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  • 2019 completed issues

    The following public advice and guidance issues have been completed.

    [3765] Transfer pricing rules and debt/equity tests

    Purpose
    To provide the Commissioner’s view on whether Division 974 of the Income Tax Assessment Act 1997 can limit the operation of Subdivision 815-B of the Income Tax Assessment Act 1997.

    Outcome
    TD 2019/10 published on 3 July 2019.

    [3796] Consolidation – tax offsets

    Purpose
    To replace ATO ID 2015/6 with a taxation determination that provides 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.

    Outcome
    After completing our review of this issue, we do not propose to publish any further guidance. The ATO view on this issue in ATO ID 2015/6 remains available on the Legal database.

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

    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.

    Outcome
    We are not proceeding with this advice product. After review, we no longer consider a draft Taxation Ruling to consolidate the existing ATO view documents on this issue is a priority. The ATO view documents on this issue remain available on the Legal database.

    [3840] Deductibility of seismic data expenses under section 40-25 of the ITAA 1997

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

    Outcome
    TR 2019/4 published on 18 September 2019.

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

    Purpose
    To provide guidance on how the new 'similar business test' introduced by the Treasury Laws Amendment (2017 Enterprise Incentives No. 1) Act 2019 will apply in practice.

    Outcome
    LCR 2019/1 published on 22 May 2019.

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

    Purpose
    To outline what constitutes ‘use’ (and potentially first use) of a mining, quarrying and prospecting right for the purposes of subsection 40-80(1) of the ITAA 1997.

    Outcome
    TD 2019/1 published on 13 February 2019.

    [3886] Taxpayer alerts

    Purpose
    To provide updated guidance to staff on the process for initiating and issuing a Taxpayer Alert.

    Outcome
    PS LA 2008/15 published on 16 January 2019.

    [3888] Carrying on a business

    Purpose
    To 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.

    Outcome
    TR 2019/1 published on 5 April 2019.

    [3893] Fringe benefits tax – taxi travel exemption

    Purpose
    To provide employers with guidance on the Commissioner's compliance approach for the 2019 FBT year in determining whether travel undertaken by an employee in a ride-sourcing vehicle is taxi travel for the purposes of the FBT taxi travel exemption

    Outcome
    Following consideration of the issue and avenues available under the law, the proposed practical compliance guideline will not be proceeding. Our position on the taxi travel exemption is contained in Chapter 20 of the Fringe benefits tax – a guide for employers.

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

    Purpose
    To provide 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.

    Outcome
    We are not proceeding with this advice. After review, it is no longer considered a priority.

    [3904] Attribution of wine equalisation tax

    Purpose
    To convert existing PS LA 2013/1 (G/A) Attribution of wine equalisation tax (WET) where contracts include a retention of title clause and the purchaser sells or otherwise uses the wine before title passes into a practical compliance guideline.

    Outcome
    PCG 2019/3 published on 17 April 2019.

    [3912] Fringe benefits tax – registered religious institutions

    Purpose
    To provide the Commissioner's view on when benefits provided by a registered religious institution to a religious practitioner are exempt from fringe benefits tax.

    Outcome
    TR 2019/3 published on 19 June 2019.

    [3913] Thin capitalisation – what type of costs are debt deductions within the scope of subparagraph 820-40(a)(iii) of the ITAA 1997?

    Purpose
    To provide the ATO view on what costs are considered to be directly incurred in relation to a taxpayer’s debt capital that are within the scope of subparagraph 820-40(1)(a)(iii) for the purposes of applying the thin capitalisation rules contained within Division 820 of the Income Tax Assessment Act 1997.

    Outcome
    TD 2019/12 published on 17 July 2019.

    [3915] GST – improvements on the land

    Purpose
    Whether there are improvements on the land is relevant in establishing whether concessional GST treatment is available for a supply of land (by way of sale or long-term lease) made by the Commonwealth, a State or Territory. This Addendum provided clarity on the ATO view on this point.

    Outcome
    GSTR 2006/6 was updated on 14 August 2019

    [3918] Retirement villages – CGT event L5

    Purpose
    To provide guidance on when CGT event L5 happens for taxpayers continuing to rely on TR 94/24 (withdrawn in April 2000) when a subsidiary that owns or develops a retirement village exits the group.

    Outcome
    After consultation with the Retirement Living Council, we are not proceeding with this guidance.

