1 to the Taxation Administration Act 1953 and in relation to amending an assessment of a net fuel amount.

    Outcome
    This issue has been withdrawn.

    After further review, we consider that the ATO view of what is a 'particular' is sufficiently explained in TR 2011/5 at paragraphs 154-171. The principles discussed at these paragraphs, whilst in the context of section 14ZV of the Taxation Administration Act 1953, also apply to amending assessed net fuel amounts.

    [3854] GST – supplies of 'things other than goods or real property' done in the indirect tax zone

    Purpose
    To explain the Commissioner’s views on when a supply of 'things other than goods or real property' is done in the indirect tax zone.

    Outcome
    This issue has been withdrawn as it will now be addressed as part of an addendum to GSTR 2000/31. Refer to GST issue [3870].

    [3855] GST – supplies made through an enterprise carried on in the indirect tax zone

    Purpose
    To explain the Commissioner’s views on when a supply is made through an enterprise carried on in the indirect tax zone.

    Outcome
    This issue has been withdrawn as it will now be addressed as part of an addendum to GSTR 2000/31. Refer to GST issue [3870].

    [3856] GST – supplies of a right or option to acquire another thing connected with the indirect tax zone

    Purpose
    To explain the Commissioner’s views on when a supply of a right or option to acquire another thing is connected with the indirect tax zone.

    Outcome
    This issue has been withdrawn as it will now be addressed as part of an addendum to GSTR 2000/31. Refer to GST issue [3870].

    [3862] Meaning of 'supply'

    Purpose
    To update GSTR 2006/9, in particular paragraphs 71–91, following the High Court’s observations in Commissioner of Taxation v. MBI Properties Pty Ltd.

    Outcome
    Addendum to GSTR 2006/9 published on 20 December 2017.
    See also finalised consultation matter [201660]

    [3869] Supply of credit card – GST-free

    Purpose
    To provide guidance regarding to what extent the supply of a credit card will be a supply made in relation to rights for use outside the indirect tax zone.

    Outcome
    GSTD 2017/1 published on 12 July 2017

    [3871] Commissioner's power to transfer exploration expenditure deductions

    Purpose
    To guide ATO staff on when a petroleum resource rent tax assessment can be amended to correct an error in a transfer of exploration expenditure.

    Outcome
    PS LA 2017/1 published on 8 November 2017

    [3872] Effective life of depreciating asset

    Purpose
    To outline 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. New assets and effective lives have been added to the ruling this year for the following industries:

    • Dairy product manufacturing (cheese, milk powder and yoghurt)
    • Data storage services (data centres)
    • Grain mill product (flour, linseed oil, rice) manufacturing
    • Mining support services
    • Photo processing
    • Poultry processing
    • Pulses and seed processing
    • Textile floor covering manufacturing
    • Wool scouring and carbonisation

    Outcome
    TR 2017/2 published on 28 June 2017.

    [3873] Division 7A – Unpaid entitlements under sub-trust arrangements

    Purpose
    To provide greater certainty on the consequences where a UPE held on sub trust solely for the benefit of a private company beneficiary and is invested in accordance with Option 1 of the safe harbours in PSLA 2010/4, and that investment is not repaid at the end of the investment term.

    Comments
    PCG 2017/13 published 19 July 2017. See also finalised consultation matter [201702].

    [3878] Closing down expenditure

    Purpose
    To outline the Commissioner’s view on the taxation treatment of abandonment and decommissioning expenditure (‘ADE’) and rehabilitation expenditure under the closing-down deductibility provision in subsection 39(1) of the PRRT Act while production of petroleum or marketable petroleum commodities (‘MPCs’) continue in another part of the petroleum project or combined project.

    Outcome
    As a result of stakeholder feedback the subject of this draft Taxation Determination and ID 3879 will be combined into one taxation ruling. Refer to ID 3895 in PRRT issues.

    See also consultation matter [201641]

    [3879] General project expenditure

    Purpose
    To outline the Commissioner’s view on the taxation treatment of abandonment and decommissioning expenditure (‘ADE’) and rehabilitation expenditure under the general deductibility provision in section 38 of the PRRT Act while production of petroleum or marketable petroleum commodities (‘MPCs’) continue in another part of the petroleum project or combined project.

    Outcome
    As a result of stakeholder feedback the subject of this draft Taxation Determination and ID 3878, will be combined into one taxation ruling. Refer to ID 3895 in PRRT issues

    See also finalised consultation matter [201640]

    [3890] Transfer balance cap

    Purpose
    The Treasury Laws Amendment (2017 Measures No. 2) Act, which received Royal Assent on 22 June 2017, made a number of minor and technical amendments to the 2016 superannuation reform package. LCG 2016/9 is being updated to reflect the new transfer balance credit arising from the repayment of a limited recourse borrowing arrangement and changes to the treatment of transition to retirement income streams.

    Outcome
    Final amendment to LCG 2016/9 published on 20 December 2017.

    [3891] Transitional CGT relief for complying superannuation funds and pooled superannuation trusts

    Purpose
    The Treasury Laws Amendment (2017 Measures No. 2) Act, which received Royal Assent on 22 June 2017, made a number of minor and technical amendments to the 2016 superannuation reform package. LCG 2016/8 is being updated to reflect changes that apply to transition to retirement income streams and pooled superannuation trusts.

    Outcome
    Final amendment to LCG 2016/8 published on 20 December 2017.

    [3892] Total superannuation balance

    Purpose
    The Treasury Laws Amendment (2017 Measures No. 2) Act, which received Royal Assent on 22 June 2017, made a number of minor and technical amendments to the 2016 superannuation reform package. LCG 2016/12 is being updated to reflect the changes made to the treatment of transition to retirement income streams.

    Outcome
    Final amendment to LCG 2016/12 published on 20 December 2017.

    Last modified: 30 Jan 2018QC 51293