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  • 2018 completed issues

    The following public advice and guidance issues have been completed.

    [3766] Transfer pricing benefit from an outbound/inbound interest free loan

    Purpose
    To provide the Commissioner’s view on whether interest free loans will be considered to be an equity contribution when identifying the actual and arm’s length conditions.

    Outcome
    As a result of internal feedback the subject of this draft taxation determination will be combined into the taxation determination at reference [3765] transfer pricing rules and debt/equity tests.

    [3821] Thin capitalisation: attribution of ADI equity capital and Controlled Foreign Entity equity

    Purpose
    To outline an approach in determining the amount of ADI equity capital and controlled foreign equity attributed by outbound investing entities.

    Outcome
    PCG 2018/1 published on 24 January 2018.

    [3829] Low value goods

    Purpose
    To explain when a supply of low value imported goods will be connected with Australia.

    Outcome
    LCR 2018/1 published on 7 March 2018.

    Purpose
    To explain the Electronic Distribution Platform (EDP) rules and when an operator of an EDP will be responsible for GST on a supply of offshore low value goods made through their platform.

    Outcome
    LCR 2018/2 published on 7 March 2018.

    Purpose
    Provides guidance on when an entity is a redeliverer and when they will be responsible for GST on an offshore supply of low value goods.

    Outcome
    LCR 2018/3 published on 7 March 2018.

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

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

    Outcome

    TD 2018/13 published on 18 July 2018.

    [3838] Corporate residency – central management and control in Australia

    Purpose
    To provide the ATO’s view on ‘central management and control in Australia’ for the purposes of paragraph (b) of the definition of ‘resident’ or ‘resident of Australia’ in subsection 6(1) of the Income Tax Assessment Act 1936.

    Outcome
    TR 2018/5 published on 21 June 2018.

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

    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

    Outcome
    TD 2018/9 published on 20 June 2018.

    [3865] MAAL – directly in connection with supply

    Purpose
    To provide guidance on when activities undertaken in Australia will be 'directly in connection with' a supply by a foreign entity under the Multinational Anti-Avoidance Law.

    Outcome
    TD 2018/12 published on 4 July 2018.

    [3874] Propagation arrangements adopted by registrable superannuation entities

    Purpose
    This Practical Compliance Guideline sets out the ATO’s compliance approach to the use of propagation arrangements used by registrable superannuation entities when selecting assets for disposal. It applies from 1 July 2018 and clarifies the ATO’s approach to these types of arrangements for the large superannuation industry. This Guidance does not apply to self-managed superannuation funds.

    Outcome
    PCG 2018/2 published on 30 May 2018.

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

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

    Outcome
    TD 2018/D2 published on 13 June 2018. This draft taxation determination is being finalised under [3877].

    [3880] Operation of the system

    Purpose
    To update WETR 2009/1 following legislative amendments receiving royal assent on 23 August 2017.

    Outcome
    Addendum to WETR 2009/1 published on 29 June 2018.

    [3881] Operation of the producer rebate

    Purpose
    To update WETR 2009/2 following legislative amendments receiving royal assent on 23 August 2017.

    Outcome
    Addendum to WETR 2009/2 published on 29 June 2018.

    [3882] Operation of the producer rebate for New Zealand entities

    Purpose
    To update WETR 2006/1 following legislative amendments receiving royal assent on 23 August 2017.

    Outcome
    Addendum to WETR 2006/1 published on 29 June 2018.

    [3894] Long term construction contracts

    Purpose

    This Ruling is a refresh of IT 2450 Income tax: recognition of income from long term construction contracts which was published in 1987 and a consolidation with five related Tax Determinations. We’ve used this opportunity to reference a new accounting standard (AASB 15 Revenue from contracts with customers, which takes compulsory effect from 1 January 2018) and incorporate the views expressed in related publications. This means we’ve expanded the content so that it now covers the treatment of both income and deductions in respect of long term construction contracts. The refreshed product does not change the ATO view. This Ruling continues to provide the long standing concessional method for reporting notional taxable income from construction contracts, with reference to the new accounting standard.

    Outcome
    TR 2018/3 published on 7 March 2018.

    [3895] Expenditure incurred in relation to abandonment, decommissioning and rehabilitation activities

    Purpose
    To set out whether abandonment, decommissioning and rehabilitation expenditure incurred on a part of a petroleum project prior to a project being completely closed down is characterised as general project expenditure (under section 38) or closing down expenditure (under section 39) of the Petroleum Resource Rent Tax Assessment Act 1987.

    Outcome
    TR 2018/1 published on 24 January 2018.

    [3896] Retirement village operators in South Australia – treatment of amounts payable to or by operators under residence contracts

    Purpose
    To provide a practical approach to amounts payable to, or by, a retirement village operator under a residence contract entered into before, on, or after the Retirement Villages Act 2016 comes into effect so that the taxation treatment of amounts payable to or by an operator under residence contracts entered into before the commencement of the Act is not changed by the commencement of that Act.

    Outcome
    The final compliance appendix in TR 2002/14 published on 7 March 2018.

    [3897] Exempt car benefits and exempt residual benefits – compliance approach to determining private use of vehicles

    Purpose
    To provide a practical approach for employers in demonstrating that the private use of eligible vehicles provided to their employees during an FBT year meet the car related exemptions of work related travel or other private use that is 'minor, infrequent and irregular'.

    Outcome
    PCG 2018/3 published on 11 July 2018.

    [3916] GST – GST at settlement

    Purpose
    To explain new provisions that require a purchaser of certain types of real property to make a payment to the Commissioner that represents the GST payable by the vendor.

    Outcome
    LCR 2018/4 published on 27 June 2018.

    [3921] Effective life review of assets

    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.

    Outcome
    TR 2018/4 published on 27 June 2018.

    Last modified: 08 Aug 2018QC 54468