    [3919] Retirement villages – exit ACA calculation

    Purpose
    To outline the ATO's administrative approach to address practical difficulties relating to the interaction of the consolidation regime and the treatment of certain liabilities under our taxation rulings when a tax consolidated group sells their interests in a subsidiary member that owns a retirement village

    Outcome
    PCG 2019/4 published on 12 June 2019

    [3920] Consolidation churning measure

    Purpose
    To 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 structures.

    Outcome
    LCR 2019/2 published on 17 July 2019.

    [3934] Pension tax bonuses

    Purpose
    To provide the ATO's compliance approach for large APRA-regulated super funds in respect of pension tax bonuses not included in members’ opening account balances on commencement of a pension.

    Outcome
    PCG 2019/7 published on 2 October 2019.

    [3936] Disposal of dwellings acquired from a deceased estate

    Purpose
    To outline the

    • circumstances in which trustees or beneficiaries of a deceased estate can manage their tax affairs as if the Commissioner had exercised the discretion to allow a period of longer than two years to sell a dwelling acquired from a deceased estate
    • factors the Commissioner will consider where taxpayers request the exercise of the discretion.

    Outcome
    PCG 2019/5 was published on 27 June 2019.

    [3939] Corporate collective investment vehicles

    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.

    Outcome
    At this stage, we are not proceeding with this guidance until the Corporate Collective Investment Vehicle Bill 2019 has received Royal Assent.

    [3940] Inbound supply chains

    Purpose
    To provide our compliance approach to the transfer pricing outcomes associated with the following activities of inbound distributors:

    • distributing goods purchased from related foreign entities for resale, and
    • distributing digital products or services where the intellectual property in those products or services is owned by related foreign entities

    Outcome
    PCG 2019/1 published on 13 March 2019.

    [3950] OECD hybrid mismatch rules

    Purpose
    To provide advice in relation to the terms 'structured arrangement' and 'party to the structured arrangement' set out in section 832-210 of the Income Tax Assessment Act 1997.

    Outcome
    LCR 2019/3 published on 24 July 2019.

    Purpose
    To provide practical guidance in relation to the term ‘structured arrangement' in section 832-210 of the Income Tax Assessment Act 1997.

    Outcome
    PCG 2019/6 published on 24 July 2019. Work continues on other aspects of the OECD hybrid mismatch rules.

    See also

    [3954] Expansion of the taxable reporting system - road freight, security, investigation or surveillance and IT services

    Purpose
    To provide the ATO view of the extension of the taxable payments reporting system to road freight, security, investigation, surveillance and information technology services.

    Outcome
    LCR 2019/4 published on 14 August 2019.

    [3960] Non-arm's length income

    Purpose
    To provide the ATO's view in respect of the amendments in the Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2018, concerning the application of the non-arm's length income provisions where a trustee incurs non-arm's length expenditure under a scheme.

    Outcome
    LCR 2018/D10 published for public comment on 19 December 2018 was withdrawn as a result of the Treasury Law Amendment (2018 Superannuation Measures No.1) Bill 2018 having lapsed when the 45th Parliament was prorogued and the House of Representatives was dissolved on 11 April 2019.

    See also:  

    [3961] Total superannuation balance

    Purpose
    To provide the ATO's view of amendments in Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2018, once passed, which require the outstanding balance of a borrowing made under a limited recourse borrowing arrangement in certain circumstances to be included in an individual's total superannuation balance.

    Outcome
    The draft consolidation of LCR 2016/12 published for public comment on 19 December 2018 was withdrawn as a result of the Treasury Laws Amendment (2018 Superannuation Measures No.1) Bill having lapsed when the 45th Parliament was prorogued and the House of Representatives was dissolved on 11 April 2019.

    [3963] Division 7A – interposed entity rules

    Purpose
    TD 2018/13 was planned to be amended to provide a further example.

    Outcome
    After review, we no longer propose to publish this Addendum. TD 2018/13 remains the ATO view and is available on the Legal database.

    [3967] Definition of financial intermediary business

    Purpose
    To provide advice on when a company will be considered to have a business whose income is derived principally from the lending of money for the purposes of paragraph (b) of the definition of ‘financial intermediary business’ in subsection 317(1) of the Income Tax Assessment Act 1936.

    Outcome
    TD 2019/8 was published on 22 May 2019.

    [3975] Super benefits in breach of rules

    Purpose
    To provide the ATO view of the Administrative Appeals Tribunal decision in Wainwright and Commissioner of Taxation [2019] AATA 333 which considered the exercise of the discretion in subsection 304-10(4) of the Income Tax Assessment Act 1997.

    Outcome
    The Decision Impact Statement published on 25 July 2019. Work continues on further clarifying our approach.

    See also:  

    Last modified: 09 Oct 2019QC 57881